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Article 9
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After the issuer receives approval as a qualified issuer of call (put) warrants and wishes to apply to the TWSE for listing of a planned call (put) warrants issue, the issuer shall apply to the TWSE with an Application for Listing of Call (Put) Warrants (Attachment 2) filled out in full and with the required documents attached. Following TWSE approval of the issuer's issuance plan, the TWSE will immediately issue a letter of approval, with a copy to the competent authority, provided that depending on the issuer's financial and business condition, the status of the underlying securities or the underlying index, 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 TWSE may withhold approval, limit the number of warrants to be listed, or impose other conditions.
After receiving a TWSE 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 TWSE 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.
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Article 10
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An application for TWSE listing approval for an issue of call (put) warrants shall conform to each of the following conditions:
1. The issue shall comprise 10 million to 50 million issuance units. An issuance unit for non-index warrants shall represent one share (one unit) or a basket of single shares, or every 2 issuance units shall represent one share (one unit) or a basket of single shares, or every 5 issuance units shall represent one share (one unit) or a basket of single shares, or every 10 issuance units shall represent one share (one unit) or a basket of single shares, or every 100 issuance units shall represent one share (one 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 unit) or a basket of single shares. For index warrants, the issuer will determine the index points represented by each issuance unit; one index point corresponds to NT$1.
2. Period of validity: Calculated from the date of listing, the period of validity shall be between six months and two years, inclusive.
3. Restriction on total issuance volume of the underlying represented by a warrant: (1) When the underlying security is a stock, 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 TWSE may not exceed 22% of the total number of outstanding shares of the domestic issuing company after deduction of each of the following types of shareholdings. Where the issuer and any of its overseas subsidiaries (whose warrant issuing operations are guaranteed or secured by the mother company) issue offshore call (put) warrants, the total number of shares of the underlying securities that may be called (put) through the offshore call (put) warrants, combined with the number of those issued overseas and representing the same underlying securities, may not exceed three percent of the total number of outstanding shares of the issuing company after deduction of each of the following types of shareholdings:
(i.) The total percentage of shares held by directors and supervisors under statutory shareholding ratio requirements.
(ii.) Already pledged securities.
(iii.) The number of centrally deposited shares mandatory for newly listed companies.
(iv.) Shares already repurchased under the Rules Governing Share Repurchase by Listed and OTC Companies and not yet cancelled.
(v.) Shares with restrictions on listing or trading imposed by the competent authority.
(2) When the underlying security is the certificates of beneficial interest of an ETF announced by the TWSE, 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 TWSE, 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 beneficial interest units already issued by the fund, provided that this shall not affect the validity of any call (put) warrants already issued.
(3) When the underlying security is Taiwan Depository Receipts, the total number of units of the underlying that may be called (or put) through the call (put) warrants and the units of the same underlying represented by other existing call (put) warrants already listed on the TWSE may not exceed 22 percent of the already listed units of the receipts.
4. When the underlying security is an ETF announced by the TWSE, consent shall be obtained from the institution creating the fund's underlying index; when the underlying index is an index announced by the TWSE, consent shall be obtained from the institution creating the given underlying index.
5. 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 index, security, or basket of securities (when the underlying securities of the warrants issued are stocks, 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 or exercise index level, exercise period and number of shares, beneficial units, depository receipt units, or index points represented per issuance unit; conditions regarding upper and lower price caps or index levels 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 or the closing level of the underlying index reaches the exercise index level, 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 or the closing level of the underlying index on the last day of trading, shall be set out in a prominent typeface). For a call warrant, the strike price or exercise index level referred to may not exceed 150% of the underlying security's price or the closing level of the underlying index 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 or the closing level of the underlying index 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 or underlying index, the strike price or exercise index level, 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 with the same listed security or index as the underlying security.
(6) Detailed information on the guarantor and the guaranty agreement or collateral.
(7) Items that must be included in the issuance plan in accordance with Article 8 of the Taiwan Stock Exchange Corporation Directions for Call (Put) Warrant Liquidity Provider Operations.
(8) Procedures for exercising the option and the terms for cancellation of already-exercised call (put) warrants.
(9) Strategies for offsetting foreseeable risks.
(10) 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 TWSE reference formula, that fact shall be noted in bold lettering in the issuance prospectus.
(11) 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
(12) Methods of handling market listing of the call (put) warrants, or suspension of trading or de-listing of the warrants by the TWSE.
(13) Terms stipulating that upon expiration of the period of validity, where the market price of the underlying securities or the closing level of the underlying index is higher than the strike price or the exercise index level of a call warrant (or the strike price or exercise index level of a put warrant is higher than the market price of the underlying securities or the closing level of the underlying index) 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.
(14) 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.
(15) Procedures for delivery and payment when the warrant holder exercises the option.
(16) 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 or the closing level of the underlying index on the exercise date.
(17) Terms stipulating the methods for handling distribution of securities centrally deposited in the Taiwan Depository and Clearing Corporation account where the issuer fails to perform its delivery of the underlying securities or the cash price differential within the prescribed time period.
(18) Clarification of whether or not there are plans for a reverse issue of call (put) warrants against the same underlying securities or underlying index within the coming three months.
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