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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(2015.08.06)
Date：
Article 8     Where an issuer conducts an offering and issuance of securities as contemplated under Article 6, paragraph 2, 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 Article 139, paragraph 2 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 files 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 attributable to owners of the parent 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 they have been notified 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 filing 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, for which the issuance rules do not specify that the offerees are required, from the issuance date of the corporate bonds, to place the corporate bonds and any subsequently converted or subscribed shares under the custody of the centralized securities depository enterprise for one year.
  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 11     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 3 months from the date of receiving the notice of effective registration from the FSC, or after the extended offering period granted by the FSC.
  2. Any one of the events prescribed under Article 251, paragraph 1 or Article 271, paragraph 1 of the Company Act occurs.
  3. The issuer is in violation of Article 20, paragraph 1 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. For purposes of protecting the public interest, or if the issuer is in violation of these Regulations or any restrictions or prohibitions imposed at the time when the FSC notified the issuer that its registration had become effective or application had 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 there has been a material impact on securities prices or shareholders' equity, 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 10 days upon receipt of the cancellation notice from the FSC and be responsible for damages.
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 Article 6, paragraph 2 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 change to one-third or more of directors has occurred in the year of registration or the previous 2 years and any one of the following events takes place, provided that this rule does not apply if more than half of the issuer's directors are controlled by the original major shareholders before and after such change:
      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 does not 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 cash for the purpose of public sale in connection with initial listing on the stock exchange or OTC market.
  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 Taipei Exchange 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 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. However, with special approval from the central competent authority of the relevant industry, the total number of employee stock warrants and new restricted employee shares obtained by a single employee may be exempted from the above-mentioned restriction.
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 73     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 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. 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. 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.
  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 2 consecutive years.
    2. A provision in Article 72-1 has been violated.
  6. Failure 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.
  7. Violation of or failure to fulfill commitments made at the time of application for listing or trading at the business places of securities firms, where the circumstances are serious.
  8. The FSC discovers any violation of laws or regulations, where the circumstances are serious.
  9. Other circumstances as deemed necessary by the FSC to protect the public interest.