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Criteria Governing Applications for Issuance of Call (Put) Warrants by Issuers(2003.02.25) |
| Date： |
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Article 1
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These Criteria are promulgated pursuant to Article 22 paragraph 1 of the Securities and Exchange Law (hereinafter referred to as the "SEL").
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Article 2
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The issuing of call (put) warrants, except for where provided for in other laws and regulations, shall be governed by these Criteria.
The term "call (put) warrant" as used in these Criteria shall mean a security that is issued by a third party other than the issuing company of the underlying security and that represents that the holder is entitled to buy from or sell to such third party the underlying security at the exercise price during the option period or on a specified maturity date, or to collect a spread by settlement in cash.
The underlying security specified in the preceding paragraph shall be limited to stocks or portfolios thereof that are listed by the Taiwan Stock Exchange Corporation (hereinafter referred to as the "TSE") or the GreTai Securities Market (hereinafter, "GTSM") and that meet the criteria prescribed by the TSE or the GTSM.
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Article 4
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An issuer issuing call (put) warrants shall first apply to the Ministry of Finance's Securities and Futures Commission (hereinafter referred to as the "SFC") for a qualification recognition for issuance of call (put) warrants.
An issuer applying to the SFC for a qualification recognition for issuance of call (put) warrants shall obtain a credit rating of a specific grade issued by a credit rating institution approved by the SFC. The foreign institution may obtain a credit rating of a certain grade issued by a credit rating institution recognized by the SFC for filing an application [for issuance of said warrants].
If an issuer engages a foreign institution to act as a risk management institution or if the issuer is a foreign institution, it shall first obtain a consent letter from the competent authority in charge of foreign exchange.
An issuer applying to the SFC for a qualification recognition for issuance of call (put) warrants shall file with the TSE an application by submitting an "Application For Issuance of Call (Put) Warrants" as per the attached form, filled out in full, together with two copies of the required attachments. After the application has been reviewed and approved by the TSE or the GTSM, the issuer shall report in writing the TSE's or the GTSM's review opinion to the SFC for review and approval.
An application for a qualification recognition for issuance of call (put) warrants as referred to in the first paragraph of this article shall be reviewed and approved by the SFC based on a financial report audited in accordance with regulations by a certified public accountant (CPA), an opinion of legality issued by a licensed attorney, credit rating information, related documents, and a review opinion issued by the TSE or the GTSM.
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Article 6
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From the date on which an issuer applies to the SFC for a qualification recognition for issuance of call (put) warrants, if there occurs any matter having a material affect on shareholders' equity or the price of the underlying securities as described in Article 36 paragraph 2 subparagraph 2 of the SEL, in addition to filing a report with the SFC and either the TSE or the GTSM within two days from the date of occurrence of the matter, the issuer shall, based on the nature of the matter, provide relevant expert opinions to a CPA and ask the CPA to provide its comments on the affect on the financial reports and to submit the same to the TSE or the GTSM. The TSE or the GTSM shall provide its opinion for handling such matters and submit a written report to the SFC.
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Article 7
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If any one of the following conditions applies to an issuer applying for qualification for issuance of call (put) warrants, the SFC may reject the application:
1. where the application documents are incomplete and, upon the expiration of a specified time period for completion, the documents remain incomplete;
2. where the items applied for violate the law or involve concealment;
3. where the issuer suffers a major event of loss of creditworthiness and such event has not been settled, or four years have not elapsed since such settlement;
4. where the issuer fails to meet any of the requirements in the subparagraphs of Article 38 of the Standards Governing the Establishment of Securities Firms; and where the issuer is a foreign institution and a similar failure exists on the part of its head office;
5. where any director, supervisor, or manager of the issuer meets any of the categories in subparagraphs 1 through 5 of Article 53 of the SEL, or any similar condition provided in any comparable foreign futures or securities law or regulation, or has been sentenced for violation of the Futures Trading Law, Company Law, Banking Law, Statute Governing Foreign Exchange, or comparable foreign law or regulation, to a fine or heavier penalty, where three years have not elapsed since the completion of the sentence, the expiration of the period of suspended sentence, or pardon.
6. where the issuer is a foreign institution, and its head office or its directors, supervisors, or managers commit in their home country or in a foreign country any one offense comparable to those under subparagraphs 4 and 5;
7. where the issuer fails to have proper risk management measures;
8. where the issuer has previously issued call (put) warrants and was unable to perform the contracts;
9. where in the most recent year the issuer has failed to process matters in accordance with the TSE's or the GTSM's regulations relevant to call (put) warrants, and improvement within the specified time period is not possible;
10. where the issuer fails to prepare financial reports in accordance with generally accepted accounting principles, or where efficient operation of its internal control system is not possible;
11. where the issuer violates Article 6, or where an assessment shows that the matters reported by it might have significant impact on its financial status;
12. where there is a major dispute or violation with respect to rights and interests sufficing to influence the issuer's finances or business, and there is no resolution or improvement;
13. where there are facts proving that there are major irregularities with the issuer's finances or business; or
14. where the SFC considers it necessary to protect the public interest.
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Article 8
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After an issuer has been issued a qualification certificate for issuance of call (put) warrants by the SFC, if it is discovered or reported in writing by the TSE or the GTSM that the issuer meets the conditions in any one of the preceding subparagraphs, the issuer's rights and interests with respect to issuance of call (put) warrants shall be discontinued.
For issuers which have already obtained a qualification certificate for issuance of call (put) warrants, if the issuer fails to meet the conditions set out in Article 38 paragraphs 1 through 5 of the Standard Governing the Establishment of Securities Firms, the issuer's qualification certificate for issuance of call (put) warrants shall be discontinued for the periods specified in the respective paragraphs.
If the issuer's rights and interests with respect to the issuance of call (put) warrants are discontinued pursuant to the provisions in the preceding two paragraphs, where warrants have already been approved for issuance but have not yet been issued, their issuance shall be discontinued.
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Article 10
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After the qualification certificate for issuance of call (put) warrants has been issued by the SFC, the issuer shall apply to the TSE or the GTSM for approval of its plans to issue call (put) warrants for listing on the TSE or on over-the-counter markets. After the issuer's issuance plan has been approved by the TSE or the GTSM, the issuer may proceed with issuance and sales.
The issuer of the call (put) warrants referred to in the preceding paragraph shall enter into a contract for public listing or over-the-counter listing of call (put) warrants with the TSE or the GTSM. The TSE or the GTSM shall report the contract for public listing or over-the-counter listing to the SFC for review and approval.
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Article 11
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After the issuer's contract for public listing or over-the-counter listing has been approved by the SFC but before the call (put) warrants have begun to be bought and sold on the market, if it is discovered or it is reported in writing by the TSE or the GTSM that the issuer meets any of the conditions in Article 7, the issuer's approval may be revoked or voided.
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Article 12
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If a contract for public listing or over-the-counter listing of call (put) warrants reported by the TSE or the GTSM is not approved or its approval is revoked or voided by the SFC, the issuer shall, within ten days from the day when the SEC's or the GTSM's notification was received, refund the price of the call (put) warrants that have already been issued and pay statutory interest on them.
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Article 13
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An issuer issuing call (put) warrants may consign a securities underwriter to underwrite the call (put) warrants or sell such warrants by itself. The issuer shall deliver a prospectus to the subscribers.
Matters to be stated in the prospectus referred to in the preceding paragraph shall be prescribed by the TSE or the GTSM and reported to the SFC for approval.
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Article 14
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These Criteria shall take force on the date of promulgation.
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