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Amendments

Title：

Regulations Governing the Offering and Issuance of Securities by Securities Issuers  CH

Amended Date： 2023.12.29 
Article Content Chapter Content Search Article No. Search Legal Basis Subordinate Legislation Amended Article Legislative History Chinese

Title： Regulations Governing the Offering and Issuance of Securities by Securities Issuers(2012.09.17)
Date：
Article 3     The Financial Supervisory Commission ("FSC") shall supervise the offering and issuance, secondary distribution, and retroactive handling of public issuance procedures, issuance of new bonus shares, and capital reductions through effective registration.
    In these Regulations, the terms "registration" and "effective registration" mean submission by the issuer of relevant documents to the FSC in accordance with law. Unless the documents are rejected by the FSC due to insufficient information contained in the said documents, or for the purpose of protecting the public interest, the registration will become effective after a designated number of business days from the date when the FSC and FSC-designated institutions receive the submission.
    The fact of effective registration for the items set forth under paragraph 1 may not be cited as proof of the veracity of registration particulars, or as guarantee of the value of the securities.
    The term "business day" as used in paragraph 2 means a day on which transactions are conducted in the securities market.
    The term "company traded on an OTC market" as used in these Regulations means a company whose stock has been approved for trading on an OTC market in accordance with Article 3 or Article 3-1 of the GreTai Securities Market Rules Governing Review of Securities Traded on Over-the-Counter Markets.
    The term "financial reports" as used in these Regulations means consolidated financial reports, or if the issuer does not have a subsidiary, means individual financial reports.
Article 5     When any event that has a material impact on shareholders' equity or securities prices, as provided in Article 36, paragraph 3, subparagraph 2 of the Act, occurs from the date shown on the balance sheets of the latest financial reports submitted by the issuer to the date when the registration becomes effective, the issuer shall disclose this incident to the public and report to the FSC within 2 days after the occurrence of such event. In addition, the issuer shall provide to the FSC expert opinion on such occurrence based on the nature of the event involved and the evaluation from the attesting certified public accountant (CPA) regarding the impact of such event on the financial reports.
    From the receipt date of the registration documents by the FSC and FSC-designated institutions until the registration becomes effective, except for information revealed in accordance with acts and regulations, the issuer may not state or reveal any forecasted financial or business information to any specified or unspecified person.
    If the issuer externally disseminates any information not in conformance with the registration documents, it shall correct the relevant documents and submit them to the FSC.
Article 7     Upon the occurrence of any one of the following events, the FSC may reject the registration submitted by 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 reports.
  3. The Application Review Form prepared by the issuer, reviewed by the attesting CPA, and provided by the securities underwriter reveals any violation of laws or regulations or articles of incorporation of the issuer and such violation has impacts on 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 impacts on 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 3 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 related laws.
  7. An issuer registers a cash capital increase or an issue of corporate bonds, and 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 property, plant and equipment and promise has been undertaken to refrain from increasing investment in mainland China.
  8. There has been a material failure by an exchange-listed, OTC-listed, or emerging stock company to establish a remuneration committee pursuant to paragraph 1 of Article 14-6 of the Act or material failure to comply with laws or regulations applicable thereto.
  9. The issuer fails to adopt an electronic means as one of the methods for exercising voting power pursuant to Article the proviso to paragraph 1 of 177-1 of the Company Act.
  10. There has been a material violation or failure to perform the undertakings made upon application for listing in the stock exchange market or OTC market.
  11. The FSC finds that there has been a material violation of relevant laws or regulations.
Article 8     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 2 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 3 years have passed between the registration date and the actual completion date of the plan.
    3. The 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. The company has failed to faithfully disclose information in accordance with the Directions for Public Companies Conducting Private Placements of Securities, where the circumstances are serious.
    6. No reasonable benefit is derived from the plan and no legitimate reason is provided. However, in the event more than 3 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 methods of issuance, 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 which has lent a substantial amount of money to other parties for purposes other than financing needs arising from business transactions with other companies or business firms, and which has not yet rectified the situation, submits for registration 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 submits for registration to conduct a cash capital increase or issue corporate bonds, but holds financial assets distinguished as current, idle assets, or investment 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 the equity in the most recent financial reports 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 issuance. However, this provision does not apply when the funds to be raised will be used to purchase property, plant and equipment and there is a concrete plan to evidence 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 3 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 issuance of new shares in connection with a merger, or an issuance of new shares in connection with receiving transfer of shares of another company, or an issuance of new shares in connection with an acquisition or demerger conducted in accordance with related laws, and any one of the following descriptions presents:
    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 encumbered or limited in such a way that restrictions on the trading rights are imposed.
    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 financial reports 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 on 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 percent 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 order 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, together with cash equivalents, financial assets listed under current assets, and securities issued by the issuer account for 50 percent 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 percent 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, subparagraph 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 investments in financial assets distinguished as current 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.
Article 9     After the registration of a planned offering and issuance of securities has become effective, the issuer shall act in accordance with the following regulations:
  1. Within 30 days after receipt of notice indicating that the registration has become effective, the issuer shall act in accordance with Articles 252 or 273 of the Company Act.
  2. With exception of the issuance of new shares in connection with merger, issuance of new shares in connection with receiving transfer of shares of another company, issuance of new shares in connection with acquisition or demerger conducted in accordance with related laws, issuance of ordinary corporate bonds, issuance of employee stock option certificates, and issuance of new restricted employee shares, an issuer shall retain a financial institution to collect payments and deposit them in the designated account opened by the issuer, and shall, prior to collecting payments, respectively enter into a payment collection agreement with the retained financial institution and an agreement for deposit in the designated account with the bank thereof, and within 2 days from the signing of such agreements shall enter the name of the financial institution and the date of the agreement into the website specified by the FSC for reporting of information. The collection of payments and deposit thereof in a designated account may not be handled by the same business unit in a bank. The financial institution of the designated account shall only allow an issuer to withdraw or use the money after the financial institution has received all the money due. Within 2 days after receipt of all the money due, the issuer shall enter the information on full collection of the proceeds into the website specified by the FSC for reporting of information.
  3. Except where otherwise provided for by the FSC, within 30 days after the receipt of the approval letter for permission of incorporation or the amendment registration certificate of issuing new shares from the Ministry of Economic Affairs, the issuer of public offering shall have the securities certified in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies. The securities shall be delivered to subscribers or placees and a public announcement shall be made prior to the delivery; provided that in case where physical securities are not printed, certification of stocks and corporate bonds shall be exempt in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies.
  4. Before issuing corporate bonds, the issuer shall enter into a contract with a centralized securities depository enterprise, agreeing therein to provide information related to the issue, and to lend its cooperation when asked to help with cancellation of the previous owner, repayment of principal, and payment of interest.
  5. Before the utilization plan of the cash capital increase or corporate bond issuance is completed, the company having cash capital increase or issuing corporate bonds shall disclose the progress of the said plan in its annual report. In the case of the issuance of corporate bonds, within 2 days of the completion of the funds offering and prior to the tenth day of each month during the issuance period of the corporate bonds, information related to the issuance of the corporate bonds shall be input into the website specified by the FSC for reporting of information.
  6. Within 10 days after the end of each quarter, the quarterly report on the plan for cash capital increase or corporate bond issuance and capital utilization shall be posted to the website specified by the FSC for reporting of information in accordance with FSC regulations.
  7. Where an exchange-listed or OTC-listed company conducts a cash capital increase or corporate bond issuance, it shall contact the original underwriter or the attesting CPA to comment on the reasonableness of the progress made regarding capital utilization and of the purposes for unused capital, and on whether there has been any deviation from the capital utilization plan, and within 10 days after the end of each quarter shall post this information together with the information referred to in the preceding subparagraph to the information reporting website specified by the FSC.
  8. Listed or OTC companies issuing new shares in connection with a merger, issuing new shares in connection with receiving transfer of shares of another company, or issuing new shares in connection with acquisition or demerger conducted in accordance with related laws, shall, within 10 days after the end of each quarter during the first year after completion and registration of the merger, receipt of transfer of shares of another company, or acquisition or demerger, ask the original lead underwriter to provide an assessment opinion as to whether any of the aspects of the merger would have an effect on the finances, business, and shareholders' equity of the issuer, and input the same into the website specified by the FSC for reporting of information.
  9. In the event of a change to an item or monetary amount of a particular item in the plan for cash capital increase or corporate bond issuance, thus causing the total amount required for the original item to either decrease or increase by an amount equivalent to 20 percent or more of the funds to be raised, the company shall amend the plan and, within 2 days after the amendment has been ratified by resolution of the board of directors, make a public announcement and submit the amendment to a shareholders' meeting for ratification; if the corporate bonds are denominated in a foreign currency, the funds raised thereby shall either be retained as foreign currency, or the entire amount converted into New Taiwan Dollars via an FX swap or cross currency swap (CCS) for use; otherwise, it shall apply for the approval of the Central Bank. If the company is an exchange-listed or OTC-listed company, upon such amendment and thereafter within 10 days after the end of each quarter, the listed or OTC company shall contact the original underwriter to comment on the reasonableness of the progress made regarding capital utilization and of the purposes for unused capital, and key in the aforesaid change and comment in combination with information as referred to in subparagraph 6 into the website specified by the FSC for reporting of information.
  10. For corporate bonds issued in foreign-currency denominations, the collection of, payment of interest on, and repayment of principal for, funds raised thereby and, where the circumstances set forth in Article 11, paragraph 4 exist, the return of payment, shall be conducted by a designated bank through a foreign exchange deposit account using the book-entry transfer method.
  11. For corporate bonds issued in foreign-currency denominations, a separate Statement of Changes in the Outstanding Balance of Issued Foreign-Currency Denominated Corporate Bonds (Table 34) shall be filed on the information reporting website specified by the FSC on the 20th day of each month for the data as of the 15th of that month, and by the 5th day of each month for the data as of the end of the previous month; such Statements shall also be filed with the Central Bank.
    In the event the issuer conducts a shelf registration to issue corporate bonds, any change to the filed material for the first issuance of corporate bonds occurring within the scheduled issuance date shall be reported to the FSC and be put in public announcement.
Article 12     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 an issuance of new shares for cash 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 if the issuer, prior to that registration becoming effective, submits to the FSC and FSC-designated institutions updated relevant data due to a change in the issuing price.
Article 13     For an issuer conducting any of the case types listed below, registration shall become effective 20 business days from the date on which the FSC and FSC-designated institutions receive its registration form for the issuance of new shares:
  1. Establishment by offering.
  2. Any one of the types of share issuance set forth under Article 6, paragraph 2, subparagraphs 1 and 3, where the circumstances in any one of the following items exist:
    1. An issuance conducted in accordance with paragraph 2 of Article 6 has been previously rejected, disapproved or revoked by the FSC. However, this restriction need not apply where the case had been rejected or revoked by the FSC because the issuance had not been fully subscribed and payment therefore had not been fully collected in cash since the effective registration or upon arrival of notification of approval.
    2. The issuer has been sanctioned two or more times by the FSC in accordance with Article 178 of the Act for violating the Act or other relevant acts and regulations during the fiscal year when the registration was filed or during the previous fiscal year.
    3. The profits or net profits before tax of the issuer show losses in the recent 2 consecutive years or the latest financial reports indicate that the net asset value per share is lower than its par value.
    4. The issuer is required to allocate special reserve for its non-arm's length transactions and such requirement is not lifted yet.
    5. During the year of registration or the previous 2 years, an event set forth under Article 185 of the Company Act has occurred or a portion of the operations or R&D results is transferred to another company. However, if the operating revenue or assets value of those transferred items or the expenses accumulated for R&D does not exceed 10 percent of the operating revenue or assets value or R&D expenses shown on the financial reports of the previous year respectively, such restriction does not apply.
    6. A material change has occurred among the company's governance or top management in the year of registration or the previous 2 years and any one of the following events takes place:
      1. The submitted financial reports indicates an addition to the principal products (meaning that the operating revenue resulting from the products accounts for 20 percent or more of the operating revenue) and that the total operating revenue or operating income from the added principal products accounts for 50 percent or more of the same respective categories of that year. However, the difference between the operating revenue for the preceding and following periods did not reach 50 percent or more therefore the principal products may not be counted.
      2. The submitted financial reports indicates that the issuer has acquired an on-going or completed construction project and the operating revenue or operating income from that project has reached 30 percent of the same respective categories of that year.
      3. The submitted financial reports indicates that the issuer has received transfer of a portion of the operations or R&D results of another company other than an affiliated company and that the operating revenue or operating income from that partial operations or R&D result has reached 30 percent of the same respective categories of that year.
    Except for an issuer filing for registration pursuant to the provisions of the preceding paragraph, the registration of an issuer that files to issue new shares shall become effective 12 business days after the date on which the FSC and FSC-designated institutions receive its registration form. However, for an issuer other than those in the financial holding, banking, bills finance, credit card, or insurance businesses that conducts any of the matters listed below, the effective registration period shall be shortened to 7 business days:
  1. An emerging-stock company, or company that is neither listed on an exchange nor traded on an OTC market, issues new shares for a cash capital increase, and is not required to allocate a certain percentage of the newly issued shares to a public offering.
  2. An emerging-stock company, or company that is neither listed on an exchange nor traded on an OTC market, issues new shares in connection with merger, or issues new shares in connection with an acquisition or demerger conducted in accordance with related laws.
  3. An emerging-stock company issues new shares for a cash capital increase pursuant to Article 6, paragraph 2, subparagraph 2.
  4. Either an OTC-listed company has applied to transfer its listing to a stock exchange or an exchange-listed company has applied to transfer its listing to an OTC market, and the Taiwan Stock Exchange or the GreTai Securities Market has filed the exchange listing or OTC listing with the FSC, and the company is now carrying out a cash capital increase in order to achieve compliance with standards governing dispersion of equity ownership.
    Where an issuer issues new shares in connection with receiving transfer of shares of another company, and files for effective registration with the FSC on the same day, that registration becomes effective 12 days from the date on which the FSC and FSC-designated institutions receive the registration application.
    Paragraph 1, subparagraph 2 does not apply to cases of 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 acquisition or demerger conducted in accordance with related laws.
Article 18     If the number of registered shareholders holding 1,000 shares or more of an emerging stock company or a company whose shares are neither listed on an exchange nor traded in the business places of securities firms does not reach 300, or the company fails to reach the shareholding dispersion standard prescribed by the competent authorities, upon conducting cash offering of new shares, the company shall allocate 10 percent of the new shares for public offering and is exempted from paragraph 3 of Article 267 of the Company Act which prescribes that the current shareholders shall be entitled to subscribe the new shares in proportion to their respective shareholding percentage, unless any one of the following events occurs. However, if the shareholders??meeting decides to set a higher percentage, its resolution shall be applicable:
  1. It conducts the initial public offering.
  2. It has been incorporated for less than 2 complete fiscal years.
  3. Both the company's final operating income and the pre-tax income as ratios of paid-in capital as reported in the financial reports fail to meet any of the below conditions. However, the profitability as reported in the financial reports does not take into account the effects on the company brought about by the net profit (or net loss) attributable to its non-controlling interests.
    1. The said ratios for the most recent fiscal year reach four percent or more, and the company has no accumulated losses for the most recent fiscal year.
    2. The said ratios for the most recent 2 fiscal years reach 2 percent or more.
    3. The average of the said ratios for the most recent 2 fiscal years reaches 2 percent or more, and the profitability of the company for the most recent fiscal year is more favorable than that for the previous fiscal year.
  4. The number of shares allocated for public offering in accordance with the 10 percent requirement or the percentage set by the resolution of the shareholders??meeting does not reach 500,000.
  5. Preferred stocks with warrants are issued.
  6. Any situation where the FSC deems the public offering unnecessary or inappropriate.
    Where a company is a major national economic enterprise as determined and certified by the competent authority for the enterprise, the provisions of subparagraphs 1 through 3 of the preceding paragraph shall not be applicable.
    Where an issuer publicly offers its securities in accordance with paragraph 1, the prices for the employees of the issuer or the original shareholders to pay for the new shares in the same issuance shall be the same as the price set for public offering, and it shall be noted in the prospectus and subscription form that its shares are neither listed on the Stock Exchange nor listed and traded on any OTC market.
Article 21     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 and its 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.
    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 coupon interest rate and then submits the modified relevant documents to the FSC and FSC-designated institutions before the original registration becomes effective, its registration will become effective in accordance with the time frame prescribed in paragraph 2.
Article 22     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. addition, it shall complete the issuance within the scheduled issuance period.
  1. Its stocks have been listed in the stock exchange market or traded in the business places of securities firms for a combined period of 3 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 3 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. There has been no occurrence of rejection, or withdrawal by the FSC with regard to the offering and issuance of securities within the past 3 years. However, this restriction need not apply to the case where, following the date of receiving the notice of effective registration, the issuance has not been fully subscribed and payment thereof has not been fully collected in cash and hence the case has been rejected or revoked by the FSC.
  4. The cash capital increase or corporate bond issuance plans effectively registered with the FSC within the past 3 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 2 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.
Article 23     When issuing corporate bonds within the scheduled issuance period as referred to in the preceding Article, the issuer shall, on the next business day after it has put such issuance plan in public announcement in accordance with Article 252 of the Company Act and completed payment collection, submit the Supplementary Form for the Shelf Registration for Issuing Corporate Bonds (Attachment 16) completed with all required information, together with required documents, to the FSC for recordation.
    In case of change of CPA or lead underwriter retained by the issuer during the scheduled issuance period as referred in the preceding Article, qualifications prescribed in paragraph 1, subparagraph 6 or 7 of the preceding article shall apply to the succeeding CPA or lead underwriter.
    The FSC may suspend the additional issuance of corporate bonds supplemental to the current issuance in case where an issuer violates Articles 7 and 8 and paragraph 1 of the preceding article during the scheduled issuance period.
Article 26     A public company may issue exchangeable corporate bonds whose repayment subject is the stocks, held by the public company for more than 2 years, of a listed company or a company whose shares are traded at the business places of securities firms in accordance with Article 3 of the GreTai Securities Market Rules Governing Review of Securities Traded on Over-the-Counter Markets.
    A public company may issue exchangeable corporate bonds only after it has submitted the Registration Statement for Issuing Exchangeable Corporate Bonds (Attachment 17), provided all information required therein, along with required documents to the FSC, and after such registration becomes effective.
    Paragraph 2 of Article 12, Articles 15 and 16, and paragraphs 2 and 4 of Article 21 shall apply mutatis mutandis to the public company registering with the FSC in accordance with the preceding paragraph. However, the waiting period for effective registration is 12 business days in the case of a financial holding, banking, bill finance, or credit card enterprise.
    When issuing exchangeable corporate bonds, the issuer shall set out the following items in the terms of issuance and exchange:
  1. Article 29, paragraph 1, subparagraphs 1 through 8, 10, 11, 13, and 17 shall apply mutatis mutandis.
  2. The procedures for requesting exchange and the ways of payment.
  3. The deposit procedures for the underlying shares.
    Unless otherwise regulated by related laws, the aforementioned deposit procedure shall be conducted by a centralized securities depository enterprise. During the period of deposit, the underlying shares may not be pledged or retrieved.
    The bondholder who requests for exchange shall fill out the Exchange Request Form and submits the form along with the bonds in question to the issuer or its agent. The exchange becomes effective at the time of receipt of the aforementioned documents. After receiving the exchange request from the bondholder, the issuer or its agent shall deliver the exchange underlying stock to the bondholder within the next business day. If the exchange results in odd-lot units of less than 1,000 shares, the stocks can be delivered within 5 business days.
    When issuing exchangeable corporate bonds, the issuer shall engage securities underwriter(s) to handle a public offering of the entire issuance, to which the provisions of Article 30, Article 32, paragraph 1, Article 35, and Article 38 shall apply mutatis mutandis.
Article 27     Exchange-listed or OTC-listed companies shall submit the Registration Statement for Issuing Convertible Bonds (Attachments 18 and 19), provide all information required therein, along with required documents to the FSC for registration. The companies can commence issuing convertible bonds only after the registration becomes effective.
    Registration to issue convertible corporate bonds filed by an exchange-listed or OTC-listed company at which any of the circumstances set forth in Article 13, paragraph 1, subparagraph 2 exists shall become effective 20 business days from the date on which the FSC and FSC-designated institutions receive its registration form.
    Registration to issue convertible corporate bonds submitted by an exchange-listed or OTC-listed company, except those filing in accordance with the preceding paragraph, shall become effective 12 business days after the date on which the FSC and FSC-designated institutions receive its registration form.
    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 issuance produced by a credit rating institution approved or recognized by the FSC. The Registration Statement for Issuing Convertible Bonds will become effective 7 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, banking, 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.
Article 39     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 equity 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.
    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 issuance prepared by a credit rating institution approved or recognized by the FSC. The Registration Statement for Issuing Convertible Bonds will become effective 7 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, banking, 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.
Article 51     Where an issuer applies for issuance of employee stock warrants, the number of shares for each issuance of employee stock warrants may not be more than 10 percent of its total issued shares.
    Where an issuer issues employee stock warrants, the cumulative number of shares subscribable by any single subscriber may not be more than 1 percent of its total number of issued shares.
Article 55     An issuer issuing employee stock warrants shall file the registration statement (Attachment 22) documenting all required items, together with all required documents, to the FSC, may proceed with the issue only after the registration with the FSC becomes effective.
    The aforesaid report shall become effective 7 business days after its receipt by the FSC and FSC-designated institutions, and paragraph 2 of Article 12, and Articles 15 and 16 shall apply mutatis mutandis. However, the waiting period for effective registration is 12 business days in the case of a financial holding, banking, bill finance, credit card, or insurance enterprise.
Article 56-1     To issue employee stock warrants that are not subject to the exercise price restriction set out in Article 53, an issuer is required to obtain the consent of at least two-thirds of the voting rights represented at a shareholders??meeting attended by shareholders representing a majority of the total issued shares. The issuer is allowed to register multiple issues over a period of 1 year from the date of the shareholders resolution [provided that the combined number of subscribable shares does not exceed the number approved by the shareholders].
    To conduct the matter under the preceding paragraph, the issuer shall be required to specify the following information in the notice of reasons for convening the shareholders??meeting, and may not raise the matter by means of an extraordinary motion:
  1. The total number of employee stock warrants to be issued, the number of shares subscribable per stock warrant, and the number of new shares that will have to be issued to cover exercise of the warrants or the number of shares that will have to be repurchased in accordance with the provisions of Article 28-2 of the Act.
  2. The criteria for determination of the exercise price, and the reasonableness of the price.
  3. Qualification requirements for warrant subscribers, and the number of shares they are allowed to subscribe for.
  4. The reasons why it is necessary to issue the employee stock warrants.
  5. Factors affecting shareholders' equity:
    1. The expensable amount, and dilution of the company's earnings per share.
    2. Where previously issued shares will be used to cover the warrants, explain what financial burden this will impose on the company.
    Matters required by paragraph 1 to be submitted for resolution at a shareholders??meeting shall be set out in the company? articles of incorporation.
Article 60-3     To issue new restricted employee shares, the issuer shall submit the Registration Statement for Issuance of New Restricted Employee Shares (Attachment 22-1), provide all the information required therein, along with the required documents, to the FSC, and may proceed with the issue only after the registration with the FSC becomes effective.
    A registration filed in accordance with the preceding paragraph shall become effective 7 business days after the day the Registration Statement for Issuance of New Restricted Employee Shares is received by the FSC and the FSC-designated institutions, and the provisions of Article 12, paragraph 2, and Articles 15 and 16 shall apply mutatis mutandis. However, the waiting period for effective registration shall be 12 days for financial holding, banking, bill finance, credit card, or insurance enterprises.
Article 60-6     (deleted)
Article 60-9     Where an issuer issues employee stock warrants under Article 56-1, paragraph 1, the cumulative number of shares subscribable by a single warrant holder of the employee stock warrants, in combination with the cumulative number of new restricted employee shares obtained by the single warrant holder, may not exceed 0.3 percent of the issuer’s total issued shares. And the above in combination with the cumulative number of shares subscribable by the single warrant holder of employee stock warrants issued by an issuer under Article 56, paragraph 1, may not exceed 1 percent of the issuer’s total issued shares.
Article 61     In the event the holder of securities conducts a secondary distribution to unspecified persons in accordance with paragraph 3 of Article 22 of the Act, it shall submit the Registration Statement for Secondary Distribution of Securities (Attachment 23), provide all information required therein, along with required documents to the FSC. The said holder can proceed with the secondary distribution only after the registration with the FSC becomes effective.
    In the event a holder intends to register with the FSC for a secondary distribution to unspecified persons of securities that were not publicly issued in accordance with the Act, the holder shall request the issuer of the securities to file retroactively with the FSC for a review of its public issuance. Before the registration with the FSC becomes effective, the holder cannot proceed with the secondary distribution.
    In the event a holder of securities registers in accordance with paragraph 1, such registration will become effective 7 business days after the receipt of the Registration Statement for Secondary Distribution of Securities by the FSC and FSC-designated institutions, and the provisions of paragraph 2 of Article 12, and Articles 15 and 16 shall apply mutatis mutandis.
    The provisions of paragraphs 1 and 2 may not apply to an auction or sale procedure conducted in accordance with laws.
Article 63     When the holder of emerging stocks, shares not listed on a stock exchange, or shares that are not traded in the business places of securities firms, registers a secondary distribution of the said stocks to unspecified persons, the FSC may reject the registration if any of the following circumstances obtains:
  1. Less than 3 years have elapsed since the incorporation registration of the issuer of the stocks.
  2. Both the final operating income and pre-tax income as ratios of paid-in capital as reported in the issuer's financial reports fail to meet any of the below conditions. However, the profitability as reported in the financial reports does not take into account the effects on the issuer brought about by the net profit (or net loss) attributable to its non-controlling interests.
    1. The said ratios for the most recent fiscal year reach 4 percent or more, and the issuer has no accumulated losses for the most recent accounting period.
    2. The said ratios for the most recent 2 fiscal years reach 2 percent or more.
    3. The average of the said ratios for the most recent 2 fiscal years reaches 2 percent or more, and the profitability of the issuer for the most recent fiscal year is more favorable than that for the previous fiscal year.
  3. The net asset value of the shares issued by the issuer in the most recent year is lower than its par value, or the net worth before distribution does not reach one-third of total assets.
  4. Where the FSC otherwise deems the secondary distribution to unspecified persons inappropriate.
Article 66     In the event that the issuer conducts initial public offering in accordance with paragraph 1 of Article 42 of the Act and paragraph 3 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 3 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 3 years have elapsed from the delivery date of the privately placed securities.
Article 67     In any of the following circumstances, the FSC may reject an application for approval of an initial public offering filed under Article 42, paragraph 1 of the Act or Article 156, paragraph 3 of the Company Act:
  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 reports.
  3. The Application Review Forms prepared by the issuer and reviewed by the attesting CPA reveal any violation of laws or regulations or the articles of incorporation, where the violation is serious.
  4. The applicant has failed to institute an internal control system including and adopt internal audit implementation rules and have them passed by the board of directors pursuant to the Regulations Governing Establishment of Internal Control Systems by Public Companies.
  5. Any of the following circumstances arise in the CPA project audit of the efficacy of the internal control system design or implementation:
    1. The audited company fails to provide a Statement regarding the efficacy of the internal control system design or implementation.
    2. The CPA report indicates material deficiencies in the design or implementation of the audited company's internal control system and failure to improve them, or the report is a disclaimer of opinion.
  6. Employee stock option certificates have previously been issued under Article 167-2 of the Company Act, but a concomitant initial public offering is not conducted for the certificates along with that for the stock.
  7. The FSC discovers a violation of laws or regulations, where the violation is serious.
    Where conducting an initial public offering for privately placed ordinary corporate bonds under paragraph 6 of the preceding Article and 3 years have not elapsed since the delivery date of the privately placed ordinary corporate bonds, the FSC may reject the application.
Article 68     For the below-listed securities privately placed by a public company in accordance with laws and securities subsequently distributed, converted, or subscribed, the public company must arrange with the FSC for a public offering, at least 3 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 laws.
  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 7 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, banking, bill finance, credit card, or insurance 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.
Article 69     When an issuer files registration for the retroactive handling of public issuance procedures for privately placed securities, it shall submit a prospectus for the retroactive handling of public issuance procedures clearly recording the matters listed below:
  1. Status of matters conducted in accordance with the Directions for Public Companies Conducting Private Placements of Securities.
  2. Results of the implementation of the private placement plan for the securities.
  3. Financial reports audited and certified by a CPA, and the CPA audit report, for the most recent fiscal year. Where the filing date falls after the deadline for public disclosure and filing of the financial report for a given quarter, the issuer shall additionally include the financial report for the most recent quarter, audited and certified or reviewed by a CPA, and the CPA audit or review report.
  4. Other matters as required by the FSC.
Article 72     To issue bonus shares or carry out a capital reduction, a public company shall submit for registration to the FSC a registration statement, (Attachments 32 and 33) specifying all required particulars, and the required documents.
    Where an exchange-listed or OTC-listed company files to register a capital reduction, the registration shall become effective 12 business days from the date on which the FSC and FSC-designated institutions receive the registration statement for a new share issuance.
    Registration by a public company for the cases listed below shall become effective 7 business days from the date upon which the FSC and FSC-designated institutions receive the registration statement for the issuance of new shares, provided that the effective registration period for a financial holding, bank, bills finance, credit card, or insurance enterprise shall be 12 business days.
  1. Issuance of new bonus shares.
  2. Capital reduction by an emerging stock company, or a company whose shares are neither listed on an exchange nor traded at the business places of securities firms.
    The provisions of Article 5, paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis to cases handled under paragraph 1.
    If, after effective registration, any circumstance in Article 11, paragraph 1, subparagraphs 3 to 6, the FSC may revoke or void the effective registration.
Article 75-1     Article 3, paragraph 6, Article 8, Article 13, paragraph 1, subparagraph 2, item 6, Article 18, and Article 63, as amended on 17 September 2012, shall apply as follows:
  1. To public companies with shares listed on a stock exchange or traded on the over-the-counter market, these provisions shall apply from the fiscal year of 2013.
  2. To public companies with shares not listed on a stock exchange nor traded on the over-the-counter market, these provisions shall apply from the fiscal year of 2015. However, such companies may voluntarily apply these provisions from the fiscal year of 2013.
  3. Public companies that do not follow either of the preceding two subparagraphs shall follow the provisions of these Regulations before the issuance and enforcement of the 17 September 2012 amendment.