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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 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, where the circumstances are serious.
(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 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, failure to enumerate and explain the relevant matters in the notice of reasons for convening of the shareholders meeting or the meeting notice the relevant matters in accordance with Article 43-6, paragraph 6, of the Act and the Directions for Public Companies Conducting Private Placements of Securities, or prior to carrying out multiple issues, failure to enumerate or explain in advance the relevant matters in the notice of reasons for convening of the shareholders meeting. However, this restriction shall not apply where a sanction has duly been imposed, an administrative fine has been paid, the required matters have been enumerated 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. A subscription to the current private placement of securities by an insider or a related party of the issuing company fails to comply with the provisions under the Directions for Public Companies Conducting Private Placements of Securities, and the circumstances are serious. However, this restriction does not apply if a letter of approval issued by the Taiwan Stock Exchange or the GreTai Securities Market has been obtained.
8. When resolution for a private placement of securities is passed by a shareholders meeting of a company that had a net profit and no accumulated deficit in the preceding fiscal year, and the company fails to comply with the requirements of the Directions for Public Companies Conducting Private Placements of Securities, and the circumstances are serious in nature. However, this restriction does not apply if a letter of approval issued by the Taiwan Stock Exchange or the GreTai Securities Market has been obtained.
9. Failure to have the price of the shares or subscription paid up in full within the time period prescribed in the Directions for Public Companies Conducting Private Placements of Securities.
10. 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.
11. Securities trading has been restricted under Article 139, paragraph 2 of the Act and the FSC has not yet lifted the restriction.
12. The attesting CPA issues a disclaimer of opinion or an adverse opinion in the audit report.
13. The attesting CPA issues a qualified opinion in the audit report, where such qualified opinion would affect the fair presentation of the financial report.
14. 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.
15. Less than three full years have elapsed since delivery of privately placed convertible corporate bonds there has been an exercise of conversion rights.
16. The FSC discovers any violation of law or regulation, where the circumstances are serious.
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