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Article 8
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Where any of the following conditions apply to an issuer, the TWSE may withhold approval for qualification; however, if the circumstance set forth in subparagraph 4 applies to an issuer, but the issuer has shown concrete improvement in the circumstances, and the competent authority has recognized the improvement, the issuer may be exempted from the restriction thereunder：
- The issuer has made incomplete submission of required application documents, and failed to supplement those documents by the deadline prescribed by the TWSE.
- The particulars of the issuer's application do not conform to laws and regulations, or contain false and misleading presentations.
- There is an instance of major default by the issuer which has yet to be settled, or less than 4 years have elapsed since settlement of the default.
- Non-conformance by the issuer with any of subparagraphs 2 to 5 of Article 38, paragraph 1 of the Standards Governing the Establishment of Securities Firms, or any similar circumstances in cases where the issuer is a foreign institution.
- The issuer lacks appropriate mechanisms for risk management.
- The issuer has been incapable of meeting obligations in connection with any previous issue of call (put) warrants.
- The issuer has been incapable of carrying out issuance in conformance with relevant TWSE regulations governing call (put) warrants within the previous year and unable to achieve conformance within the period of time prescribed by the TWSE.
- Preparation of the issuer's financial reports does not conform with generally accepted accounting principles or its internal control system is not capable of functioning effectively.
- The issuer has violated Article 6 of the Issuance Rules, or review of matters requiring disclosure show threat of serious influence to its financial condition.
- There are serious equity disputes or violation of regulations sufficient to affect financial operations of the issuer that have not been resolved or rectified.
- Where there is factual evidence of irregular circumstances in the issuer's finances or operations.
- There is nonconformance with provisions of these Rules relating to the issuer's financial status.
When any circumstance set forth in the subparagraphs below occurs after an issuer obtains qualification approval, its issuance of call (put) warrants shall be suspended, and resumed only after such circumstances are rectified. The issuance of any warrants already approved but not yet issued shall be suspended, and the suspension shall be reported to the competent authority; the validity of any call (put) warrants already issued shall not be affected. This paragraph shall also apply when the issuer is a foreign institution and the circumstances of any subparagraph herein exist with respect to its head office.
- The issuer does not simultaneously operate underwriting, trading for its own accounts, and brokerage or intermediary services.
- The latest financial report, audited and attested or reviewed by a CPA, fails to conform with the standards of Article 4, paragraph 2, subparagraphs 1 and 2, provided that this shall not apply where there is non-conformance with the standards of Article 4, paragraph 2, subparagraph 1, but the measures provided in Article 5 are followed.
- The issuer's regulatory capital adequacy ratio falls below 150 percent, or remains below 200 percent for a period of 3 consecutive months.
- The issuer's credit rating fails to achieve the minimum prescribed standard.
If any of the events listed in the subparagraphs below occurs after an issuer has obtained qualification approval, the issuer shall be restricted from applying for issuance of call (put) warrants for 1 year. The issuance of warrants already approved but not yet issued shall be suspended, and the suspension shall be reported to the competent authority for recordation. However, the validity of call (put) warrants already issued shall not be affected.
- The issuer is ranked in Level 5 for the most recent year, or in Level 4 for the most recent 2 years, in the assessment conducted pursuant to the Operational Guidelines for Assessment of Securities Firms Risk Management System.
- The issuer has violated Article 17, paragraph 1 herein or provisions of the TWSE Operation Directions Governing Liquidity Providers of Call (Put) Warrants, and it has been sanctioned within the most recent year by the TWSE or the GreTai Securities Market by imposition of penalties in a cumulative amount of NT$300,000 or more or by restriction of application for issuance of call (put) warrants two times.
- The issuer has been restricted by the TWSE from applying for issuance of call (put) warrants because of an irregularity in the quotation system of its call (put) warrant liquidity provider in the current year, and it still has failed to take corrective action.
Directions for handling irregularities in the quotation system of a call (put) warrant liquidity provider shall be separately prescribed by the TWSE.
The TWSE may report an issuer in writing to the competent authority for recordation if the issuer fails to issue any call (put) warrants for 1 year or more, or if the issuer has been under suspension from call (put) warrants issuance pursuant to paragraph 2 for 1 year or more and still fails to take corrective action.
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Article 12
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Where any of the following conditions apply, the TWSE may withhold approval for an application for market listing of a projected issue of call (put) warrants:
- The required application documents submitted by the issuer are incomplete, and it has failed to supplement the required documents by the deadline prescribed by the TWSE.
- The particulars of the issuer's application do not conform to laws and regulations, or the issuer has made false and misleading presentations in the application.
- The issuer or an affiliated company of the issuer has, during the month preceding application, released information or predictions relating to the price of the underlying securities or the underlying index of its projected warrants issue.
- When the underlying security of the projected issue of warrants is a domestic stock, and the issuer or its directors, supervisors, managers, employees, or shareholders hold 10 percent or more of the issuer's shares, or any of the above hold 10 percent or more of the shares of another company, and are at the same time a director, supervisor, manager, or shareholder with a stake of 10 percent or more in the issuing company of the underlying security or any of the issuing companies of the basket of underlying listed securities. But this provision shall not apply to a follow-on issue of call (put) warrants.
- The issuer's CPA audited and attested or CPA reviewed financial report for the most recent period is not in compliance with the standards of Article 4, paragraph 2, subparagraphs 1 and 2, provided that this shall not apply where there is non-conformance with the standards of Article 4, paragraph 2, subparagraph 1, but the measures provided in Article 5 are followed.
- When the combined total of the issue price of the currently listed, GTSM listed, and GTSM contract-based call (put) warrants issued domestically by the issuer whose term of validity has not yet expired, and the call (put) warrants issued overseas whose term of validity has not yet expired, and the projected issue of call (put) warrants, together with the amount of the guarantee or the assets provided as collateral for the overseas subsidiary's offshore call (put) warrant issuing business is subject to any of the following conditions:
- The issuer's credit rating is a Taiwan Ratings Corporation Class A rating or above, a Fitch Ratings Limited, Taiwan Branch rating of A (twn) or above, a Moody's Investors Service rating of A.tw or above, a Moody's Investors Service Class A rating or above, a Standard & Poor's Corp. Class A rating or above, or a Fitch Inc. Class A rating or above, and the combined total exceeds 60 percent of its eligible net regulatory capital adequacy requirement.
- The issuer's credit rating is a Taiwan Ratings Corporation Class BBB- rating or above, a Fitch Ratings Limited, Taiwan Branch rating of BBB- (twn) or above, a Moody's Investors Service rating of Baa1.tw, Baa2.tw, Baa3.tw or above, a Moody's Investors Service Class Baa1, Baa2, Baa3 rating or above, a Standard & Poor's Corp. Class BBB- rating or above, or A Fitch Inc. Class BBB- or above, and the combined total exceeds 50 percent of its eligible net regulatory capital adequacy requirement.
- The issuer's credit rating is a Taiwan Ratings Corporation Class BB+ rating or above, a Fitch Ratings Limited, Taiwan Branch rating of BB+ (twn) or above, a Moody's Investors Service rating of Ba1.tw or above, a Moody's Investors Service Class Ba1 rating or above, a Standard & Poor's Corp. Class BB+ rating or above, or a Fitch Inc. Class BB+ or above, and the combined total exceeds 30 percent of its eligible net regulatory capital adequacy requirement.
- The issuer's credit rating is a Taiwan Ratings Corporation Class BB rating or above, a Fitch Ratings Limited, Taiwan Branch rating of BB (twn) or above, a Moody's Investors Service rating of Ba2.tw or above, a Moody's Investors Service Class Ba2 rating or above, a Standard & Poor's Corp. Class BB rating or above, or a Fitch Inc. Class BB rating or above, and the combined total exceeds 20 percent of its eligible net regulatory capital adequacy requirement.
- The issuer's credit rating is a Taiwan Ratings Corporation Class BB- rating or above, a Fitch Ratings Limited, Taiwan Branch rating of BB- (twn) or above, a Moody's Investors Service rating of Ba3.tw or above, a Moody's Investors Service Class Ba3 rating or above, a Standard & Poor's Corp. Class BB- rating or above, or a Fitch Inc. Class BB- rating or above, and the combined total exceeds 10 percent of its eligible net regulatory capital adequacy requirement.
The above-mentioned eligible net regulatory capital adequacy requirement shall be calculated based on the methods set forth within the Rules Governing Securities Firms, for Taiwan issuers.
If the issuer is a foreign institution, the aforesaid eligible net regulatory capital is calculated by (the net worth on the most recent financial reports of its branch(es) within the Republic of China or branch(es) established within the Republic of China by its wholly owned subsidiaries) x (net available funds multiplier).
- The issuer is a foreign institution, and at the time of application to issue call (put) warrants, the inward remittance of capital required for a hedge on the issue (the amount remitted into Taiwan minus the amount not required for a hedge on the issue) is less than 20 percent of the market value of the underlying securities represented by the non-matured listed or GTSM listed call (put) warrants (including the current issue). In addition, where a letter of undertaking stating that the premiums collected for the given issue of warrants will only be remitted into Taiwan after the expiration of the period of validity of the warrant or proof of an existing line of credit at a Taiwan bank in an amount equivalent to the premiums collected on the given issue have not been issued.
- There are irregular fluctuations in the price of the underlying security within the 3 months prior to the date of application, and a penalty has been imposed in accordance with the TWSE Rules Governing Implementation of the Stock Market Monitoring System.
- There is any other factor arising out of the nature of the enterprise or exceptional circumstances that may be deemed to adversely affect the applicant's performance of the option or the price of the underlying securities.
- There are any of the conditions set forth in Article 8, paragraph 1 of these Rules.
When the circumstance set forth in Article 8, paragraph 1, subparagraph 4 applies to an issuer intending to conduct warrant business, apart from the condition that the period of any sanction imposed on the issuer to suspend its business must have expired, if the issuer has shown concrete improvement in the circumstances and the competent authority has recognized the improvement, or if the issuer fell under the subparagraph 4 circumstance for a reason other than conducting warrant business, the issuer may be exempted from restriction under the preceding paragraph.
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