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Amended Article

Title：

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

Amended Date： 2021.03.29 
Article Content Chapter Content Search Article No. Search Legal Basis Subordinate Legislation Amended Article Legislative History Chinese
Article 3     The Financial Supervisory Commission ("FSC") shall supervise the offering and issuance, secondary distribution, and retroactive handling of public issuance procedures, issuance of new shares as stock dividends, and capital reductions through effective registration.
    In these Regulations, the term "effective registration" means that the issuer has duly filed all relevant documents with the FSC for registration in accordance with law. Unless the documents do not contain all the required information, amendment is required to protect the public interest, or the filing is rejected by the FSC, the registration will become effective after a designated number of business days from the date when the FSC and FSC-designated institutions receive the filing submission.
    The fact of effective registration for the items set forth under paragraph 1 may not be cited as proof of the veracity of registration particulars, or as guarantee of the value of the securities.
    The term "business day" as used in paragraph 2 means a day on which transactions are conducted in the securities market.
    The term "exchange-listed company" in these Regulations means a company whose stock is listed and traded in accordance with Chapters II and IV of the Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings ("Listing Review Rules").
    The term "Taiwan Innovation Board listed company" ("TIB-listed company") in these Regulations means a company whose stock is listed and traded on the Taiwan Innovation Board (TIB) in accordance with Chapter IV of the Listing Review Rules.
    The term "OTC-listed company" in these Regulations means a company whose stock is traded on the TPEx in accordance with the Taipei Exchange Rules Governing the Review of Securities for Trading on the TPEx ("TPEx Review Rules").
    The term "emerging stock company" in these Regulations means a company whose stock is traded on the TPEx in accordance with Chapter II or III of the Taipei Exchange Rules Governing the Review of Emerging Stocks for Trading on the TPEx ("Emerging Stock Review Rules").
    The term "Pioneer Stock Board company" ("PSB company") in these Regulations means a company whose stock is registered and traded on the Pioneer Stock Board (PSB) in accordance with Chapter III of the Emerging Stock Review Rules.
    The term "financial reports" as used in these Regulations means consolidated financial reports, or if the issuer does not have a subsidiary, means individual financial reports.
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Article 6     An issuer registering to offer and issue securities shall submit a prospectus.
    Given any of the following circumstances when the issuer files for registration, the issuer shall ask the lead securities underwriter for an evaluation and ask a lawyer to review the relevant legal issues. They shall respectively provide an evaluation report and a legal opinion in accordance with regulatory requirements:
  1. The filing for registration for issuance of new shares for cash, new shares in connection with merger, new shares in connection with receiving transfer of shares of another company, or new shares in connection with an acquisition or demerger conducted in accordance with laws, is made by an exchange-listed or OTC-listed company.
  2. An emerging stock company carries out a cash capital increase through a new share issue and allocates a certain percentage of the newly issued shares to a public offering.
  3. After the TWSE has filed an issuer's TIB listing contract with the FSC, the issuer carries out a cash capital increase through an issue of new shares to be sold in the public offering prior to initial listing.
  4. A company whose stock is neither listed on a stock exchange (hereinafter referred to as "unlisted") nor traded in the business places of securities firms, conducts an issuance of new shares for cash and allocates a certain percentage of the aggregate new shares to be publicly offered in accordance with Article 18.
  5. The offering is used to establish a company.
  6. Corporate bonds with equity characteristics are to be offered publicly through a securities underwriter.
    If the securities firm meets the financial and business requirements set by the FSC, it can be exempted from the requirement that the lead underwriter must issue an evaluation report.
    The legal opinion in paragraph 2, and concluding opinions of the evaluation report, shall be provided in the prospectus.
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Article 8     Where an issuer conducts an offering and issuance of securities as contemplated under Article 6, paragraph 2, the FSC may reject the registration upon the occurrence of any one of the following events:
  1. Fifty percent of the original directors have changed during the year of registration or during the previous 2 years, and a shareholder has obtained its shares in violation of the provisions of Article 43-1 of the Act. However, this provision does not apply where corrections have been made prior to the registration date.
  2. Any one of the events set forth under Article 156 of the Act applies to an exchange-listed or OTC-listed company. However, this restriction does not apply to any company upon which restrictions have been imposed, in accordance with the provisions of Article 139, paragraph 2 of the Act, with respect to the trading of its shares on a stock exchange.
  3. The plan for the current offering and issuance is unfeasible, unnecessary, or unreasonable.
  4. Any one of the following events has occurred in the implementation of a previous plan for the offering and issuance, or private placement, of securities, and the situation has not been improved:
    1. The process of implementation is seriously delayed without legitimate reason and the implementation has not been completed yet.
    2. The plan has undergone substantial change without due reasons and such change has not been completed. However, this provision does not apply where more than 3 years have passed between the registration date and the actual completion date of the plan.
    3. The offering and issuance plan has undergone material change, but said change has not yet been reported to a shareholders' meeting for approval.
    4. The company has failed in the most recent year to observe the provisions of Article 9, paragraph 1, subparagraphs 4 through 9, or provisions set out in Article 11 of the Regulations Governing the Offering and Issuance of Overseas Securities by Issuers.
    5. The company has failed to faithfully disclose information in accordance with the Directions for Public Companies Conducting Private Placements of Securities, where the circumstances are serious.
    6. No reasonable benefit is derived from the plan and no legitimate reason is provided. However, in the event more than 3 years have passed since the completion date of the plan till the registration date, such restriction does not apply.
  5. An important part of the plan for the current offering and issuance of securities (such as methods of issuance, source of funds, particulars of the plan, implementation schedule, and expected returns) has not been placed on the agenda of a board meeting or shareholders meeting in accordance with the Company Act and the issuer's articles of incorporation, or has not been adopted by resolution at such a meeting.
  6. The company which has lent a substantial amount of money to other parties for purposes other than financing needs arising from business transactions with other companies or business firms, and which has not yet rectified the situation, submits for registration to conduct a cash capital increase or issue corporate bonds.
  7. The company has entered into an irregular transaction of material significance, and has not yet rectified the situation.
  8. The company files for registration to conduct a cash capital increase or issue corporate bonds, but holds liquid financial asset investments, idle assets, or investment property, with no plan to actively dispose of or develop such holdings, and they amount to either: (1) 40 percent or more of the equity attributable to owners of the parent in the most recent financial reports audited and attested (or reviewed) by a CPA, or (2) 60 percent of the total amount of funds to be raised through the cash capital increase or corporate bond issuance. However, this provision does not apply when the funds to be raised will be used to purchase property, plant and equipment or used for merger of a company that is not engaged primarily in the business of trading of securities, and furthermore there is a concrete plan to evidence the need to raise the funds.
  9. Proceeds from the cash capital increase or corporate bond issuance are to be used to invest in a company engaged primarily in the business of trading of securities, or to establish a securities firm or a securities service enterprise.
  10. The company has failed to prepare its financial statements in accordance with relevant acts or regulations, or with generally accepted accounting principles, and such violations are of material significance.
  11. The company has violated the provisions of Article 5, paragraph 2.
  12. The internal control system is seriously deficient in design or implementation.
  13. The company's share price fluctuated abnormally during the month prior to the date of registration.
  14. Any one of the following descriptions applies to the 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 they have been notified to make up for the shortfall but they have not yet done so.
    2. The percentage 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 does 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 filing is made, or during 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.
  15. The issuer or its current chairperson or general manager, or a de facto responsible person has received a fixed sentence or a more severe punishment from a court in the past 3 years due to violation of laws governing business and industry such as the Act, the Company Act, Banking Act, Financial Holding Company Act, or Business Accounting Act, or due to a crime involving breach of faith such as corruption, malfeasance, fraud, breach of fiduciary duty, or embezzlement.
  16. The court has decided that the issuer has an obligation for damages under the Act and the issuer has not met that obligation yet.
  17. Collateral has been provided for a loan of any third party in violation of Article 5 of the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, the circumstances are serious, and there has been no improvement.
  18. There is an issuance of new shares in connection with a merger, or an issuance of new shares in connection with receiving transfer of shares of another company, or an issuance of new shares in connection with an acquisition or demerger conducted in accordance with related laws, and any one of the following descriptions presents:
    1. There has been a material violation of the provisions of Chapter 2, Section 5 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.
    2. The received or acquired shares are not the newly issued shares of another company, non-current equity investment, or previously issued shares held by the shareholders of another company.
    3. The ownership rights over the received shares or the acquired business or assets are encumbered or limited in such a way that restrictions on the trading rights are imposed.
    4. There has been a violation of Article 167, paragraph 3 or 4 of the Company Act.
    5. An audit report with unqualified opinion was not issued by a CPA for financial reports of an absorbed company for the most recent fiscal year; provided, that this provision does not apply where an audit report with qualified opinion was issued together with an unqualified opinion on the balance sheet.
  19. An event prescribed in Article 13, paragraph 1, subparagraph 2, item 6 occurs, and any of the following circumstances is present:
    1. A filing for issuance of new shares for cash, and any director or supervisor, or shareholder who holds shares over 10 percent of the total issued shares of the issuer, fails to undertake to place a certain percentage of their shares under the custody of a centralized securities depository enterprise.
    2. A filing for issuance of convertible corporate bonds or corporate bonds with warrants, for which the issuance rules do not specify that the offerees are required, from the issuance date of the corporate bonds, to place the corporate bonds and any subsequently converted or subscribed shares under the custody of the centralized securities depository enterprise for one year.
  20. The securities underwriter, at the time the issuer files for registration, has received cumulatively 10 demerit points in the most recent year from the FSC, TWSE, TPEx, and Taiwan Securities Association, and three months have not elapsed since the date when the demerit points cumulatively reached 10 points. However, this restriction does not apply to a cash issue by an issuer of new shares that are to be sold in the public sale prior to an initial listing on the stock exchange or OTC market.
  21. The FSC deems it necessary, in order to protect the public interest, to reject or disapprove the issuer's application.
    The term "company engaged primarily in the business of trading of securities" as referred to in subparagraphs 8 and 9 of the preceding paragraph shall mean a company merged by the issuer, or a company in which the issuer has directly invested, or in which a subsidiary of the said issuer has invested under the equity method, provided that its cash, together with cash equivalents, financial assets listed under current assets, and holdings of securities issued by the issuer account for 50 percent or more of the total assets value of such company, and the revenue or profit/loss respectively from trading or holding of the aforesaid assets account for 50 percent or more of the revenue or profit/loss of such company.
    Where an issuer conducts an offering and issuance of securities as contemplated under Article 6, paragraph 2, subparagraph 2 or 3, or where either a TIB-listed company applying to be reclassified as a company under Chapter II of the Listing Review Rules, or an OTC-listed company applying to transfer its listing to a stock exchange listing, or an exchange-listed company applying to transfer its listing to an OTC listing carries out a cash capital increase in order to achieve compliance with standards governing dispersion of equity ownership, if the underwriter evaluation report clearly explains the feasibility of the capital allocations and the reasonableness of the expected benefits of the plan for the current offering and issuance of securities, then provisions regarding the necessity of the plan, as set out in subparagraph 5 of the preceding article and in paragraph 1, subparagraph 3 of this article, need not apply.
    If the issuer is a securities, futures, or financial enterprise, it is not required to include investments in financial assets distinguished as current in its calculations when totaling the value of the assets set forth under paragraph 1, subparagraph 8. The provisions of paragraph 1, subparagraph 8 need not apply if the issuer is an insurance enterprise, or the issuer is conducting a case provided for in Article 6, paragraph 2, subparagraph 2 or 3, or it is either a TIB-listed company applying to be reclassified as a company under Chapter II of the Listing Review Rules, or an OTC-listed company applying to transfer its listing to a stock exchange listing or an exchange-listed company applying to transfer its listing to an OTC listing that intends to carry out a cash capital increase in order to achieve compliance with standards governing dispersion of equity ownership.
    The provisions prescribed in paragraph 1, subparagraph 8 need not apply where an issuer, for the purpose of enjoying tax incentives, conducts a cash capital increase to raise funds not greater in amount than the upper limit set by the competent authority or NT$100 million.
    With respect to the issuance of new shares in connection with merger, issuance of new shares in connection with receiving transfer of shares of another company, or issuance of new shares in connection with an acquisition or demerger conducted in accordance with the law, the following parts of paragraph 1 need not apply: subparagraph 1, those provisions of subparagraph 4 that relate to implementation of a previous plan for cash capital increase or corporate bonds, and subparagraphs 13, 15, and 19.
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Article 10     Except where a physical certificate is not printed, when the issuer produces certificates evidencing payment for the purpose of cash capital increase or corporate bond issuance, such certificates shall be certified prior to delivery by the certifying institutions in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies. Before the amendment registration is approved by the competent authority over corporate registration, the company may use the documents evidencing effective registration for cash capital increase or corporate bond issuance and those evidencing that all money for shares or bond subscription has been paid in to serve as the basis for certification.
    Except where a physical certificate is not printed, the aforementioned certificate evidencing payment may be made in the minimum trading unit prescribed by the Stock Exchange or Taipei Exchange and the "units" section can be left blank on some additional certificates so that the subscriber or placee can request the issuing company to produce shares or corporate bonds in fractional units.
    Except where a physical certificate is not printed, the aforementioned certificate evidencing payment shall list the date and document reference number for the effective registration. Or the receipts can be produced before the registration becomes effective and be stamped with the date and document reference number for effective registration afterwards.
    An exchange-listed, OTC-listed, or emerging stock company that issues stocks or corporate bonds shall deliver them by book-entry transfer in scripless form.
    In connection with the issuance of securities, in case where a physical certificate is not printed, certification in accordance with the Regulations Governing Certification of Corporate     Stock and Bond Issues by Public Companies need not apply.
Where securities are delivered by book-entry transfer, the issuance or cancellation shall be handled in accordance with the relevant rules of the centralized securities depository enterprises.
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Article 11-1     The FSC may engage the Taiwan Stock Exchange or Taipei Exchange to handle cases of the following kinds:
  1. Case in which an exchange-listed or OTC-listed company files for registration of issuance of new shares in connection with a merger, or issuance of new shares in connection with receiving transfer of shares of another company, or issuance of new shares in connection with an acquisition or demerger conducted in accordance with related laws, or the retroactive handling of public issuance procedures for privately placed securities, or capital reduction.
  2. Cases in which an issuer files to issue shares for cash capital increase for the purpose of public sale in connection with an initial listing on the stock exchange or OTC market.
  3. Cases in which an issuer files for an initial public offering (including cases in which a filing is concurrently made for both issuance of new shares for cash capital increase and issuance of new shares as stock dividends).
    When an issuer files for registration of an issue of straight corporate bonds in accordance with Article 21 or 22, the FSC may engage the TPEx to handle the case.
    When the Taiwan Stock Exchange or Taipei Exchange is engaged by the FSC to handle a case under the preceding two paragraphs, if, after effective registration, any circumstance is discovered under which the effective registration is voidable or revocable under these Regulations, the FSC may order the engaged institution to void or revoke the effective registration.
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Article 12     When offering and issuing stocks, the issuer shall submit the relevant registration statement (Attachments 2 through 12) based on the nature of its case, recording all of the necessary information, together with the required attachments to the FSC. Only after the registration becomes effective can the issuer proceed with such offering and issuance.
    If the registration statement submitted by the issuer, or the information recorded therein, is incomplete, or any one of the events prescribed under Article 5 herein occurs, and the issuer submits the necessary supplementation before receiving a stop order from the FSC regarding its registration, its registration shall become effective when the effective registration period set forth in Article 13 has elapsed, counting from the date on which the FSC and FSC-designated institutions receive supplementation in full.
    The registration of an issuer of an issuance of new shares for cash shall still become effective based on the effective registration period set forth in Article 13 herein, and the provisions of the preceding paragraph do not apply if the issuer, prior to that registration becoming effective, submits to the FSC and FSC-designated institutions updated relevant data due to a change in the issuing price.
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Article 13     For an issuer conducting any of the case types listed below, registration shall become effective 20 business days from the date on which the FSC and FSC-designated institutions receive its registration form for the issuance of new shares:
  1. Establishment by offering.
  2. Any one of the types of share issuance set forth under Article 6, paragraph 2, subparagraph 1 or 4, where the circumstances in any one of the following items exist:
    1. An issuance conducted in accordance with Article 6, paragraph 2 has been previously rejected, disapproved or revoked by the FSC. However, this restriction need not apply where the case had been rejected or revoked by the FSC because the issuance had not been fully subscribed and payment therefore had not been fully collected in cash since the effective registration or upon arrival of notification of approval.
    2. The issuer has been sanctioned two or more times by the FSC in accordance with Article 178 of the Act for violating the Act or other relevant acts and regulations during the fiscal year when the registration was filed or during the previous fiscal year.
    3. The profits or net profits before tax of the issuer show losses in the recent 2 consecutive years or the latest financial reports indicate that the net asset value per share is lower than its par value.
    4. The issuer is required to allocate special reserve for its non-arm's length transactions and such requirement is not lifted yet.
    5. During the year of registration or the previous 2 years, an event set forth under Article 185 of the Company Act has occurred or a portion of the operations or R&D results is transferred to another company. However, if the operating revenue or assets value of those transferred items or the expenses accumulated for R&D does not exceed 10 percent of the operating revenue or assets value or R&D expenses shown on the financial reports of the previous year respectively, such restriction does not apply.
    6. A change to one-third or more of directors has occurred in the year of registration or the previous 2 years and any one of the following events takes place, provided that this rule does not apply if more than half of the issuer's directors are controlled by the original major shareholders before and after such change:
      1. The submitted financial reports indicates an addition to the principal products (meaning that the operating revenue resulting from the products accounts for 20 percent or more of the operating revenue) and that the total operating revenue or operating income from the added principal products accounts for 50 percent or more of the same respective categories of that year. However, the difference between the operating revenue for the preceding and following periods did not reach 50 percent or more therefore the principal products may not be counted.
      2. The submitted financial reports indicates that the issuer has acquired an on-going or completed construction project and the operating revenue or operating income from that project has reached 30 percent of the same respective categories of that year.
      3. The submitted financial reports indicates that the issuer has received transfer of a portion of the operations or R&D results of another company other than an affiliated company and that the operating revenue or operating income from that partial operations or R&D result has reached 30 percent of the same respective categories of that year.
    7. The securities underwriter, at the time the issuer files for registration, has received cumulatively 5 or more demerit points in the most recent year from the FSC, TWSE, TPEx, and Taiwan Securities Association.
    Except for an issuer filing for registration pursuant to the provisions of the preceding paragraph, the registration of an issuer that files to issue new shares shall become effective 12 business days after the date on which the FSC and FSC-designated institutions receive its registration form. However, for an issuer other than those in the financial holding, banking, bills finance, credit card, or insurance businesses that conducts any of the matters listed below, the effective registration period shall be shortened to 7 business days:
  1. An emerging-stock company, or company that is neither listed on an exchange nor traded on an OTC market, issues new shares for a cash capital increase, and does not allocate a certain percentage of the newly issued shares to a public offering.
  2. An emerging-stock company, or company that is neither listed on an exchange nor traded on an OTC market, issues new shares in connection with merger, or issues new shares in connection with an acquisition or demerger conducted in accordance with related laws.
  3. An issuer issues new shares for cash capital increase for the purpose of public sale in connection with initial listing on the stock exchange or OTC market.
  4. A TIB-listed company applying to be reclassified as a company under Chapter II of the Listing Review Rules issues new shares for cash capital increase; either an OTC-listed company has applied to transfer its listing to a stock exchange listing or an exchange-listed company has applied to transfer its listing to an OTC listing, and the Taiwan Stock Exchange or the Taipei Exchange has filed the exchange listing or OTC listing with the FSC, and the company is now carrying out a cash capital increase in order to achieve compliance with standards governing dispersion of equity ownership.
    Where an issuer issues new shares in connection with receiving transfer of shares of another company, and files for effective registration with the FSC on the same day, that registration becomes effective 12 days from the date on which the FSC and FSC-designated institutions receive the registration application.
    Paragraph 1, subparagraph 2 does not apply to cases of issuance of new shares in connection with merger, issuance of new shares in connection with receiving transfer of shares of another company, or issuance of new shares in connection with acquisition or demerger conducted in accordance with related laws.
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Article 14     An exchange-listed or OTC-listed company or an emerging stock company may issue preferred shares with warrants for which the preferred shares and warrants are detachable; a company whose stock is neither listed on an exchange nor traded over-the-counter at securities firms may not issue preferred shares with warrants for which the preferred shares and warrants are detachable.
    For issuance of preferred stocks with warrants, the terms and conditions shall provide for the following items:
  1. Issue date.
  2. Class of the preferred stocks and total issue amount.
  3. The number of warrant units represented by each preferred share with warrant.
  4. The listing or trading at the places of business of securities firms of the preferred stocks with warrants of an exchange-listed or OTC-listed company.
  5. Criteria for setting conditions for exercising the warrant (including exercise price, exercise period, type of the share for warrant exercise, and the number of shares represented by each warrant).
  6. For stocks with detachable warrants, the total number of the issued units of the warrants and the method of calculation of the price per unit of the warrants.
  7. The adjustment of exercise price.
  8. Procedure of request for exercising the warrant and method of paying for stock price. The method of paying for stock price shall be conducted by means of a choice of payment of cash or an offset of preferred stocks from the given offering.
  9. The rights and obligations after exercising warrant.
  10. Shares for performance of contract shall be restricted to the issuance of new shares.
  11. The number of times and date for the stockholder to acquire new stocks by submitting the certificate of payment for stock price.
  12. Procedure for obtaining the preferred stocks with warrants.
  13. Other important stipulations.
    The exercise price for preferred shares with warrants in an emerging stock company, may not be lower than the weighted average trade price for the company's common shares during the period preceding the price determination date, and may not be lower than its net value per share as reported in the financial reports for the most recent fiscal period, audited and attested (or reviewed) by a CPA, and a recommending securities firm shall be retained to give an opinion on the reasonableness of the issuing price.
    The exercise price for preferred shares with warrants issued by a company whose stock is neither listed on an exchange nor traded over-the-counter at securities firms may not be lower than its net value per share as reported in the financial reports for the most recent fiscal period, audited and attested or reviewed by a CPA, and a CPA shall be retained to give an opinion on the reasonableness of the issuing price.
    The weighted average trade price for the company's common shares during the period preceding the price determination date as mentioned in paragraph 3 of this article and in Article 33, paragraph 2, and Article 42, paragraph 3 shall mean, for the 30 business days preceding the price determination date, the simple arithmetic mean closing price of the common shares, or the sum of the monetary amounts traded on each of those business days of those emerging stock common shares in the Emerging Stock Computerized Price Negotiation and Click System divided by the sum of the numbers of those shares traded on each of those business days.
    Paragraph 2 of Article 42, and Articles 43 through 49 shall apply mutatis mutandis to issuance of preferred stocks with warrants by an issuer.
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Article 17     When an exchange-listed or OTC-listed company handles an issuance of new shares in a cash capital increase, unless those who are prohibited from trading stocks in the market under paragraph 2 of Article 139 of the Act, the issuer shall allocate 10 percent of the aggregate number of new shares for public offering at market price and is exempted from paragraph 3 of Article 267 of the Company Act which prescribes that the current shareholders shall be entitled to subscribe the new shares in proportion to the percentage of their respective shareholding. However, if the shareholders meeting decides to have a higher percentage, its resolution should be applied.
    The provisions of the preceding paragraph shall apply mutatis mutandis to an issue of new shares for cash capital increase conducted for the purpose of public sale in connection with initial listing on the stock exchange or OTC market; the provisions of the preceding paragraph may be applied mutatis mutandis to an issue of new shares for cash capital increase conducted by an emerging stock company for purposes other than a case referred to above.
    Issuing new shares for cash capital increase by a company whose shares are listed or traded at the business places of securities firms, except those allocating a certain percentage of the aggregate number of new shares for public offering pursuant to the preceding two paragraphs, shall be handled in accordance with paragraph 3 of Article 267 of the Company Act.
    Where the issuer allocates shares for public offering at market price in accordance with paragraphs 1 and 2, the prices for the employees of the issuer or the original shareholders to pay for the new shares in the same issuance shall be the same as the price set for public offering.
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Article 60-1     The term “new restricted employee shares” as used in these Regulations means new shares issued by an issuer for employees pursuant to Article 267, paragraph 9 of the Company Act, with vesting conditions such as service-based conditions or performance-based conditions attached, under which the rights in the shares are restricted until the vesting conditions are met.
    With respect to new restricted employee shares issued by an issuer pursuant to Article 267, paragraph 9 of the Company Act and to these Regulations, when employees fail to meet the vesting conditions, the issuer may redeem or buy back the already-issued new restricted employee shares in accordance with the terms of the issuance rules, and is exempted from the restriction of Article 167, paragraph 1 of the Company Act prohibiting the company from redeeming or buying back its shares.
    New restricted employee shares that are bought back or redeemed under the preceding paragraph are deemed shares that have never been issued by the company, and the company shall apply for alteration of the corporate registration in respect of the shares accordingly.
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Article 66     In the event that the issuer conducts initial public offering in accordance with paragraph 1 of Article 42 of the Act and Article 156-2 of the Company Act, it shall submit the registration statement (Attachment 24) to the FSC, providing the necessary information and annexing the relevant documents such as the stock issue prospectus. The registration will become effective 12 business days after the receipt of the registration statement by the FSC and FSC-designated institutions.
    The Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses and the Regulations Governing Information to be Published in Financial Institution Prospectuses for Offering and Issuance of Securities shall apply mutatis mutandis to the information to be provided in the stock issue prospectus under the preceding paragraph.
    Article 5, paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis to submission of the registration statement under paragraph 1.
    If, after effective registration for initial public offering under paragraph 1, any circumstance set forth in Article 11, paragraph 1, subparagraph 4, 5, or 7 is discovered to exist, the FSC may revoke or void the effective registration.
    A company conducting an initial public offering of stock under paragraph 1 shall concomitantly conduct an initial public offering of employee stock option certificates previously issued under Article 167-2 of the Company Act.
    A company conducting an initial public offering of stock under paragraph 1 may concomitantly conduct an initial public offering of straight corporate bonds previously privately placed under Article 248 of the Company Act, after 3 years have elapsed from the delivery date of the privately placed straight corporate bonds.
    If a company that has publicly issued stock under the Act does not continue to publicly issue stock, any securities that it has privately placed under Article 43-6 of the Act are not eligible to be included together with its stock under an application to the FSC for initial public offering until 3 years have elapsed from the delivery date of the privately placed securities.
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Article 67     In any of the following circumstances, the FSC may reject an application for approval of an initial public offering filed under Article 42, paragraph 1 of the Act or Article 156-2 of the Company Act:
  1. The attesting CPA issues an adverse opinion or disclaimer of opinion in the audit report.
  2. The attesting CPA issues a qualified opinion in the audit report, and such qualified opinion has an impact on the fairness of presentation of the financial reports.
  3. The Case Review Form prepared by the issuer and reviewed by the attesting CPA reveal any violation of laws or regulations or the articles of incorporation, where the violation is serious.
  4. The applicant has failed to institute an internal control system including and adopt internal audit implementation rules and have them passed by the board of directors pursuant to the Regulations Governing Establishment of Internal Control Systems by Public Companies.
  5. Any of the following circumstances arise in the CPA project audit of the efficacy of the internal control system design or implementation:
    1. The audited company fails to provide a Statement regarding the efficacy of the internal control system design or implementation.
    2. The CPA report indicates material deficiencies in the design or implementation of the audited company's internal control system and failure to improve them, or the report is a disclaimer of opinion.
  6. Employee stock option certificates have previously been issued under Article 167-2 of the Company Act, but a concomitant initial public offering is not conducted for the certificates along with that for the stock.
  7. The FSC discovers a violation of laws or regulations, where the violation is serious.
    Where conducting an initial public offering for privately placed straight corporate bonds under paragraph 6 of the preceding Article and 3 years have not elapsed since the delivery date of the privately placed straight corporate bonds, the FSC may reject the application.
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Article 75     For the purpose of registration for approval made in accordance with these Regulations, all required attachments shall be prepared in accordance with the forms prescribed and the attachments should be put in binders.
    For the supplementary documents furnished in accordance with Articles 12, 16, 21, 22, 26, 27, 39, 55, 56, 61, 66, 68, and 72, the modified registration documents shall be put in binders pursuant to the forms required by the attachments. The cover of the binder shall indicate the documents being modified and the number of times of their modification. An index regarding the modifications made shall be prepared and put in front of the main table of contents of the registration documents. The parts subject to modification shall be underlined and noted. If the documents are written in vertical form, the underline mark shall be at the right side of the text while it shall be beneath the sentences if the documents are arranged horizontally.
    When the issuer registers for offering and issuance of securities, retroactive handling of public issuance procedures, issuance of new shares as stock dividends, or capital reduction, or when a holder of securities registers to conduct a secondary offering of such securities, it shall put the registration documents or supplements/modification into binders. In addition, at the time of registration or supplementation/modification, a copy of these documents shall be sent to the Stock Exchange, the Taipei Exchange, the Taiwan Securities Association, the Securities and Futures Institute, and any other organizations designated by the FSC for the public's review.
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Article 75-1     (Deleted)