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Amendments

Title:

Taiwan Stock Exchange Corporation Rules Governing Review of Call (Put) Warrant Listings  CH

Amended Date: 2021.06.11 (Articles 10 amended,English version coming soon)
Current English version amended on 2020.12.24 
Categories: Primary Market > Review

Title: Taiwan Stock Exchange Corporation Rules Governing Review of Call (Put) Warrant Listings(2007.07.30)
Date:
Article 9 After the issuer receives approval as a qualified issuer of call (put) warrants and wishes to apply to the TSEC for listing of a planned call (put) warrants issue, the issuer shall apply to the TSEC with an Application for Listing of Call (Put) Warrants (Attachment 2) filled out in full and with the required documents attached. Following TSEC approval of the issuer's issuance plan, the TSEC will immediately issue a letter of approval, with a copy to the competent authority, provided that depending on the condition of the issuer's financial business, the status of the underlying securities, the number of call (put) warrants already listed on the market with identical or similar types of underlying securities and their expiration dates and distributions, the TSEC may withhold approval, limit the number of warrants to be listed, or impose other conditions.
After receiving a TSEC approval letter and submitting a copy to the competent authority, the issuer may entrust an underwriter with underwriting of the issue or it may sell the warrants itself, and provide a prospectus to the subscribers.
The guidelines for information to be published in public offering prospectuses will be adopted by the TSEC in accordance with Article 13 of the Rules Governing Applications for Issuance of Call (Put) Warrants by Issuers and shall take force upon ratification by the competent authority.
Article 10 An application for TSEC listing approval for an issue of call (put) warrants shall conform to each of the following conditions:
1. The issue shall comprise 20 million or more issuance units, or 10 million or more units with a total value of NT$200 million or more.
An issuance unit shall represent one share (one beneficial unit) or a basket of single shares, or every 2 issuance units shall represent one share (one beneficial unit) or a basket of single shares, or every 5 issuance units shall represent one share (one beneficial unit) or a basket of single shares, or every 10 issuance units shall represent one share (one beneficial unit) or a basket of single shares, or every 100 issuance units shall represent one share (one beneficial unit) or a basket of single shares. The price of the underlying security must be NT200 (inclusive) or higher, however, before there may be an issuance in which every 100 issuance units represent one share (one beneficial unit) or a basket of single shares.
2. Distribution of warrant holders:
(1) There must be 100 or more warrant holders. At least 80 warrant holders must hold between 1,000 and 50,000 issuance units, and their cumulative holdings must comprise 20% or more of the total listed issuance units.
(2) The number of issuance units held by any single warrant holder may not exceed 10% of the total volume of listed issuance units; where a warrant holder is the issuer, the number of issuance units held may not exceed 30% of the total volume of listed issuance units, provided that where the issuer entrusts another institution with risk management, the risk management institution in question may not hold the warrants issued.
(3) The total number of issuance units held by the issuer and the issuer's associated persons and employees may not exceed 35% of the total volume of listed issuance units.
(4) During the sale of the call (put) warrants, the issuer shall restrict the directors, supervisors, and managers of the company whose securities are represented in the call (put) warrants, as well as major shareholders with shareholdings of 10% or more in that company, from holding warrants through which they may subscribe to a number of shares in excess of the number of shares of the underlying security they already hold, with the exception of the TSEC Taiwan 50 Index, Taiwan Mid-Cap 100 Index, and Taiwan Technology Index exchange-traded funds (respectively, "the Taiwan 50 Index," "the Taiwan Mid-Cap 100 Index," and "the Taiwan Technology Index").
3. Period of validity: Calculated from the date of listing, the period of validity shall be between six months and two years, inclusive.
4. Restriction on total issuance volume of the underlying represented by a warrant: The total number of shares of the underlying security that may be called (or put) through the call (put) warrants and the shares of the same underlying security represented by other existing call (put) warrants already listed on the TSEC, combined with those issued overseas by the issuer or its correspondent institution overseas and representing the same underlying, may not exceed 17.5% of the total number of outstanding shares of the issuing company after deduction of each of the following types of shareholdings:
(1) The total percentage of shares held by directors and supervisors under statutory shareholding ratio requirements.
(2) Already pledged securities.
(3) The number of centrally deposited shares mandatory for newly listed companies.
(4) Shares already repurchased under the Rules Governing Share Repurchase by Listed and OTC Companies and not yet cancelled.
(5) Shares with restrictions on listing or trading imposed by the competent authority. When the underlying security is the Taiwan 50 Index, Taiwan Mid-Cap 100 Index, or Taiwan Technology Index, the total number of shares of the underlying that may be called (or put) through the call (put) warrants and the shares of the same underlying represented by other existing call (put) warrants already listed on the TSEC, combined with those issued overseas by the issuer or its correspondent institution overseas and representing the same underlying, may not exceed the total number of outstanding shares of the issuing company, provided that this shall not affect the validity of any call (put) warrants already issued.
5. When the underlying security is the Taiwan 50 Index, Taiwan Mid-Cap 100 Index, or Taiwan Technology Index, consent shall be obtained from the institution creating the fund's underlying index.
6. The issuance plan shall contain the following terms and conditions:
(1) The issuance date and the period of validity.
(2) Detailed information on the underlying security or basket of securities (for the underlying securities of the warrants issued, in addition to the financial statement of the most recent period audited or certified by a certified public accountant and showing no losses, there shall also be a statement of the reason for issuing warrants based on the underlying securities).
(3) The type of call (put) warrant, the volume of issuance units and total value of the issue.
(4) Terms of issuance (such terms, including issuance price, strike price, exercise period and number of shares or beneficial units represented per issuance unit; conditions regarding upper and lower price caps for knock-out call or put warrants; and the fact that when the closing price of the underlying security reaches the upper or lower price cap, it will be the final trading day for the given warrant, which will be deemed to be at maturity on the following business day, with automatic cash settlement taking place uniformly at the closing price of the underlying security on the last day of trading, shall be set out in a prominent typeface). For a call warrant, the strike price referred to may not exceed 150% of the underlying security's price at market close on the date of application; for a put warrant, the strike price may not be lower than 50% of the underlying security's price at market close on the date of application, provided that the above ratios may be exceeded when the strike price and the
closing price of the underlying security differ by less than NT$30. There shall be reasonable cause and explanation for any terms of issuance that do not conform to the above standards, and full disclosure shall be given to investors.
(5) The method by which the issuance price is calculated, including the price of the underlying security, the strike price, the period of validity, the interest rate, the rate of fluctuation of the underlying security and other elements used in the calculation, and a table of comparison with other warrants in the preceding year that took the same listed security as the underlying security.
(6) Detailed information on the guarantor and the guaranty agreement or collateral.
(7) Procedures for exercising the option and the terms for cancellation of already-exercised call (put) warrants.
(8) Strategies for offsetting foreseeable risks.
(9) The policy of the issuer regarding adjustment of the strike price of the call (put) warrant and related items along with the distribution of dividends and bonuses, increases or decreases in capitalization, stock splits or consolidations, and handling of other related matters by the issuing company of the underlying securities, or the distribution of Taiwan 50 Index exchange-traded fund dividends and handling of other matters by the securities investment trust enterprise. Where the issuer does not make such adjustments in accordance with the TSEC reference formula, that fact shall be noted in bold lettering in the issuance prospectus.
(10) Methods of handling merger by the company issuing the underlying securities, or alteration in the trading method, suspension of sale, or de-listing of the securities, or delisting when the securities investment trust enterprise of the underlying Taiwan 50 Index fund undergoes dissolution or bankruptcy, or its approval its revoked
(11) Methods of handling market listing of the call (put) warrants, or suspension of trading or de-listing of the warrants by the TSEC.
(12) Terms stipulating that upon expiration of the period of validity, where the market price of the underlying securities is higher than the strike price of a call warrant (or the strike price of a put warrant is higher than the market price of the underlying securities) and where there is value in the exercise of the option and the terms of exercise require cash settlement, the warrant holder shall be deemed to have exercised the warrant and to have given notice to that effect.
(13) Terms stipulating that the warrant issuer may not substitute another warrant with a period of validity longer than that of the original warrant, or any other security, for the originally issued warrant.
(14) Procedures for delivery and payment when the warrant holder exercises the option.
(15) Terms stipulating that where settlement after exercise of the option referred to in the preceding paragraph shall be in cash, the cash settlement amount shall be calculated based on the closing price of the underlying securities on the exercise date.
(16) Terms stipulating the methods for handling distribution of securities centrally deposited in the Taiwan Central Depository Corporation account where the issuer fails to perform its delivery of the underlying securities or the cash price differential.
(17) Clarification of whether or not there are plans for a reverse issue of call (put) warrants against the same underlying securities within the coming three months.
Article 11 For applications for TSEC approval for listing of call (put) warrants, when the underlying securities are stocks, they shall conform to each of the following conditions:
1. Market value of underlying security: NT$10 billion or more.
2. The volume of shares traded during the most recent three calendar months shall account for 20% of the total of outstanding shares, or the average monthly volume of shares traded in the most recent three months shall reach 100 million shares or more.
3. The financial report for the most recent period, certified or audited by a certified public accountant, shall show no losses, or shall show no accumulated deficit if losses exist.
Conformance of underlying securities with the standards of the preceding paragraph shall be based on quarterly TSEC announcements, provided that if during the period for announcement the financial report required under Article 36 of the Securities and Exchange Law does not conform with Subparagraph 3 of the preceding paragraph, the TSEC will announce cancellation of the given security's qualification as the underlying of a call (put) warrant.
In applications to the TSEC for approval for listing of call (put) warrants, in addition to the financial statement of the most recent period audited or certified by a certified public accountant and showing no losses, there shall also be a statement of the reason for issuing warrants based on the underlying securities.
Applications with the TSEC for approval for listing of call (put) warrants whose underlying security is beneficial interest certificates shall be limited to Taiwan 50 Index, Taiwan Mid-Cap 100 Index, and Taiwan Technology Index funds.