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Article 1
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These Criteria are adopted pursuant to the provisions of Article 22, paragraph 1 of the Securities and Exchange Law (the "Law").
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Article 2
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Except where otherwise provided by law, the offering and issuance of overseas securities by issuers shall be governed by these Criteria.
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Article 3
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A public company with shares listed on a stock exchange or traded on an over-the-counter market in accordance with Article 3 of the GreTai Securities Market Criteria Governing Review of Securities Traded on Over-the-Counter Markets (hereinafter referred to as a "listed company" or an "OTC company meeting the provisions of Article 3 of the GreTai Criteria for Securities Traded on OTC Markets", as the case may be) may apply to offer and issue overseas corporate bonds and overseas stocks, to Sponsor Issuanc
e of Overseas Depositary Receipts, and to trade its issued stocks on offshore stock exchanges.
A public company that has entered into a listing contract with the Taiwan Stock Exchange Corporation or that, in accordance with Article 3 of the GreTai Securities Market Criteria Governing Review of Securities Traded on Over-the-Counter Markets, has applied and entered into a contract with the GreTai Securities Market for over-the-counter (OTC) trading of securities, may apply to offer and issue overseas stocks or to Sponsor Issuance of Overseas Depositary Receipts concurrent with its domestic underwrit
ing.
A company which is neither a listed company nor meets the provisions of Article 3 of the GreTai Criteria for Securities Traded on OTC Markets may apply to offer and issue overseas common corporate bonds, as well as overseas convertible bonds. Such a company may also apply to offer and issue overseas corporate bonds with warrants where the applicant intends to meet future demand for bond conversions or the exercise of share purchase rights by using the shares it owns in either a listed company or in an OT
C company meeting the provisions of Article 3 of the GreTai Criteria for Securities Traded on OTC Markets.
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Article 4
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The term "Sponsor Issuance" as used in these Criteria refers to the issuer assisting in the implementation of the issuance plan for Overseas Depositary Receipts and providing financial information to a Depositary Institution pursuant to a deposit contract.
The term "Depositary Institution" as used in these Criteria refers to a financial institution located outside the territory of the Republic of China that issues Overseas Depositary Receipts pursuant to the securities regulations of the country where it is located.
The term "Custodian Institution" as used in these Criteria refers to a bank located within the territory of the Republic of China that has been approved by the Ministry of Finance to engage in custodian business.
The term "Overseas Depositary Receipts" as used in these Criteria refers to receipts issued by a Depositary Institution outside the Republic of China pursuant to the securities regulations of the country where it is located to evidence the underlying securities held in the custody of a Custodian Institution.
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Article 5
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An issuer shall not apply to offer and issue overseas securities upon the existence of any of the following circumstances:
1. Where the issuer has violated Article 247, paragraph 2 of the Company Law, or Article 249 of the Company Law, it shall not issue unsecured overseas corporate bonds; provided, however, that issuers who are in conformance with Article 28-4 of the Law shall not be subject to the restrictions of Article 247 of the Company Law.
2. Where the issuer has violated Article 247, paragraph 1 or Article 250 of the Company Law, it shall not issue overseas corporate bonds; provided, however, that issuers who are in conformance with Article 28-4 of the Law shall not be subject to the restrictions of Article 247 of the Company Law.
3. Where the issuer has violated Article 269, Article 270, or Article 278, paragraph 2 of the Company Law, it shall not carry out a cash capital increase through a new share issue in order to facilitate the issue of Overseas Depositary Receipts, nor shall it carry out a capital increase through the issue of overseas stocks; provided, however, that where the issuer acquires the shares of a foreign company in accordance with Article 156, paragraph 6 of the Company Law, it shall be subject to the restrictio
ns of Article 278, paragraph 2 of the Company Law.
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Article 6
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When an issuer applies to issue and offer overseas securities, it shall apply for approval from the Securities and Futures Commission (SFC) and obtain a consent letter from the competent authority for foreign exchange business.
If an application is incomplete or the particulars required to be specified are insufficient and have not been corrected within a time frame prescribed by the SFC, the SFC may return the application documents.
An amendment application shall be filed promptly with the SFC if there is any change in the particulars applied for or the documents submitted.
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Article 7
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The SFC may deny approval for the offering and issuance of overseas securities upon the existence of any of the following circumstances:
1. where there exists any of the circumstances referred to in Article 156, paragraph 1 of the Law;
2. where the plan for the current offering and issuance of overseas securities is unfeasible, unnecessary, or unreasonable;
3. where the implementation of any previous plan for cash capital increase or issuance of corporate bonds has been accompanied by any of the following problems and no improvement has been made:
(1) The implementation is seriously behind schedule without justifiable reason and has not been completed.
(2) The plan was materially changed without justifiable reason; provided, however, that this provision shall not apply where the time between the actual completion of the plan and the filing of the application exceeds three years.
(3) The plan was materially changed without being submitted to and approved by a shareholders' meeting.
(4) The issuer has not complied in the most recent one year with Article 9 herein and with Article 9, paragraph 1, subparagraphs 4 through 8 of the Criteria Governing the Offering and Issuance of Securities by Securities Issuers.
(5) Reasonable returns have not been achieved without justifiable reason; provided, however, that this provision shall not apply if the period between the actual completion date of the plan and the application date is more than three years.
4. where the issuer has failed, without legitimate reason, to achieve a reasonable return on any previous issue of new shares for the purpose of a merger, issuance of new shares for the purpose of acquiring the shares of another company, or issuance of new shares for the purpose of an acquisition or split conducted in accordance with law; provided, however, that this shall not apply if the period between the actual completion date of the plan and the application date is more than three years;
5. where the important contents of the plan for this offering and issuance of overseas securities (such as issuance rules, source of funds, project particulars, implementation schedule, and expected returns) have not been proposed and submitted to a board meeting or shareholders meeting for discussion and resolution/approval in accordance with the Company Law and the issuer's Articles of Incorporation.
6. where the company lends large amounts of capital to others in excess of financing needs resulting from the company's business transactions with other companies or firms, or lends a very large sum to another party, or enters into seriously irregular transactions, and has not rectified the situation at the time of filing the application.
7. where the company holds a large volume of short-term investments, or holds idle assets or real property and has no plan to actively dispose or develop them; provided, however, that this provision shall not apply when the funds raised are used to purchase fixed assets and there is a concrete plan for fund raising evidencing the necessity to raise the funds.
8. where the company provides its assets as security for a loan to another party; provided, however, that this provision shall not apply if the assets are provided as security for a loan needed by a subsidiary for business purposes.
9. where the overseas securities being offered and issued are to be purchased by a subscriber that is affiliated with the issuer, or the ultimate source of the funds used to purchase the issue is a party affiliated with the issuer. The meaning of the term "affiliated" shall be interpreted according to paragraph 2 of the Statements of Financial Accounting Standards No. 6.
10. where the offering and issuance of overseas securities is accompanied by one of the following circumstances:
(1) The amount of capital to be directly or indirectly invested in mainland China as set forth in the funds utilization plan is greater than 20% of the capital raised from the offering; provided, however, that this provision shall not apply where the overseas securities to be offered and issued are securities that confer shareholder rights, such as stocks, depositary receipts, and convertible corporate bonds, and provided, furthermore, that the amount of direct or indirect investment in mainland China un
der the funds utilization plan does not exceed 40 percent of the total amount in the current offering, and the issuance rules or conversion rules expressly provide that the bearer may not request redemption, conversion, or reimbursement within one year of the issuance of the overseas securities.
(2) The total amount of direct or indirect investment in mainland China exceeds the upper limit set by the Investment Commission, Ministry of Economic Affairs; provided, however, that this provision shall not apply where the capital is used to purchase domestic fixed assets and a commitment is made not to increase investment in the mainland.
11. where the company's financial statements in the most recent two years have not been prepared in accordance with relevant laws and generally accepted accounting principles, and such violations are significant.
12. where the offering and issuance involves either acquiring the shares of a foreign company, or acquiring a foreign company, and such acquisition has not been conducted under any of the following conditions:
(1) The acquisition of shares or of a corporation involves shares newly issued by the overseas company, long-term holdings of the overseas company, or outstanding shares in the overseas company that are held by overseas Chinese or by foreign nationals, and such acquisition does not violate the provisions of Article 167, paragraphs 3 or 4 of the Company Law.
(2) The ownership rights of the acquired shares, business, or assets are not impaired or encumbered in any way, such as through the creation of pledge thereupon or placing of restrictions on the purchase or sale thereof.
(3) A CPA-audited and -certified financial report on the acquired company was not prepared for the most recent fiscal year, or if prepared did not give an unqualified opinion, or if a qualified opinion was given in the certified financial report, the report gave an unqualified opinion with respect to the balance sheet.
13. where the particulars applied for are in violation of other laws and regulations, or where the SFC deems disapproval necessary for protection of the public interest or national reputation.
The foregoing subparagraphs 5 to 10 are not applicable in the case of applications to use outstanding shares to Sponsor Issuance of Overseas Depositary Receipts, or to use outstanding shares to engage in trading on offshore stock exchanges.
The provisions of Article 1, subparagraphs 3 and 10 shall not apply where the issuer applies to Sponsor Issuance of Overseas Depositary Receipts through capital increase, which in turn is done in order to acquire a foreign company, to acquire the shares of a foreign company, or to issue new shares for the purpose of an acquisition or split of a foreign company conducted in accordance with the law.
The term "large volume" as used in paragraph 1, subparagraph 7 means short-term investments, idle assets, and real property held in one of the following percentages:
1. 40% of shareholders' equity in the most recent CPA-audited and -certified financial report; or
2. 60% of the total amount of the overseas securities offering to be issued under the application.
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Article 8
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After an issuer's application to offer and issue overseas securities has been approved, the SFC may revoke the approval if the SFC discovers any of the following situations:
1. The overseas securities have not been fully subscribed to and the cash proceeds thereof have not been fully collected within three months from the date on which the approval letter of the SFC has been received; provided, however, that the SFC may grant an extension of three months upon application where proper reasons have been given (only one extension shall be allowed).
2. The issuance of Overseas Depositary Receipts is sponsored or the overseas stock is offered and issued using a method that is at variance with the particulars of application and the issuance rules set forth in the accompanying documents, and no application for change has been filed with the SFC before the date of execution of a deposit contract or the date of fixing the price for the issuance; provided, however, that this provision shall not apply if the issuer applies to use outstanding shares to Spon
sor Issuance of Overseas Depositary Receipts, or to use outstanding shares to engage in trading on offshore stock exchanges.
3. Overseas convertible bonds or bonds with warrants are not issued in accordance with application particulars, the statement of issuance methods, and other conversion rules or warrant exercise rules, and where no application for change has been filed with the SFC before the date for fixing the price of the issue.
4. Any provision of these Criteria or any restriction or prohibition specified in the SFC's notice of application approval is violated.
Overseas securities shall not be listed and traded overseas in New Taiwan Dollars.
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Article 9
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After the application to offer and issue overseas securities has been approved, the issuer shall comply with the following:
1. If the funds utilization plan has not yet been fully executed, the issuer shall disclose the implementation progress of the plan in the annual report; where the issuer is issuing overseas corporate bonds, information relating to the corporate bond issue shall be posted by the issuer to the information disclosure website specified by the SFC within two days from the date of completion of the raising of capital, and by the tenth day of each month for the duration of the period during which the overseas
corporate bonds are being issued.
2. In connection with the raising of capital, the issuer shall, within ten days after the end of each quarter and in accordance with SFC regulations, post the funds utilization plan and the quarterly report on the status of funds utilization to the information disclosure website specified by the SFC.
3. If the SFC requires that the funds raised be used for a specific purpose, the issuer shall, on a quarterly basis, request the original underwriter to prepare an evaluation opinion on progress in implementation of the funds utilization plan and the legitimacy of the purpose of the unused funds. Within ten days after the end of each quarter, the issuer shall post such opinion together with the information referred to in the preceding subparagraph to the information disclosure website specified by the SF
C.
4. Where the issuer is Sponsoring Issuance of Overseas Depositary Receipts through cash capital increase, and its purpose in so doing is to acquire a foreign company, acquire the shares of a foreign company, or Sponsor Issuance of new shares for the purpose of an acquisition or split of a foreign company conducted in accordance with the law, the issuer shall, on a quarterly basis for the first year following completion of registration, request the original underwriter to prepare an opinion evaluating the
impact of such matters upon the issuer's financial operations, business operations, and shareholders' equity. The issuer shall post such opinions to the information disclosure website specified by the SFC.
5. Where, as the result of a change to an item or a dollar amount in an individual item in the funds utilization plan, the total amount of capital needed for the original item increases or decreases by 20% or more of the total amount of capital raised, after reporting the change to the authority in charge of foreign exchange for approval, the issuer shall register an amendment of the plan and, within two days after the amendment is approved by a resolution of the board of directors, the issuer shall make
a related public announcement via the information disclosure website specified by the SFC. The issuer shall also submit the change to a shareholders meeting for confirmation. Where the funds utilization plan is amended, the issuer shall, upon such change and within ten days after the end of each subsequent quarter, also request the original underwriter to issue an evaluation opinion on the progress of implementation of the funds utilization plan and the legitimacy of the purpose of the unused funds, and s
ha ll post such opinion together with the information referred to in subparagraph 2 above to the aforementioned website.
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Article 10
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An issuer applying to use either (i) a cash capital increase through a new share issue or (ii) outstanding shares, to Sponsor Issuance of Overseas Depositary Receipts by a Depositary Institution, shall, depending on the nature of the issue, file [one of five different types of] Application for Sponsoring Issuance of Overseas Depositary Receipts (Attachments 1 to 5), specifying therein the required particulars, together with the required supporting documents, and may proceed to the issuance only after app
roval by the SFC.
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Article 11
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An issuer may apply to Sponsor Issuance of Overseas Depositary Receipts through cash capital increase by issuance of new shares at below par value.
An issuer applying to Sponsor Issuance of Overseas Depositary Receipts through cash capital increase by issuance of new shares at below par value shall state its reasons for not using other capital raising methods, the legitimacy of said reasons, its method for setting the issue price of shares, and any effects on shareholders' equity. It shall also apply for approval by resolution of a shareholders meeting or directors meeting in accordance with the Company Law or relevant provisions of securities laws
and regulations.
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Article 12
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After the issuance of Overseas Depositary Receipts, additional depositary receipts shall only be issued under the following conditions and with the SFC's approval:
1. The additional depositary receipts are issued in accordance with the provisions of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals; provided, however, that the deposit contract and custody contract must expressly provide that Overseas Depositary Receipts may be re-issued following redemption.
2. Following the issuance of Overseas Depositary Receipts, the issuer carries out a cash capital increase through a new share issue, a new share distribution from earnings, or a new share distribution from capital reserve, and in connection therewith issues additional depositary receipts corresponding to the amount of the newly issued shares.
Where the issuer referred to in the preceding paragraph needs to issue additional Overseas Depositary Receipts in order to carry out a cash capital increase through a new share issue, if the proceeds raised offshore are to be converted into New Taiwan Dollars and used onshore, the issuer shall obtain a consent letter from the government authority for foreign exchange business before registering a cash capital increase with the SFC (or applying to the SFC for approval thereof).
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Article 13
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In applying to Sponsor Issuance of Overseas Depositary Receipts, the issuer shall submit an issuance plan that specifies the following particulars:
1. purpose of the offering;
2. projected date of issuance, total dollar amount, total number of units to be issued, number of the underlying securities evidenced by Overseas Depositary Receipts, and method for determining the per unit issue price;
3. rights and obligations of the holders of Overseas Depositary Receipts;
4. source of the underlying securities evidenced by Overseas Depositary Receipts; where the issuance of Overseas Depositary Receipts is sponsored through cash capital increase, if a shareholders' meeting authorizes the board of directors to adjust the issuance amount in accordance with market conditions within the scope of the authorized issuance, and all the depositary receipts are issued in one tranche, such shall be expressly stated in the offering plan.
5. statement of issuance methods: It shall be expressly stated whether all the depositary receipts shall be publicly issued or whether a portion thereof shall be subscribed to by specific person(s) through special agreement. If it is agreed that a portion thereof shall be subscribed to by specific person(s), the purpose of subscription by specific person(s), the total number of units subscribed to by the specific person(s), total dollar amount, and the relation between the specific person(s) and the issu
er shall be specified in the offering plan.
6. place of issuance and transaction;
7. the funds utilization plan and the expected returns (where the issuer is Sponsoring Issuance of Overseas Depositary Receipts through cash capital increase);
8. where the issuer applies to Sponsor Issuance of Overseas Depositary Receipts through capital increase and its purpose in so doing is to acquire a foreign company, to acquire the shares of a foreign company, or to issue new shares for the purpose of an acquisition or split of a foreign company conducted in accordance with law, the offering plan shall specify the following particulars:
(1) the name and volume (value) of shares (business operations or assets) acquired, and the name of the party from whom they are to be acquired;
(2) schedule for implementation and completion of the plan;
(3) method of determining the share exchange ratio, and the legitimacy thereof;
(4) any conditions or restrictions upon future transfer of the shares, business, or assets to be acquired;
(5) expected returns; and
(6) where the company to be acquired or the company whose shares are to be acquired is an affiliated enterprise or affiliated person, the issuance plan shall specify the issuer's relationship with the affiliated enterprise or affiliated person, the reason for choosing the affiliated enterprise or affiliated person, the necessity for such choice, and the impact upon shareholders' equity;
9. allocation of responsibility for payment of relevant fees incurred during the offering period and the period when the facility remains outstanding; and
10. other items as required by SFC regulations.
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Article 14
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An issuer applying to offer and issue Overseas Depositary Receipts shall retain a securities underwriter to prepare an evaluation report on the following matters:
1. feasibility of the issuance plan for the Overseas Depositary Receipts;
2. the allocation of responsibility for expenses incurred in connection with Sponsoring Issuance of Overseas Depositary Receipts, and the impact of such sponsorship on shareholders' equity;
3. the reasonableness of the issuance plan, its legality, and its impact on shareholders' equity (where it is stipulated in the statement of issuance methods that a portion of the depositary receipts shall be subscribed to by a specific person or persons);
4. the feasibility and necessity of the offering and issuance plan, as well as the reasonableness of the funds utilization plan, the implementation schedule, and the expected returns (where the issuer is Sponsoring Issuance of Overseas Depositary Receipts through cash capital increase);
5. the necessity and legitimacy of discounting the price of the newly issued shares, the issuer's reasons for not using other capital raising methods, and any impact on shareholders' equity (where the issuer is Sponsoring Issuance of Overseas Depositary Receipts through cash capital increase by issuance of new shares at below par value);
6. the legitimacy of the pricing formula for the Overseas Depositary Receipts;
7. where the issuer applies to Sponsor Issuance of Overseas Depositary Receipts through capital increase and its purpose in so doing is to acquire a foreign company, to acquire the shares of a foreign company, or to issue new shares for the purpose of an acquisition or split of a foreign company conducted in accordance with law, the evaluation report shall specify the following particulars:
(1) the feasibility and necessity of the plan for acquisition or share exchange, the schedule for implementation and completion of the plan, and the expected returns and reasonableness thereof;
(2) the method of determining the share exchange ratio, the method for determining the value of the Overseas Depositary Receipts for which the issuer is to Sponsor Issuance, the method of determining the value of assets to be acquired, and the legitimacy of such methods;
(3) where the company to be acquired or the party whose shares are to be acquired through exchange is an affiliated enterprise or an affiliated person, the evaluation report shall specify the issuer's relationship with the affiliated enterprise or affiliated person, the reason for choosing the affiliated enterprise or affiliated person, the necessity for such choice, and the impact upon shareholders' equity; and
(4) any conditions or restrictions upon future transfer of the shares, business, or assets to be acquired; and
9. whether any of the circumstances listed in Article 5 and Article 7 of these Criteria exists, and an explanation of the basis for determining that such circumstances do or do not exist.
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Article 15
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When a holder of Overseas Depositary Receipts requests redemption, it may request the Depositary Institution to transfer the title of the underlying securities to itself, or to sell the underlying securities and then pay the sales proceeds to the holder after deducting tax and other relevant fees.
The holder of depositary receipts may not request redemption within three months after the issuance of the Overseas Depositary Receipts if the underlying securities for such depositary receipts are new shares issued for the purpose of capital increase.
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Article 16
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After a Depositary Institution has issued Overseas Depositary Receipts, it shall act in accordance with the Statute for Regulation of Foreign Exchange when handling exchange matters arising in connection with its receipt of: (1) cash dividend distributions; (2) proceeds from the redemption and sale of securities underlying Overseas Depositary Receipts; and (3) funds required by a Depositary Institution in order to re-issue such Overseas Depositary Receipts, where an investor (or a Depositary Institution
acting on such investor's behalf) has (within the scope of the original share issue and in accordance with the provisions of Article 12, paragraph 1, subparagraph 1) purchased on a domestic market the underlying securities evidenced by the depositary receipts, and such investor or Depositary Institution has delivered the securities to a custodian institution, and a Depositary Institution (as mentioned above) uses these securities to re-issue such Overseas Depositary Receipts.
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Article 17
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A Depositary Institution shall appoint a local agent to handle the opening of a domestic securities trading account, exercise of shareholder's rights, applications for foreign exchange, and payment of taxes.
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Article 18
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After an issuer receives the SFC approval to Sponsor Issuance of Overseas Depositary Receipts, it shall, within two days after signing a deposit contract, make a public announcement of the following matters on the information disclosure website specified by the SFC:
1. total dollar amount, unit price, and volume of the Overseas Depositary Receipts issue; provided, however, that if the Overseas Depositary Receipts are for conversion of overseas corporate bonds, the issuer may opt to announce only the estimated number of units to be issued;
2. the number of shares of the underlying securities and their unit price; provided, however, that if the Overseas Depositary Receipts are for conversion of overseas corporate bonds, the issuer may opt to announce only the estimated number of shares;
3. place of issuance and transaction;
4. the issuer's reason for arranging for subscription by the specific person(s), the total number of units subscribed to by the specific person(s), total dollar amount, and the relationship between the specific person(s) and the issuer (the statement of issuance methods provides that a portion of the depositary receipts shall be subscribed to by specific person or persons);
5. the proceeds plan and the expected returns (where the issuer is Sponsoring Issuance of Overseas Depositary Receipts through cash capital increase);
6.the name of the company involved in such acquisition or share exchange, the number of shares involved, the schedule for implementation and completion of the plan, the expected returns, the share exchange ratio, the method (and legitimacy thereof) for determining the value of the Overseas Depositary Receipts for which the issuer is to Sponsor Issuance, and the method (and legitimacy thereof) for determining the value of the assets to be acquired by the issuer (the above disclosures are to be made where
the issuer intends to acquire a foreign company, to acquire the shares of a foreign company, or to issue new shares for the purpose of an acquisition or split of a foreign company conducted in accordance with the law);
7. the primary impact on shareholders' equity (e.g. expenses incurred by the issuer in Sponsoring Issuance of the Overseas Depositary Receipts, impact on shareholding structure, etc.).
After the announcement of the items referred to in the preceding paragraph, should there be any change to any of these items, a public announcement of such change shall be made within two days after the closing of the offering.
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Article 19
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An issuer approved by the SFC to Sponsor Issuance of Overseas Depositary Receipts shall submit one of each of the following documents to the SFC for recordation within ten days after issuance of the Overseas Depositary Receipts:
1. a prospectus prepared in accordance with the securities laws of the country where the offering took place (the prospectus must also be uploaded to the information disclosure website specified by the SFC); provided, however, that these requirements do not apply to the issuance of Overseas Depositary Receipts for conversion of overseas corporate bonds;
2. a duplicate copy of the deposit contract;
3. a duplicate copy of the custody contract;
4. an opinion letter in Chinese issued by an ROC attorney-at-law confirming that there is no material discrepancy between the issuance rules and the contents approved by the SFC; and
5. other documents required by the SFC.
If an issuer Sponsoring Issuance of Overseas Depositary Receipts is required by a deposit contract to provide any information to a Depositary Institution, within three days after providing such information the issuer shall report such provision to the SFC for recordation.
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Article 20
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After the issuance of Overseas Depositary Receipts, the sponsor shall, within ten days after the end of each month, post the Monthly Statement of Outstanding Balance of Overseas Depositary Receipts and Securities Represented Thereby (Attachment 13) to the information disclosure website specified by the SFC, and shall also submit a report to the competent authority in charge of foreign exchange for recordation.
In the event that the sponsor carries out a cash capital increase through a new share issue, a new share distribution from earnings, or a new share distribution from capital reserve, and the Depositary Institution issues additional Overseas Depositary Receipts in a corresponding amount pursuant to Article 12, paragraph 1, subparagraph 2, the sponsor shall, within two days after issuance of the Overseas Depositary Receipts, report to the competent authority in charge of foreign exchange the total dollar a
mount of the Overseas Depositary Receipts, total units, and the number of the underlying securities, and shall post the relevant information to the information disclosure website specified by the SFC.
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Article 21
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An issuer intending to issue and offer overseas corporate bonds shall file an Application to Offer and Issue Overseas Corporate Bonds (Attachments 6-8) specifying therein the required particulars, together with the required supporting documents and may proceed to the issuance only after the approval by the SFC.
An issuer who has issued and offered overseas corporate bonds and wishes to use Overseas Depositary Receipts for the conversion of or subscription to overseas corporate bonds in accordance with conversion rules or warrant exercise rules shall file an Application to Offer and Issue Overseas Depositary Receipts (Attachments 9 and 10) specifying therein the required particulars. This application shall be submitted together with the required supporting documents, and the issuer may proceed with issuance only
after approval by the SFC.
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Article 22
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When offering and issuing overseas convertible bonds, an issuer shall specify in the issuance rules the following particulars:
1. the conversion procedure;
2. the method for determining the terms and conditions of the conversion (including conversion price and conversion period);
3. the conversion price and its adjustment;
4. entitlements to interest and dividends in the converting year;
5. the method for handling funds that are not sufficient to convert into one unit of the securities upon conversion;
6. when Sponsoring Issuance of Overseas Depositary Receipts for conversion purposes, the issuer shall specify the type of underlying securities evidenced by Overseas Depositary Receipts, the volume of securities evidenced by each unit of Overseas Depositary Receipts, the names of Depositary Institutions and Custodian Institutions, the issuance plan for the Overseas Depositary Receipts, and other agreed-upon terms and conditions;
7. statement of issuance methods: The statement of issuance methods shall state whether all the depositary receipts shall be publicly issued or a portion thereof shall be subscribed to by specific person(s) through negotiation; if a portion thereof shall be subscribed to by specific person(s), then the statement of underwriting procedures shall state why a specific person(s) is being contacted to subscribe through negotiation, the number of depositary receipts to be subscribed to by a specific person(s),
the total dollar amount thereof, and the relationship between the specific person(s) and the issuer;
8. whether the obligation to convert the shares will be fulfilled by issuing new shares or delivery of outstanding shares (must be one or the other); and
9. other important matters agreed upon by the contracting parties.
When overseas corporate bonds are converted to shares, such conversion shall not be subject to the prohibition against issuance of shares below par value as set forth in Article 140 of the Company Law.
Unless there is applicable precedent in international practice, Section 2 of Chapter III of the Criteria Governing the Offering and Issuance of Securities by Securities Issuers shall apply mutatis mutandis to matters relating to conversion of overseas corporate bonds.
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Article 23
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When applying to offer and issue overseas convertible bonds with warrants, an issuer shall specify in the issuance rules the following particulars:
1. for bonds with separable warrants: the total number of warrant units to be issued and the method for calculating the price of each unit;
2. the methods of determining warrant exercise conditions (including exercise price, warrant exercise period, type of shares covered by the warrant, exercise ratio, and the number of shares that each warrant provides the right to purchase);
3. adjustment of exercise price;
4. procedures for exercising warrant rights and method of payment for shares;
5. where Sponsoring Issuance of Overseas Depositary Receipts to fulfill warrant obligations: the type of underlying securities evidenced by the Overseas Depositary Receipts, their source, the number of underlying securities evidenced by each unit of Overseas Depositary Receipts, the names of Depositary Institutions and Custodian Institutions, the issuance plan for the Overseas Depositary Receipts, and other agreed-upon terms and conditions;
6. statement of issuance methods: The statement of issuance methods shall state whether all the depositary receipts shall be publicly issued or whether a portion thereof shall be subscribed to by specific person(s) through negotiation; if a portion thereof shall be subscribed to by specific person(s), then the statement of underwriting procedures shall state why a specific person(s) is being contacted to subscribe through negotiation, the number of depositary receipts to be thus subscribed to, the total
dollar amount thereof, and the relationship between the specific person(s) and the issuer;
7. whether the obligation to fulfill warrant rights will be made by issuing new shares or delivery of outstanding shares (must be one or the other); and
8. other important matters agreed upon by the contracting parties.
When warrant obligations are fulfilled by the issuer, such fulfillment shall not be subject to the prohibition against issuance of shares below par value as set forth in Article 140 of the Company Law.
Unless there is applicable precedent in international practice, Section 3 of Chapter III of the Criteria Governing the Offering and Issuance of Securities by Securities Issuers shall apply mutatis mutandis to matters relating to the exercise of warrants attached to overseas corporate bonds.
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Article 24
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An issuer applying to offer and issue overseas corporate bonds shall retain a securities underwriter to prepare an evaluation report on the following matters:
1. feasibility of the issuance plan for the overseas corporate bonds;
2. impact of the offering of overseas corporate bonds on shareholders' equity;
3. the reasonableness and legality of the issuance plan and its impact on shareholders' equity (if the statement of issuance methods provides that a portion of the corporate bonds shall be subscribed to by specific person or persons);
4. feasibility and necessity of the offering and issuance plan and the funds utilization plan, the reasonableness of the expected benefits, and the expected rate of progress in implementation;
5. whether there exists any of the circumstances listed in Article 5 and Article 7 of these Criteria, and an explanation of the basis for determining that such circumstances do or do not exist; and
6. other evaluation matters required by the SFC.
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Article 25
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Where Overseas Depositary Receipts are obtained through the conversion of overseas corporate bonds or the exercise of warrant rights, Article 15, paragraph 1 of these Criteria shall apply mutatis mutandis when the holder of such Overseas Depositary Receipts requests the Depositary Institution to redeem the Overseas Depositary Receipts.
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Article 26
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After the SFC approves the offering plan of overseas corporate bonds, the issuer shall, within two days after pricing the offering, publicly announce the following matters on the information disclosure website specified by the SFC:
1. total dollar amount of the offered overseas corporate bonds, the face value of each bond certificate, and the issue price;
2. interest rate(s) for the overseas corporate bonds to be offered;
3. repayment method and term of maturity of the overseas corporate bonds to be offered;
4. type of security (where the bonds are secured);
5. conversion terms and important stipulations (where the issuance rules provide for conversion);
6. method of warrant exercise and important stipulations (where the issuance rules set forth warrant exercise conditions)
7. place of issuance and transaction;
8. the reason why a specific person(s) is being contacted to subscribe through negotiation (in the event that such is the case), the total number of certificates to be subscribed to by the specific person(s), the total dollar amount thereof, and the relationship between the specific person(s) and the issuer;
9. a funds utilization plan, and a statement of the expected benefits thereof; and
10. the principal impact on shareholders' equity.
After the announcement of the items referred to in the preceding paragraph, should there be any change to any of these items, a public announcement of such change shall be made within two days after the closing of the offering.
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Article 27
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After the SFC approves an issuance of overseas corporate bonds, the issuer shall submit one of each of the following documents to the SFC within ten days of the issuance of the overseas corporate bonds:
1. a prospectus prepared in accordance with the securities laws of the country in which the bonds are offered (must also be uploaded to the information disclosure website specified by the SFC);
2. a duplicate copy of the issuance agreement;
3. a duplicate copy of the deposit contract and custody contract (if the bonds are convertible or have warrants for the purchase of overseas depositary receipts);
4. a duplicate copy of the paying agency agreement;
5. a duplicate copy of the purchase agreement;
6. a duplicate copy of the trust deed;
7. an opinion letter in Chinese issued by an ROC lawyer confirming that there is no material discrepancy between the issuance rules for the overseas corporate bonds and the contents approved by the SFC; and
8. other items as specified by the SFC.
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Article 28
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After the issuance of overseas corporate bonds, an issuer shall, within ten days after the end of each month, post a Monthly Statement of Outstanding Overseas Corporate Bonds to the information disclosure website specified by the SFC (Attachment 14), and shall also submit a report to the competent authority for foreign exchange business. After conversion of the overseas corporate bonds or exercise of the warrants is accepted by the issuer, the issuer shall, within ten days after completion of a cash capi
tal increase through a new share issue, report any instances of warrant exercise by overseas investors to the Investment Commission of the Ministry of Economic Affairs.
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Article 29
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An issuer applying to carry out a cash capital increase through the issue of overseas stocks, or to list its outstanding shares on a foreign securities exchange, shall file an Application for Issuance of Overseas Stocks (Attachments 11 and 12) specifying therein the required particulars, together with the required supporting documents, and may proceed to the issuance only after approval by the SFC.
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Article 30
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An issuer may apply to offer and issue overseas stocks at below par value.
An issuer applying to issue overseas stocks at below par value shall state its reasons for not using other capital raising methods, the legitimacy of said reasons, its method for setting the issue price of shares, and any effects on shareholders' equity. Such issuer shall also apply for approval by resolution of a shareholders' meeting or directors meeting in accordance with the Company Law or relevant provisions of securities laws and regulations.
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Article 31
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After the issuance of overseas stocks, SFC approval is required for the issuance of any additional stocks except under the following circumstances:
1. Where overseas stocks have been sold, investors may purchase stocks on the domestic market within the amount of the stocks previously sold and trade them on the offshore market.
2. Where, following the issuance of overseas stocks, the issuer carries out a cash capital increase through a new share issue, a new share distribution from earnings, or a new share distribution from capital reserve in a corresponding amount.
Where an issuer needs to issue additional overseas stocks in connection with a cash capital increase through a new share issue, as referred to in the preceding paragraph, if the proceeds raised offshore are to be converted into New Taiwan Dollars and used onshore, the issuer shall obtain a consent letter from the competent authority for foreign exchange business before registering (or applying for approval of) a cash capital increase with (by) the SFC.
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Article 32
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An issuer applying to issue overseas stocks shall submit an issuance plan that specifies the following particulars:
1. purpose of the offer;
2. expected date of issuance, total number of stocks to be issued, method for determining the issue price per share, and the total dollar amount;
3. place of issuance and trading;
4. statement of issuance methods: The statement shall specify whether all the stocks shall be publicly issued, or whether a portion thereof shall be subscribed to by specific person(s) through negotiation; if a portion thereof shall be subscribed to by specific person(s), then the statement of underwriting procedures shall state why a specific person(s) is being contacted to subscribe through negotiation, the number of shares to be subscribed to by a specific person(s), the total dollar amount thereof, a
nd the relationship between the specific person(s) and the issuer;
5. manner for handling and custody of the stock certificates;
6. the use of proceeds and the projected benefits to be derived therefrom (in the case of cash capital increase through a new share issue);
7. allocation of responsibility for expenses incurred through issuance and during the period when the stocks are outstanding;
8. other important stipulations; and
9. other matters required to be specified by the SFC.
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Article 33
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An issuer applying to issue overseas stocks shall retain a securities underwriter to prepare an evaluation report on the following matters:
1. feasibility of the issuance plan;
2. method of issuance expense allocation, and impact on shareholders' equity;
3. the reasonableness and legality of the issuance plan, and its impact on shareholders' equity (if the statement of issuance methods provides that a portion shall be subscribed to by specific person or persons);
4. the feasibility and necessity of the offering and issuance plan, and legitimacy of the use of proceeds, projected progress and the expected benefits (in the case of a cash capital increase through a new share issue);
5. the necessity and legitimacy of discounting the price of the newly issued shares, the reasons for not using other capital raising methods, and any effects on shareholders' equity (in the case of an issuer applying for issuance of overseas shares at below par value through cash capital increase);
6. the legitimacy of the pricing method;
7. the legality of the offshore stock service agency agreement and custody contract; and
8. whether there exists any event referred to in Article 5 or Article 7, and the basis for determining that such circumstances do or do not exist.
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Article 34
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A holder of overseas stocks may sell the stocks in Taiwan's domestic market; provided, however, that in the event of a cash capital increase through a new share issue, the holder thereof shall not effect the sale within three months after the issuance of the overseas stocks.
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Article 35
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Where an issuer has issued overseas stocks pursuant to the SFC's approval, it shall post the following particulars to the information disclosure website specified by the SFC:
1. Where the offering is to raise funds, a public announcement of the following particulars shall be made within two days after the issue pricing:
(1) number of shares issued, issue price per share, and total issue size;
(2) place of issuance and transaction;
(3) if the statement of issuance methods provides that a portion of the depositary receipts shall be subscribed to by specific person(s), then the announcement shall state the purpose for subscription by the specific person(s) through negotiation, the total number of shares subscribed to by the specific person(s), the total dollar amount, and the relationship between the specific person(s) and the issuer;
(4) the funds utilization plan and the expected benefits thereof (in the case of cash capital increase through a new share issue); and
(5) the main impact on shareholders' equity (such as expenses incurred through issuance of overseas stocks, or impact on shareholding structure).
2. Where the offering is not for the purpose of raising funds, a public announcement of the following particulars shall be made within two days after listing:
(1) number of shares listed, listed price per share, and total size of listing;
(2) place of listing; and
(3) the main impact on shareholders' equity (such as expenses incurred through issuance, or impact on shareholding structure).
Should there be any change after the announcement or reporting of items referred to in subparagraph 1 of the preceding paragraph, a public announcement of such change shall be made and a report shall be filed with the SFC within two days after the closing of the offering.
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Article 36
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After approval by the SFC for issuance of overseas stocks, the issuer shall submit one of each of the following documents to the SFC within ten days after issuance or listing:
1. a prospectus prepared in accordance with the securities laws of the country where the stocks are issued (the prospectus must also be uploaded to the information disclosure website specified by the SFC); provided, however, that these requirements do not apply to cases where the shares have not been issued for the purpose of raising capital);
2. a duplicate copy of the overseas stock service agency agreement;
3. a duplicate copy of the custody contract;
4. an opinion letter in Chinese issued by a ROC lawyer confirming that there is no material discrepancy between the issuance rules for the overseas stock issuance and the contents approved by the SFC; and
5. other documents required by the SFC.
When the issuer provides or discloses any information pursuant to the laws and regulations of the country where the stocks are issued, a report thereupon shall be filed with the SFC within three days after such provision.
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Article 37
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After the issuance of overseas stocks, the issuer shall, within ten days after the end of each month, post a Monthly Statement of Outstanding Balance of Overseas Stocks (Attachment 12) to the information disclosure website specified by the SFC, and shall further report such issuance to the competent authority for foreign exchange business.
In the event that the issuer carries out a cash capital increase through an additional share issue, a new share distribution from earnings, or a new share distribution from capital reserve pursuant to Article 31, paragraph 1, subparagraph 2, the issuer shall, within two days after issuance thereof, report to the competent authority for foreign exchange business the number of stocks issued and the total dollar amount and post the relevant information to the information disclosure website specified by the
SFC.
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Article 38
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All application documents shall be prepared according to the forms set forth in these Criteria and submitted in bound form.
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Article 39
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When issuers make public announcements or filings pursuant to Articles 18, 26, or 35 herein, copies shall be sent to the competent authority for foreign exchange business.
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Article 40
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These Criteria shall enter into force from the date of promulgation.
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