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Article 7
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Upon the occurrence of any one of the following events, the FSC may reject the registration from the issuer for offering and issuance of securities:
1. The attesting CPA issues a disclaimer of opinion or an adverse opinion in the audit report.
2. The attesting CPA issues a qualified opinion in the audit report and such opinion has an impact on the fair presentation of the financial report.
3. The application review forms prepared by the issuer, reviewed by the attesting CPA, and produced by the securities underwriter show the occurrence of violation of laws or regulations or articles of incorporation of the issuer and such violation has affected the offering and issuance of securities.
4. The legal opinion issued by a lawyer indicates that there exists violation of law or regulations and such violation has affected the offering and issuance of securities.
5. The evaluation report from the underwriter fails to specify the feasibility, necessity, and reasonability of the present offering and issuance plan.
6. The issuer files an application again under paragraph 2 of the preceding article within three months after receipt of notice from the FSC in which the FSC has rejected the issuer's application, has voided or revoked the application, or the issuer has withdrawn its registration filing or application made under these Regulations. These restrictions may not apply, however, to the issuance of new shares in connection with merger, issuance of new shares in connection with receiving transfer of shares of another company, or issuance of new shares in connection with an acquisition or demerger conducted in accordance with law.
7. Any one of the following descriptions applies to an issuer registering a cash capital increase or an issue of corporate bonds:
(1) the amount of the funds to be raised in the present offering that will be used in direct or indirect investment in mainland China exceeds 60% of the total funds to be raised in the present offering, provided that this rule does not apply to a company, or a Taiwan subsidiary of a multinational corporation, that has obtained documentary proof, issued by the Industrial Development Bureau, Ministry of Economic Affairs, certifying its compliance with the operational scope of an operational headquarters;
(2) the aggregated amount directly or indirectly invested in the mainland China area violates the regulations of the Investment Commission, Ministry of Economic Affairs. However, the aforesaid restriction need not apply where the funds are to be used in purchase of domestic fixed assets and promise has been undertaken to refrain from increasing investment in mainland China.
8. Violation or failure to serious extent of performing the undertakings made upon application for listing in the stock exchange market or OTC market.
9. The FSC finds that there has been a material violation of relevant laws or regulations.
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Article 8
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Where an issuer conducts an offering and issuance of securities as contemplated under paragraph 2 of Article 6, the FSC may reject the registration upon the occurrence of any one of the following events:
1. Fifty percent of the original directors have changed during the year of registration or during the previous two years, and a shareholder has obtained its shares in violation of the provisions of Article 43-1 of the Act. However, this provision does not apply where corrections have been made prior to the registration date.
2. Any one of the events set forth under paragraph 1 of Article 156 of the Act applies to an exchange-listed or OTC-listed company. However, this restriction does not apply to any company upon which restrictions have been imposed, in accordance with the provisions of paragraph 2 of Article 139 of the Act, with respect to the trading of its shares on a stock exchange.
3. The present offering and issuance plan is unfeasible, unnecessary, or unreasonable.
4. Any one of the following events has occurred in the implementation of a previous plan for the offering and issuance, or private placement, of securities, and the situation has not been improved:
(1) The process of implementation is seriously delayed without legitimate reason and the implementation has not been completed yet.
(2) The plan has undergone substantial change without due reasons and such change has not been completed. However, this provision does not apply where more than three years have passed between the registration date and the actual completion date of the plan.
(3) The securities offering and issuance plan has undergone material change, but said change has not yet been reported to a shareholders' meeting for approval.
(4) The company has failed in the most recent year to observe the provisions of Article 9, paragraph 1, subparagraphs 4 through 9, or provisions set out in Article 11 of the Regulations Governing the Offering and Issuance of Overseas Securities by Issuers.
(5) Failure to faithfully perform information disclosure in accordance with the Directions for Public Companies Conducting Private Placements of Securities.
(6) No reasonable benefit derived and no legitimate reason is provided. However, in the event more than three years have passed since the completion date of the plan till the registration date, such restriction does not apply.
5. An important part of the plan for the present offering and issuance of securities (such as issuance rules, source of funds, particulars of the plan, implementation schedule, and expected returns) has not been placed on the agenda of a board meeting or shareholders meeting in accordance with the Company Act and the issuer's articles of incorporation, or has not been adopted by resolution at such a meeting.
6. The company has lent a large amount of money to another party for purposes other than financing needs arising from a business transaction with another company or business firm, has not yet rectified the situation, and now intends to conduct a cash capital increase or issue corporate bonds.
7. The company has entered into an irregular transaction of material significance, and has not yet rectified the situation.
8. The company intends to conduct a cash capital increase or issue corporate bonds, but holds financial assets listed under current assets, idle assets, or idle real property with no plan to actively dispose of or develop such holdings, and their total value is equivalent to either: (1) 40 percent or more of shareholders' equity in the most recent financial report audited and attested (or reviewed) by a CPA, or (2) 60 percent of the total amount of funds to be raised through the cash capital increase or corporate bond issue that the company is registering. However, this provision does not apply when the funds to be raised will be used to purchase fixed assets and there is a concrete plan for fund raising evidencing the need to raise the funds.
9. Proceeds from the cash capital increase or corporate bond issuance are to be used to invest in a company engaged primarily in the trading of securities, or to establish a securities firm or a securities service enterprise.
10. The company has failed to prepare its financial statements in accordance with relevant acts or regulations, or with generally accepted accounting principles, and such violations are of material significance.
11. The company has violated the provisions of Article 5, paragraph 2.
12. The internal control system is seriously deficient in design or implementation.
13. The company's share price fluctuated abnormally during the month prior to the date of registration.
14. Any one of the following descriptions applies to the shareholdings of the entire body of the company's directors or supervisors:
(1) The percentage of their equity stake is in violation of Article 26 of the Act and the FSC has notified them to make up for the shortfall but they have not yet done so.
(2) The percentage of their equity stake still does not meet the required equity stake set forth under Article 26 of the Act even after accounting for the share issue that the company is now registering; provided, however, that this does not apply where the entire body of the company's directors or supervisors pledges to make up for the shortfall upon completion of the offering.
(3) During the fiscal year in which the registration is made, or during the preceding fiscal year, the entire body of the company's directors or supervisors did not honor a promise to make up for a shortfall in their equity stake.
15. The issuer or its current chairperson or general manager, or a de facto responsible person has received a fixed sentence or a more severe punishment from a court in the past three years due to violation of laws governing business and industry such as the Act, the Company Act, Banking Act, Financial Holding Company Act, or Business Accounting Act, or due to a crime involving breach of faith such as corruption, malfeasance, fraud, breach of fiduciary duty, or embezzlement.
16. The court has decided that the issuer has an obligation for damages under the Act and the issuer has not met that obligation yet.
17. Collateral has been provided for a loan of any third party in violation of Article 5 of the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, the circumstances are serious, and there has been no improvement.
18. There is an issue of new shares in connection with a merger, or an issue of new shares in connection with receiving transfer of shares of another company, or an issue of new shares in connection with an acquisition or demerger conducted in accordance with law, and any one of the following descriptions obtains:
(1) There has been a material violation of the provisions of Chapter 2, Section 5 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.
(2) The received or acquired shares are not the newly issued shares of another company, non-current equity investment, or previously issued shares held by the shareholders of another company.
(3) The ownership rights over the received shares or the acquired business or assets are not encumbered in any way, such as through the creation of pledge thereupon or placing of restrictions on the purchase or sale thereof.
(4) There has been a violation of Article 167 paragraph 3 or 4 of the Company Act.
(5) An audit report with unqualified opinion was not issued by a CPA for a financial report of an absorbed company for the most recent fiscal year; provided, that this provision does not apply where an audit report with qualified opinion was issued together with an unqualified opinion regarding the balance sheet.
19. An event prescribed in Article 13, paragraph 1, subparagraph 2, item 6 occurs, and any of the following circumstances is present:
(1) A filing for issuance of new shares for cash, and any director or supervisor, or shareholder who holds shares over 10% of the total issued shares of the issuer, fails to undertake to place a certain percentage of their shares under the custody of a centralized securities depository enterprise.
(2) A filing for issuance of convertible corporate bonds or corporate bonds with warrants.
20. The FSC deems it necessary, in to protect the public interest, to reject or disapprove the issuer's application.
The term "company engaged primarily in the trading of securities" as referred to in subparagraph 9 of the preceding paragraph shall mean a company in which the issuer has directly invested, or in which a subsidiary of the said issuer has invested under the equity method, provided that its cash, cash equivalents, financial assets listed under current assets, and securities issued by the issuer account for 50% or more of the total assets value of such company, and the revenue or profit/loss respectively from trading or holding of the aforesaid assets account for 50% or more of the revenue or profit/loss of such company.
Where an issuer conducts an offering and issuance of securities as contemplated under Article 6, paragraph 2, sub-paragraph 2, or where either an OTC-listed company applying to transfer its listing to a stock exchange or an exchange-listed company applying to transfer its listing to an OTC market carries out a cash capital increase in order to achieve compliance with standards governing dispersion of equity ownership, if the underwriter evaluation report clearly explains the feasibility of the capital allocations and the reasonableness of the expected benefits of the present offering and issuance plan, then provisions regarding the necessity of the plan, as set out in subparagraph 5 of the preceding article and in paragraph 1, subparagraph 3 of this article, need not apply.
If the issuer is a securities, futures, or financial enterprise, it is not required to include financial assets listed under current assets in its calculations when totaling the value of the assets set forth under paragraph 1, subparagraph 8. The provisions paragraph 1, subparagraph 9 need not apply if the issuer is an insurance enterprise, or it is an emerging stock company conducting a cash capital increase through a new share issue in accordance with the provisions of Article 6, paragraph 2, subparagraph 2, or it is either an OTC-listed company applying to transfer its listing to a stock exchange or an exchange-listed company applying to transfer its listing to an OTC market that intends to carry out a cash capital increase in order to achieve compliance with standards governing dispersion of equity ownership.
The provisions prescribed in paragraph 1, subparagraph 8 need not apply where an issuer, for the purpose of enjoying tax incentives, conducts a cash capital increase to raise funds not greater in amount than the upper limit set by the competent authority or NT$100 million.
With respect to the issuance of new shares in connection with merger, issuance of new shares in connection with receiving transfer of shares of another company, or issuance of new shares in connection with an acquisition or demerger conducted in accordance with the law, the following parts of paragraph 1 need not apply: subparagraph 1, those provisions of subparagraph 4 that relate to implementation of a previous plan for cash capital increase or corporate bonds, and subparagraphs 13, 15, and 19.
The provisions of paragraph 1, subparagraphs 1, 13 and 19 need not apply where an issuer has engaged a securities underwriter to publicly underwrite its ordinary corporate bonds.
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Article 11
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If any of the circumstances listed below is discovered at an issuer that offers and issues securities, the FSC may void or revoke its effective registration or approval:
1. The subscription payment has not been fully raised and paid in cash after three months from the date of receipt of effective registration from the FSC.
2. Any one of the events prescribed under paragraph 1 of Article 251 or paragraph 1 of Article 271 of the Company Act occurs.
3. The issuer is in violation of paragraph 1 of Article 20 of the Act.
4. The issuer is in violation of Article 5.
5. A serious breach of, or failure to fulfill, a commitment made at the time securities were offered and issued.
6. The issuer is in violation of these Regulations or the restrictions or prohibitions effective at the time when the FSC notifies the issuer that its registration has become effective or application has been approved.
In the event a holder of securities makes a secondary distribution to unspecified persons, the FSC may revoke the registration when the situation prescribed under the aforementioned subparagraphs 3, 5 or 6 occurs after the registration with it has become effective.
From the date on which the registration becomes effective until the date of completion of the securities offering, if the content of a publicly disclosed financial forecast or other released information is at variance with the registration or application documents, and where the securities prices or shareholders' equity has been effected substantially, the FSC may revoke or void the effectiveness of the report.
After the effective registration is revoked, if the issuer or holder has received money from others for purchasing securities, it shall return such payment with interests as regulated by laws within ten days upon receipt of the cancellation notice from the FSC and be responsible for damages.
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Article 12
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When offering and issuing stocks, the issuer shall submit the relevant registration statement (attachments 2 through 12) based on the nature of its case, recording all of the necessary information, together with the required attachments to the FSC. Only after the registration becomes effective can the issuer proceed with such offering and issuance.
If the registration statement submitted by the issuer, or the information recorded therein, is incomplete, or any one of the events prescribed under Article 5 herein occurs, and the issuer submits the necessary supplementation before receiving a stop order from the FSC regarding its registration, its registration shall become effective when the effective registration period set forth in Article 13 has elapsed, counting from the date on which the FSC and FSC-designated institutions receive supplementation in full.
The registration of an issuer of a cash issue of new shares that, prior to that registration becoming effective, submits to the FSC and FSC-designated institutions updated relevant data due to a change in the issue price, shall still become effective based on the effective registration period set forth in Article 13 herein, and the provisions of the preceding paragraph do not apply.
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Article 14
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An exchange-listed or OTC-listed company or an emerging stock company may issue preferred shares with warrants for which the preferred shares and warrants are detachable; a company whose stock is neither listed on an exchange nor traded over-the-counter at securities firms may not issue preferred shares with warrants for which the preferred shares and warrants are detachable.
For issuance of preferred stocks with warrants, the terms and conditions shall provide for the following items:
1. issue date;
2. class of the preferred stocks and total issue amount;
3. the number of warrant units represented by each preferred share with warrant;
4. The listing or trading at the places of business of securities firms of the preferred stocks with warrants of an exchange-listed or OTC-listed company;
5. criteria for setting conditions for exercising the warrant (including exercise price, exercise period, type of the share for warrant exercise, and the number of shares represented by each warrant);
6. For stocks with detachable warrants, the total number of the issued units of the warrants and the method of calculation of the price per unit of the warrants;
7. the adjustment of exercise price;
8. procedure of request for exercising the warrant and method of paying for stock price. The method of paying for stock price shall be conducted by means of a choice of payment of cash or an offset of preferred stocks from the given offering;
9. the rights and obligations after exercising warrant;
10. shares for performance of contract shall be restricted to the issuance of new shares;
11. the number of times and date for the stockholder to acquire new stocks by submitting the certificate of payment for stock price;
12. procedure for obtaining the preferred stocks with warrants;
13. other important agreements.
The exercise price for preferred shares with warrants in an emerging stock company, may not be lower than the weighted average trade price for the company's common shares during the period preceding the price determination date, and may not be lower than its net value per share as reported in the financial report for the most recent fiscal period, audited and attested (or reviewed) by a CPA, and a recommending securities firm shall be retained to give an opinion on the reasonableness of the issue price.
The exercise price for preferred shares with warrants issued by a company whose stock is neither listed on an exchange nor traded over-the-counter at securities firms may not be lower than its net value per share as reported in the financial report for the most recent fiscal period, audited and attested or reviewed by a CPA, and a CPA shall be retained to give an opinion on the reasonableness of the issue price.
The weighted average trade price for the company's common shares during the period preceding the price determination date as mentioned in paragraph 3 of this article and in Article 33, paragraph 2, and Article 42, paragraph 3 shall mean the sum of the monetary amounts traded on each business day of those emerging stock common shares in the Emerging Stock Computerized Price Negotiation and Click System during the 30 business days preceding the price determination date, divided by the sum of the numbers of those shares traded on each of those business days.
Paragraph 2 of Article 42, and Articles 43 through 49 shall apply mutatis mutandis to issuance of preferred stocks with warrants by an issuer.
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Article 21
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A public company may issue corporate bonds only after it has submitted the Registration Statement for Issuing Corporate Bonds (attachments 13 and 14), provided all information required therein and sent the registration statement along with relevant documents to the FSC and obtained an effective registration.
In the event the public company registers with the FSC and FSC-designated institutions in accordance with the preceding paragraph, its registration shall become effective 7 business days after the Registration Statement for Issuing Corporate Bonds is received by the FSC or its designated institution. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
The provisions of paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis to public companies that file for registration in accordance with paragraph 1.
After registering for issuing corporate bonds, if the public company changes the terms of issuance or the interest rate and then submits the modified relevant documents to the FSC and FSC-designated institution before the original registration becomes effective, its registration will become effective in accordance with the time frame prescribed in paragraph 2.
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Article 22
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In the event the issuer meets all the following conditions simultaneously, it may submit the Shelf Registration Statement for Issuing Corporate Bonds (attachment 15), provide all information required therein, along with all required documents to the FSC for effective registration. In addition, it shall complete the issuance within the scheduled issuance period.
1. Its stocks have been listed in the stock exchange market or OTC for a combined period of three years or more. However, this provision does not apply under the following circumstances:
(1) Where the issuer is a government-owned enterprise;
(2)Where the issuer is a financial holding company conforming to Article 4 paragraph 4 of the Financial Holding Company Act providing that the subsidiary bank, subsidiary insurance company, or subsidiary securities firm be listed or its shares be traded in the business places of securities firms for a total of three years.
2. It has periodically or non-periodically disclosed its financial information to the public in accordance with Article 36 of the Act or other relevant laws for the past 3 years.
3. No occurrence of rejection, or withdrawal by the FSC with regard to the offering and issuance of securities for the past three years. However, this restriction need not apply to the case where, since the registration taking effect, the issuance has not been fully subscribed and payment thereof has not been fully collected in cash and the case has been rejected or revoked by the FSC.
4. The cash capital increase or corporate bond issuance plans effectively registered with FSC for the past three years have been implemented in accordance with the schedules and no material changes have occurred.
5. Within the past year, a credit rating institution approved or recognized by the FSC has rated the issuer or the corporate bonds as up to or above a certain level.
6. The CPAs retained by the issuer have not received a warning or more severe sanctions for their handling of securities offering and issuance within the last 3 years.
7. The lead underwriter retained by the issuer has not been punished in accordance with Article 66, subparagraph 2 of the Act to discharge its director, supervisor, or manager or with more severe sanctions in connection with handling of securities offering and issuance within the last 3 years.
Paragraph 2 of Article 12, Articles 15 and 16, and paragraphs 2 and 4 of the preceding article shall apply mutatis mutandis to the issuer that registers with the FSC in accordance with the preceding paragraph.
The scheduled issuance period referred to in paragraph 1 may not exceed two years counting from the date of effective registration. The issuer shall set the said period at the time of registering with the FSC.
Where an issuer issues corporate bonds during the scheduled issuance period, it shall consign an underwriter to underwrite the issuance on a firm commitment basis.
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Article 33
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The conversion of convertible bonds to stocks shall not be subject to Article 140 of the Company Act providing that the issue price of the stocks may not be below par value.
The conversion price for convertible bonds issued by an emerging stock company may not be lower than the weighted average trade price for the company's common shares during the period preceding the price determination date, nor may it be lower than the company's net value per share as reported in the financial report for the most recent fiscal period, audited and attested (or reviewed) by a CPA, and a recommending securities firm shall be retained to give an opinion on the reasonableness of the issue price.
The issuing and conversion price for convertible bonds issued by a company whose shares are neither listed on an exchange nor traded on an OTC market shall not be lower than the company's net value per share as reported in the financial report for the most recent fiscal period, audited and attested (or reviewed) by a CPA, and a CPA shall be retained to give an opinion on the reasonableness of the issue price.
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Article 38
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An exchange-listed or OTC-listed company or an emerging stock company may issue corporate bonds with warrants for which the corporate bonds and warrants are detachable; a company whose stock is neither listed on an exchange nor traded over-the-counter at securities firms may not issue corporate bonds with warrants for which the corporate bonds and warrants are detachable.
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Article 39
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An exchange-listed or OTC-listed company may only issue corporate bonds with equity warrants after it has submitted the Registration Statement for Issuing Corporate Bonds with Equity Warrants (attachments 22 and 22-1), and provided all information required therein, along with required documents to the FSC for registration, and the registration has become effective.
Registration to issue corporate bonds with warrants filed by an exchange-listed or OTC-listed company where any of the circumstances under Article 13, paragraph 1, subparagraph 2 exist shall become effective 20 business days from the date the FSC and FSC-designated institutions receive the registration form.
The registration filed by an exchange-listed or OTC-listed company, except those filing in accordance with the preceding paragraph, shall become effective 12 business days after being received by the FSC and FSC-designated institution. However, with the exception of financial holding, bill finance, or credit card enterprises, the waiting period for effective registration will be shortened to seven business days if a credit rating institution approved or recognized by the FSC has in the past year rated the issuer, or the corporate bonds issued by it.
An emerging stock company or a company whose shares are neither listed on an exchange nor traded at the business places of securities firms that submits a registration in accordance with paragraph 1 shall submit with the registration a credit rating report on the subject issue produced by a credit rating agency approved or recognized by the FSC. The Registration Statement for Issuing Convertible Bonds will become effective seven business days after its receipt by the FSC and FSC-designated institutions. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
Where registration is filed pursuant to paragraph 1 herein, Article 12, paragraph 2, Article 15, Article 16, and Article 21, paragraph 4 shall apply mutatis mutandis.
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Article 41
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The following items shall be provided in the terms and conditions when issuing corporate bonds with equity warrants:
1. issue date;
2. coupon rate and payment of interest;
3. date of interest payment;
4. type of corporate bonds, the amount of each bond and the aggregate amount of this issuance;
5. The units of warrant represented by each corporate bond with warrant;
6. For corporate bonds with detachable warrants, the total number of the issued units of the warrants and the method of calculation of the price per unit of the warrants;
7. the availability of security or guarantee;
8. name of trustee and material covenants;
9. terms of repayment (e.g. repayment of principal upon maturity, payment of principal prior to maturity, terms of call or redemption, etc.);
10. the listing or trading at the business places of securities firms of listed or OTC companies' corporate bonds with equity warrants;
11. procedures regarding request for exercising warrant; payment for stock price shall be made either in cash or by corporate bonds of the issuer;
12. criteria for setting terms and conditions of exercising warrant (including exercise price, exercise period, the classes/types of shares with which to exercise warrant, and the number of shares represented by each unit of warrant);
13. adjustment of exercise price;
14. the disposition of interests and dividends in the year of exercising warrant;
15. rights and obligations after exercising warrant;
16. performance of contract shall be made only by issuing new shares;
17. the number of times and date for the bondholder to acquire new stocks by submitting certificates of payment for shares;
18. procedure for obtaining the corporate bond with warrant;
19. other agreements.
Secured corporate bonds with warrants are backed by the stocks of another company held by the issuer, the provisions of Article 25 shall apply mutatis mutandis.
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Article 42
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The face value of a corporate bond with warrants is limited to NT$100,000 or multiples thereof.
In cases where it is necessary to issue new shares in connection with exercise of warrants, the total number of new shares multiplied by the exercise price per share may not exceed the total issued amount, in terms of face value, of the subject corporate bonds.
The exercise price for the corporate bonds with warrants issued by an emerging stock company may not be lower than the weighted average trade price for the company's common shares during the period preceding the price determination date, nor may it be lower than the company's net value per share as reported in the financial report for the most recent fiscal period, audited and attested (or reviewed) by a CPA, and a recommending securities firm shall be retained to give an opinion on the reasonableness of the issue price.
The exercise price for shares of corporate bonds with warrants issued by a company whose shares are neither listed on an exchange nor traded on an OTC market may not be lower than its net value per share as reported in the financial report (audited and attested [or reviewed] by a CPA) for the most recent fiscal period, and a CPA shall be retained to give an opinion on the reasonableness of the issue price.
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Article 53
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Where an exchange-listed or OTC-listed company reports issuance of employee stock warrants, the exercise price may not be lower than the closing price of the company stocks as of the issue date.
Where an emerging stock company issues employee stock warrants, the exercise price may not be lower than the weighted average trade price for the company's common shares during the period preceding the price determination date, and may not be lower than the net price per share in the financial report audited and attested or reviewed by a CPA issued for the most recent period, provided that when at the date of issuance the company is already exchange-listed or OTC-listed, the provisions of the preceding paragraph shall apply.
The exercise price for employee stock warrants issued by a company whose shares are neither listed on an exchange nor traded over-the-counter at securities firms may not be lower than its net value per share as reported in the financial report for the most recent fiscal period, audited and attested or reviewed by a CPA, and a CPA shall be retained to give an opinion on the reasonableness of the issue price, provided that if the company has already become an emerging stock company on the issuance date, the provisions of the preceding paragraph shall apply.
Article 14, paragraph 5 shall apply mutatis mutandis to the weighted average trade price for the company's common shares during the period preceding the price determination date referred to in paragraph 2.
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Article 66
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In the event that the issuer conducts initial public offering in accordance with paragraph 1 of Article 42 of the Act and paragraph 4 of Article 156 of the Company Act, it shall submit the registration statement (attachment 24) to the FSC, providing the necessary information and annexing the relevant documents such as the stock issue prospectus. The registration will become effective 12 business days after the receipt of the registration statement by the FSC and FSC-designated institutions.
The Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses and the Regulations Governing Information to be Published in Financial Institution Prospectuses for Offering and Issuance of Securities shall apply mutatis mutandis to the information to be provided in the stock issue prospectus under the preceding paragraph.
Article 5, paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis to submission of the registration statement under paragraph 1.
If, after effective registration for initial public offering under paragraph 1, any circumstance set forth in Article 11, paragraph 1, subparagraph 3, 4, or 6 is discovered to exist, the FSC may revoke or void the effective registration.
A company conducting an initial public offering of stock under paragraph 1 shall concomitantly conduct an initial public offering of employee stock option certificates previously issued under Article 167-2 of the Company Act.
A company conducting an initial public offering of stock under paragraph 1 may concomitantly conduct an initial public offering of ordinary corporate bonds previously privately placed under Article 248 of the Company Act, after three years have elapsed from the delivery date of the privately placed ordinary corporate bonds.
If a company that has publicly issued stock under the Act does not continue to publicly issue stock, any securities that it has privately placed under Article 43-6 of the Act are not eligible to be included together with its stock under an application to the FSC for initial public offering until three years have elapsed from the delivery date of the privately placed securities.
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Article 68
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For the below-listed securities privately placed by a public company in accordance with law and securities subsequently distributed, converted, or subscribed, the public company must arrange with the FSC for a public offering, at least three full years after the delivery date of the privately placed securities, before it may apply to the Stock Exchange or the GreTai Securities Market for listing or for trading at the places of business of securities firms:
1. Stocks privately placed under Article 43-6 of the Act and shares subsequently obtained as bonus shares thereof.
2. Ordinary corporate bonds privately placed in accordance with law.
3. For employee stock option certificates privately placed under Article 43-6 of the Act, subsequently subscribed certificates of payment of shares, shares, and shares obtained as bonus shares thereof.
4. For preferred shares with warrants, corporate bonds with warrants, and convertible corporate bonds privately placed in accordance with Article 43-6 of the Act, the privately placed preferred stock with warrants, corporate bonds with warrants and convertible corporate bonds, and the subsequently subscribed certificates of payment for shares, certificates of entitlement to new shares from convertible bonds, shares, and shares obtained as bonus shares.
5. For private placement of overseas corporate bonds, overseas stocks, and participation in the private placement of overseas depositary receipts in accordance with Article 43-6 of the Act, the shares that obtained through redemption, conversion, or subscription, or obtained as bonus shares.
A filing for registration to conduct a public offering under the preceding paragraph shall be submitted to the FSC with a Registration Statement (attachments 25 to 31) specifying all required information and with the required documents attached. The registration shall become effective seven full business days after the Registration Statement is received by the FSC and FSC-designated institutions, and the provisions of Article 5, paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
If, after effective registration for public offering under paragraph 1, any circumstance set forth in Article 11, paragraph 1, subparagraphs 3 to 6 is discovered to exist, the FSC may revoke or void the effective registration.
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Article 70
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In any of the following circumstances, the FSC may reject a filing by a public company for registration to conduct cases set forth in Article 68:
1. Less than three years have elapsed since the delivery date of the privately placed securities.
2. A lawful resolution has not been adopted by a shareholders meeting or board of directors meeting in accordance with Article 43-6 of the Act. However, this restriction may not apply where a final judgment of guilty has been handed down, the full term of the sentence has been served, and post-approval of the shareholders meeting or board of directors has been submitted.
3. The placees and their number do not comply with the provisions of Article 43-6 of the Act. However, this restriction may not apply where a final judgment of guilty has been handed down, the full term of the sentence has been served, and post-approval of the shareholders meeting or board of directors has been submitted.
4. A report is not submitted within 15 days to the competent authority for recordation in accordance with Article 43-6, paragraph 5 of the Act, or there is failure to input information regarding the private placement of securities into the information reporting website designated by the FSC in accordance with the Directions for Public Companies Conducting Private Placements of Securities. However, this restriction may not apply where a sanction has duly been imposed and an administrative fine has been paid and the report has subsequently been submitted.
5. Prior to carrying out a private placement of securities, the notice of reasons for convening of the shareholders meeting did not set out or explain matters relevant thereto, or prior to carrying out multiple issues, the notice of reasons for convening of the shareholders meeting did not set out or explain matters relevant thereto. However, this restriction shall not apply where a sanction has duly been imposed, an administrative fine has been paid, the required matters have been set out and explained in a notice of reasons for convening of a shareholders meeting, and the case has been approved at the shareholders meeting.
6. Failure to submit for resolution by the shareholders meeting the pricing basis and reasonableness of and related expert opinions on the private placement of securities in accordance with the Directions for Public Companies Conducting Private Placements of Securities, and the circumstances are serious, provided that this restriction shall not apply if the same have already subsequently been submitted and been approved by the shareholders meeting.
7. Implementation of the plan for the private placement of securities is seriously behind schedule without legitimate reason, and that plan has not been completed, has undergone a material change, or cannot yield reasonable results, provided that this restriction may not apply where more than five years has already elapsed from the date of payment for the privately placed securities to the time of filing.
8. Securities trading has been restricted under Article 139, paragraph 2 of the Act and the FSC has not yet lifted the restriction.
9. The attesting CPA issues a disclaimer of opinion or an adverse opinion in the audit report.
10. The attesting CPA issues a qualified opinion in the audit report, where such qualified opinion would affect the fair presentation of the financial report.
11. The case checklist filled out by the issuer and checked and issued by the attesting CPA shows any violation of law or regulation or the company's articles of incorporation, where the circumstances are serious.
12. Less than three full years have elapsed since delivery of privately placed convertible corporate bonds there has been an exercise of conversion rights.
13. The FSC discovers any violation of law or regulation, where the circumstances are serious.
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Article 73
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In any of the following circumstances, the FSC may reject a filing for issuance of bonus shares or capital reduction by a public company:
1. The attesting CPA issues an adverse opinion or disclaimer of opinion in the audit report.
2. The attesting CPA issues a qualified opinion in the audit report, and such qualified opinion has an impact on the fairness of presentation of the financial report.
3. The case review forms prepared by the issuer and reviewed by the attesting CPA show violations of laws or regulations or the articles of incorporation, where the violation is serious.
4. Any of the following circumstances exist with respect to a report of capitalization of earnings:
(1) the balance after statutory allocation of special reserves from undistributed earnings in accordance with paragraph 1 of Article 41 of the Act is inadequate for distribution;
(2) the exchange-listed or OTC-listed company fails to prescribe a concrete dividend policy in the articles of incorporation;
(3) in the current capitalization of earnings that the listed or OTC company has reported, the entire amount of the capitalization is being accomplished through distribution of employee bonuses;
(4) the total amount of an exchange-listed or OTC-listed company's employee bonuses exceeds 50 percent of the sum of the net income and employee bonuses for the current period, or 50 percent of distributable earnings (less legal reserve, special reserve, and balance of reserves after withdrawals).
5. A capitalization of capital reserves has been reported, and one of the following circumstances exists:
(1) Losses have been incurred in the most recent two consecutive years.
(2) A provision in Article 72-1 has been violated.
6. Violation of or failure to perform commitments made at the time of application for listing or trading at the business places of securities firms, where the circumstances are serious.
7. The FSC discovers any violation of law or regulation, where the circumstances are serious.
8. Other circumstances as deemed necessary by the FSC to protect the public interest.
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