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Amendments

Title：

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

Amended Date： 2021.03.29 
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 Overseas Securities by Issuers(2012.09.17)
Date：
Article 4     The terms used herein shall have the following meanings:
  1. The term "sponsor issuance" 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.
  2. The term "depositary institution" refers to an institution located outside the territory of the Republic of China that issues depositary receipts pursuant to the securities regulations of the country where it is located.
  3. The term "custodian institution" refers to a bank located within the territory of the Republic of China that has been approved by the Financial Supervisory Commission (FSC) to engage in custodian business.
  4. The term "overseas depositary receipts" 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.
  5. The terms "registration" and "effective registration" refer to where an issuer registers with the FSC by duly submitting all required documents, with the registration to automatically become effective after a specified number of business days have elapsed since the registration materials were received by the FSC or any FSC-designated agency unless the FSC has either returned the papers to the registrant for completion of missing items or has rejected the registration in order to safeguard the public interest.
  6. The term "business day" means days on which trading takes place in the securities markets.
  7. The term "financial reports" means consolidated financial reports, or if the issuer does not have a subsidiary, means individual financial reports.
Article 6     An issuer intending to issue and offer overseas securities shall, after obtaining a letter of approval from the Central Bank, duly file with the FSC for effective registration, enclosing all required documents.
    When an issuer registers to issue and offer overseas securities, it shall engage a securities underwriter for evaluation and duly produce an evaluation report. However, this does not apply to an issue of straight corporate bonds.
    An amended registration shall be filed promptly with the FSC if there is any change in the particulars registered in the documents submitted.
Article 8     If an issuer files for registration to offer and issue overseas securities and, during the time period from the balance sheet date of the most recent financial report submitted therefore to the date of effective registration, an event occurs having a material impact on shareholders' equity or the price of the securities as set out in Article 36, paragraph 3, subparagraph 2 of the Act, then in addition to making a public disclosure and filing a report with the FSC within 2 days from the actual occurrence of that event as required, the issuer shall submit an opinion by a relevant expert according to the nature of the event, and arrange for the certifying CPA to submit a report to the FSC indicating its impact on the financial report.
    From the date on which the FSC or its designated institution receives the registration documentation until the date of effective registration, except for information issued in accordance with laws and regulations, an issuer may not state or issue any forecasted financial or business information to any specified or unspecified person.
    An issuer that externally issues any information that is not consistent with that in the registration documentation shall amend the relevant information and report it to the FSC.
Article 9     Where any of the circumstances listed below exists at an issuer, the FSC may reject its plan for offering and issuance of overseas securities:
  1. Any of the circumstances referred to in Article 156, paragraph 1 of the Act.
  2. The plan for the current offering and issuance of overseas securities is unfeasible, unnecessary, or unreasonable.
  3. The implementation of any previous plan for offering and issuance, or private placement, of securities 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 registration exceeds 3 years.
    3. The securities offering and issuance plan was materially changed without being submitted to and approved by a shareholders' meeting.
    4. The issuer has not complied in the most recent 1 year with Article 11 herein and with Article 9, paragraph 1, subparagraphs 4 through 9 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers.
    5. Failure to faithfully comply with the Directions for Public Companies Conducting Private Placements of Securities, where the circumstances are of material significance.
    6. 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 registration date is more than 3 years.
  4. An important part 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) has not been proposed and submitted to a board meeting or shareholders meeting for discussion and resolution/approval in accordance with the Company Act and the issuer's articles of incorporation.
  5. The company has lent large amounts of capital to others in excess of financing needs resulting from the company's business transactions with other companies or firms, and no improvement has yet been made at the time of registration.
  6. The company has entered into an irregular transaction of material significance, and has not rectified the situation at the time of filing the registration .
  7. The company holds current financial asset investments, idle assets, or investment real property, has no plan to actively dispose of or develop such holdings, and their total value is equivalent to either: (1) 40 percent or more of shareholders' equity in the most recent CPA-audited and -attested financial report, or (2) 60 percent of the total amount of funds to be raised through the overseas securities issue that the company is registering to issue; provided, however, that this provision shall not apply when the funds to be raised will be used to purchase property, plant and equipment and there is a concrete plan for fund raising evidencing the necessity to raise the funds.
  8. The company has provided security for a loan to another party in violation of Article 5 of the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, where the circumstances are serious, and the violation has not been rectified.
  9. The overseas securities being offered and issued are to be purchased by a subscriber that is related to the issuer, or the ultimate source of the funds used to purchase the issue is a party related to the issuer. The meaning of the term "related party" shall be determined in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
  10. The total dollar 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 utilization plan for the present offering is to purchase domestic property, plant and equipment and a commitment is made not to increase investment in the mainland.
  11. Any one of the following descriptions applies to shareholdings of the entire body of the company's directors or supervisors:
    1. The percentage of their equity stake is in violation of Article 26 of the Act and the FSC has notified them to make up for the shortfall but they have not yet done so.
    2. The percent 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 shall not apply where the entire body of the company's directors or supervisors pledges to make up for the shortfall upon completion of the offering.
    3. During the fiscal year in which the registration is made, and also in 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.
  12. The company's financial statements in the most recent 2 years have not been prepared in accordance with relevant acts, regulations, and generally accepted accounting principles, and such violations are significant.
  13. In the past 3 years, a court has rendered a final and unappealable judgment against the issuer or its current chairperson, general manager, or de facto responsible person due to violation of laws governing business operations such as the Act, Company Act, Banking Act, Financial Holding Company Act, and Business Accounting Act, or due to a breach of good faith crime such as corruption, malfeasance, fraud, breach of fiduciary duty, or embezzlement.
  14. New shares are issued for the purpose of a merger, for the purpose of acquiring the shares of another company, or for the purpose of an acquisition or separation conducted in accordance with law, and such issue has been conducted under any of the following conditions:
    1. The issue involves a material violation of the provisions of Chapter II, Section V of the Regulations Governing the Acquisition or Disposal of Assets by Public Companies.
    2. The acquisition of shares or of a corporation involves shares that are not newly issued by another company, or the non-current equity investment holdings of another company, or outstanding shares that are held by the shareholders of another company.
    3. The ownership rights of the acquired shares, business, or assets are impaired or encumbered in some way, such as through the creation of pledge thereupon or placing of restrictions on the purchase or sale thereof.
    4. The provisions of Article 167, paragraph 3 or 4 of the Company Act are violated.
    5. An audit report with unqualified opinion was not issued by a CPA regarding the financial report on the acquired company for the most recent fiscal year, except where an audit report with qualified opinion was issued together with an unqualified opinion regarding the balance sheet.
  15. The internal control system is materially flawed in terms of either design or enforcement.
  16. The company's share price has fluctuated abnormally during the month prior to the date of registration of the offering and issuance.
  17. The provisions of Article 8, paragraph 2 are violated.
  18. A listed company, OTC company, or emerging stock company fails to appoint a remuneration committee in accordance with Article 14-6, paragraph 1 of the Act, or fails to comply with applicable laws and regulations regarding remuneration committees, where the circumstances are of material significance.
  19. Failure to adopt electronic transmission as one of the methods for exercising voting rights in accordance with the proviso to paragraph 1 of Article 177-1 of the Company Act.
  20. Other acts and regulations are violated, or where the FSC deems disapproval necessary for protection of the public interest or national reputation.
    The foregoing subparagraphs 4 to 10 are not applicable in the case of registrations 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 paragraph 1, subparagraphs 3, 5, and 10 shall not apply where the issuer registers 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 separation of a foreign company conducted in accordance with the law.
    When an issuer that is a financial holding company, banking enterprise, securities enterprise, or futures enterprise, calculates the assets of paragraph 1, subparagraph 7, it need not include investments in financial asset items distinguished as current in such calculations. An issuer that is an insurance enterprise need not apply the provisions of paragraph 1, subparagraph 7.
Article 12     An issuer registering to use either (i) a 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 ten different types of] Registration to Sponsor 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 the registration filed with the FSC has become effective.
    An issuer registering to use a capital increase through a new share issue to sponsor issuance of overseas depositary receipts shall state the basis for setting the issue price, the legitimacy thereof, and any effects on shareholders' equity and refer the same to a shareholders meeting for approval by resolution.
Article 14     After the issuance of overseas depositary receipts, the issuer must obtain effective registration with the FSC before it may carry out any follow-on issue, except under the following circumstances:
  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 carries out a follow-on issue of depositary receipts corresponding to the amount of the newly issued shares.
    An issuer's director, supervisor, manager, or shareholder holding more than 10 percent of the total issued shares, intending to issue additional depositary receipts under subparagraph 1 of the preceding paragraph shall comply with Article 22-2, paragraph 1, subparagraph 1 of the Act by filing an application (Attachment 6) specifying therein the required particulars and may proceed to the issuance only after the approval by the FSC.
    Where the issuer referred to in paragraph 1 needs to carry out a follow-on issue of 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 Central Bank before registering with the FSC to carry out a cash capital increase.
Article 22     An issuer intending to issue and offer overseas corporate bonds shall submit a Registration to Offer and Issue Overseas Corporate Bonds (Attachments 12 to 17) specifying therein the required particulars, together with the required supporting documents and may proceed to the issuance only after the registration filed with the FSC becomes effective.
    An emerging stock company registering to offer and issue overseas convertible bonds or overseas corporate bonds with warrants shall submit a credit rating report on the underlying from a credit rating institution approved or ratified by the FSC.
    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 a Registration to Offer and Issue overseas depositary receipts (Attachments 10 to 11) specifying therein the required particulars, together with the required supporting documents and may proceed to the issuance only after the registration filed with the FSC becomes effective.
Article 29     An issuer registering 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 Registration for Issuance of Overseas Stocks (Attachments 12 and 13) specifying therein the required particulars, together with the required supporting documents, and may proceed to the issuance only after the registration filing with the FSC becomes effective.
Article 38-1     Article 4, subparagraph 7 and Article 9, paragraph 1, subparagraphs 7, 9 and 10, and paragraph 4, as amended on 17 September 2012, shall apply as follows:
  1. To public companies with shares listed on a stock exchange or traded on the over-the-counter market, these provisions shall apply from the fiscal year of 2013.
  2. To public companies with shares not listed on a stock exchange nor traded on the over-the-counter market, these provisions shall apply from the fiscal year of 2015. However, such companies may voluntarily apply these provisions from the fiscal year of 2013.
  3. Public companies that do not follow either of the preceding two subparagraphs shall follow the provisions of these Regulations before the issuance and enforcement of the 17 September 2012 amendment.