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Industrial circumstances and operational risks:
- Operational risks of the sector in which the issuing company runs its business:
The underwriter shall list by way of example, taking into consideration the macro economy, the operational risks of the sector in which the issuing company runs its business (e.g. economic cycles, changes in the upstream/downstream of the industry, future development of the business, and product substitution).
- Operational risks of the issuing company:
The underwriter shall list by way of example the operational risks such as to the issuing company's business operation, technical capabilities, R&D, patents, human resources, finance (including costs and exchange rate fluctuations).
For a technology-based enterprise, cultural and creative enterprise or information software enterprise, the underwriter shall also describe the following:
- assessment of the probability of accomplishment of projected production time schedules and costs, market positioning, needs and estimates on future revenue benefits, and the internal control and security measures for research and development based on the level, sources, certainty and advancement of technologies employed for its product production and development, and competitive price trends, life cycles, sustainability, and R&D programs for new products; and
- information about the background (work experiences, academic background, job positions and seniority) of the company's directors participating in the operation and decision making, shareholders holding more than 5% of the total number of outstanding shares of the issuing company, shareholders contributing capital with patents or expertise, and officers controlling manufacturing technologies and technical developments, their shareholding ratios, share transfers by them within the past three fiscal years and the year of application, and how much time these technical shareholders and officers spend on and how they are actually involved in operation, and assessment of the impact on the finance and business of the issuing company and its action plans if these people discontinue their participation in the operation.
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As to legal compliance and impact on the operation of the domestic issuer, the underwriter shall request lawyers to comment on the following with regard to the local issuer, incumbent directors, general manager, shareholders holding at least 10% of the total number of outstanding shares of the issuing company and actual responsible persons in the last three years, and the underwriter shall assess the impact on the operation and action plans of the local issuer based on the lawyers' opinion and describe factors influencing the underwriting:
- If the issuing company violates applicable laws and regulations:
- the law and regulations of the central competent authority for the sector of industry the issuing company belongs to, and major laws and regulations affecting the sector of industry;
- assess if the issuing company has acted pursuant to the laws governing disclosure of information about listed companies when disclosing the information; and
- other laws and regulations;
- if any of the directors, general manager, shareholders holding at least 10% of the total number of outstanding shares of the issuing company, actual responsible person and other relevant persons violates applicable laws and regulations and therefore breaches the principle of good faith or compromises performance of duties;
- if any copyrights, patents, trademark rights or any other intellectual property rights is infringed;
- major litigation, non-litigation or administrative disputes pending in court; and
- major labor disputes or environmental pollution events.
When assessing the primary stock listing of a foreign issuer, the underwriter shall request lawyers to issue their legal opinion on the following with regard to the foreign issuer, incumbent directors, general manager, shareholders holding at least 10% of the total number of outstanding shares of the foreign issuer and actual responsible persons in the last three years, and the underwriter shall assess the impact on the operation and action plans of the foreign issuer based on the lawyers' opinion:
- Whether the foreign issuer violates applicable laws and regulations:
- seriously violating the applicable labor safety and health laws of the jurisdiction where it was incorporated or of the countries where its has its main operation activities to the extent that it is ordered to suspend part or all of its operation;
- seriously violating the pollution control and prevention regulations of the jurisdiction where it was incorporated or of the countries where it has its main operation activities;
- major labor disputes; and
- other laws and regulations.
- Protection of shareholders' equity:
- whether the legal restrictions on where a shareholders' meeting is convened, the voting system or exercise of other shareholders' rights imposed by the law of the jurisdiction where the issuer was incorporated may influence the exercise of the shareholders' equity of the foreign issuer. If yes, describe the measures for protection of the exercise of shareholders' rights within the R.O.C.; and
- whether the articles of incorporation or the memorandum of association includes specific provisions on protection of the exercise of shareholders' equity;
- if the issuer has entered into any contract that imposes major restrictions on its operation or that is apparently unreasonable; and
- Same as paragraphs (B) to (D) of the preceding article.
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