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Amended Article

Title:

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

Amended Date: 2021.03.29 (Articles 3, 5, 6, 8, 9-1, 65 amended,English version coming soon)
Current English version amended on 2015.11.12 
Article 5     Where a foreign issuer registers a planned offering and issuance with the FSC by duly filing all required documents, the registration will automatically become effective after 12 full business days from the day on which the filing documents were received by the FSC and any FSC-designated agencies. However, the effective registration period shall be 7 business days if the foreign issuer is conducting one of the cases listed in subparagraphs 1 to 5 below; the effective registration period shall be 3 business days if the foreign issuer is conducting a case listed in subparagraph 6 below:
  1. A case of a primary exchange (or OTC) listed company or emerging stock company publicly offering and issuing overseas straight corporate bonds, or issuing employee stock warrants or new restricted employee shares.
  2. A case of a foreign issuer that has already duly issued stock and files, through the TWSE or TPEx, a primary exchange listing or primary OTC listing contract with the FSC for its stock, and subsequently conducts a public sale of new shares issued to effect a cash capital increase before the initial exchange listing or OTC listing.
  3. A case of a foreign issuer that files, through the TWSE or TPEx, an exchange listing or OTC listing contract with the FSC for its sponsored issuance of TDRs, and subsequently conducts a public sale of TDRs before the initial exchange listing or OTC listing.
  4. A case of a secondary exchange (or OTC) listed company that makes a domestic secondary public offering of stock or sponsored issuance of TDRs using shares that have already been issued and are held by shareholders.
  5. A case of an emerging stock company issuing new shares for a cash capital increase without conducting a public issue.
  6. A case of a foreign issuer publicly offering and issuing domestic straight corporate bonds.
    The FSC may suspend an effective registration where the registration materials submitted by a foreign issuer are not complete or have not been completely filled out, or where it is necessary to do so in order to safeguard the public interest.
    Where a foreign issuer submits incomplete registration materials or fails to fill out its registration materials completely and acts on its own to rectify such insufficiency before the FSC issues notification of the suspension of effective registration, the registration shall become effective after the effective registration period specified in paragraph 1 herein has elapsed from the day on which the materials rectifying the insufficiency were received by the FSC and any FSC-designated agencies.
    Where a foreign issuer registers the offering and issuance of depositary receipts or stocks and a subsequent change in the issue price prompts it to submit amended registration materials to the FSC and any FSC-designated agencies prior to the occurrence of effective registration, the registration will still become effective within the effective registration time period set forth under paragraph 1, and the provisions of the preceding paragraph shall not apply.
    After receiving notice of suspension of effective registration, a foreign issuer may submit further materials to rectify the cause of suspension; if the FSC does not then reject the registration or notify the registrant to effect further rectification, the registration shall become effective after the effective registration period specified in paragraph 1 herein has elapsed from the day on which the rectified registration materials are received by the FSC and any FSC-designated agencies.
    After the FSC suspends an effective registration, if the foreign issuer fails, within 12 business days from the day on which it receives a letter notifying it of said suspension, to act in accordance with the provisions of the preceding paragraph to apply for lifting the suspension, or it applies for lifting of the suspension but the cause of suspension has not been eliminated, the FSC may reject the registration.
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Article 6     A foreign issuer that files to publicly offer and issue the securities listed below shall engage a securities underwriter to conduct an evaluation and issue an evaluation report:
  1. A domestic issue of corporate bonds with equity characteristics in which a securities underwriter is engaged to conduct underwriting to the public.
  2. A primary exchange (or OTC) listed company domestically issuing new shares in connection with a cash capital increase, issuing new shares in connection with a merger, issuing new shares in connection with acquiring shares of another company, or issuing new shares in connection with an acquisition or demerger.
  3. A primary exchange (or OTC) listed company or emerging stock company publicly offering and issuing overseas securities. Issuers of straight corporate bonds, however, are not subject to this restriction.
  4. A secondary exchange (or OTC) listed company issuing new shares in connection with a capital increase or issuing new shares to sponsor issuance of TDRs.
  5. A secondary exchange (or OTC) listed company making a domestic secondary public offering of stock or sponsored issuance of TDRs using shares that have already been issued and are held by shareholders.
  6. An emerging stock company issuing new shares in connection with a cash capital increase and allocating a certain percentage of the total amount of newly issued shares for issuance to the public.
    The concluding opinion of the evaluation report referred to in the preceding paragraph shall be published in the prospectus.
     A primary exchange (or OTC) listed company that files for a case under subparagraphs 1 to 3 of paragraph 1 shall, in the accounting year when the offering is completed and in the subsequent two accounting years, engage a securities underwriter to assist it in complying with ROC securities laws and regulations.
Article 8     When a primary exchange (or OTC) listed company conducts a case under Article 6, paragraph 1, subparagraphs 1 to 3, or an emerging stock company conducts a case under Article 6, paragraph 1, subparagraphs 3 or 6, the FSC may reject the filing if any of the following circumstances exist:
  1. The present plan for the offering and issuance of securities is unfeasible, unnecessary, or unreasonable.
  2. Any previous plan for offering and issuance or private placement of securities has, without just cause, failed to be executed on schedule or failed to produce reasonable benefit. However, in the event more than 3 years have passed from the completion date of the plan until the filing date, such restriction does not apply.
  3. Any previous private placement of securities did not conform to Articles 43-6 to 43-8 of the Act or the provisions of the Directions for Public Companies Conducting Private Placements of Securities, where the circumstances are serious.
  4. Any important content of the present plan for the offering and issuance of securities (such as issuance rules, source of funds, or particulars of the plan) has not been placed on the agenda of a board meeting or shareholders meeting and adopted by resolution at such a meeting.
  5. The company has lent a large amount of money to another party for purposes other than financing needs arising from a business transaction with another company or business firm, and has not yet rectified the situation.
  6. The company has entered into a non-arm's-length transaction of material significance, and has not yet rectified the situation.
  7. The company is filing for registration of a cash capital increase or issue of corporate bonds, but holds financial assets listed under current assets, idle assets, or investment property with no plan to actively dispose of or develop such holdings, and their total value is equivalent to either: (1) 40 percent or more of the equity 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 if the funds to be raised will be used to purchase real estate, plants, or equipment, and there is a concrete fund raising plan evidencing the need to raise the funds.
  8. The company has failed to prepare its financial statements in accordance with relevant acts or regulations and with applicable accounting principles, where the circumstances are of material significance.
  9. Any circumstance in violation of Article 4, paragraph 3.
  10. The internal control system is materially deficient in design or implementation.
  11. The company's share price fluctuated abnormally during the month prior to the date of filing.
  12. The foreign issuer or its current chairperson, general manager, or de facto responsible person has received a sentence of imprisonment for a fixed term or a more severe punishment from a court in the past 3 years due to violation of laws governing business and industry or due to a crime involving breach of faith such as corruption, malfeasance, fraud, breach of fiduciary duty, or embezzlement, or has an obligation for damages arising from a violation of securities laws or regulations and has failed to duly perform the obligation.
  13. A subscriber, or an ultimate source of subscription, of the present offering and issuance of overseas securities is a related party of the foreign issuer. The term "related party" is as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
  14. The securities underwriter, at the time the foreign 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 an issue of new shares for cash capital increase that are to be sold in the public sale prior to an initial exchange or OTC listing.
  15. As the FSC otherwise deems necessary to protect the public interest.
    When a foreign issuer conducts a case under Article 5, paragraph 1, subparagraph 2, the provisions of subparagraph 7 of the preceding paragraph need not apply; if the underwriter evaluation report clearly states the feasibility of the capital allocations and the reasonableness of the expected benefits of the present plan for offering and issuance of securities, then the provisions regarding the necessity of the plan, as set out in subparagraph 6 of paragraph 1 of the preceding article and in subparagraph 1 of the preceding paragraph, need not apply.
    When a primary exchange (or OTC) listed company issues new shares in connection with a merger, acquisition of shares of another company, or acquisition or demerger, the provisions of subparagraphs 2, 5, 11, and 12 of paragraph 1 need not apply.
    When a primary exchange (or OTC) listed company issuing overseas straight corporate bonds has engaged a securities underwriter to publicly underwrite the bonds, the provisions of paragraph 1, subparagraph 11 need not apply.
    When a secondary exchange (or OTC) listed company conducts a case under Article 6, paragraph 1, subparagraphs 1, 4, or 5, the subparagraphs of paragraph 1 hereof shall apply mutatis mutandis. However, if it is issuing new shares or sponsoring issuance of TDRs in connection with a merger, acquisition of shares of another company, or acquisition or demerger, it may be exempted from the mutatis mutandis application of subparagraphs 2, 5, 11, and 12 of paragraph 1.
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Article 9     The FSC may void or revoke an effective registration for the offering and issuance of securities granted to a foreign issuer where any of the following circumstances is discovered:
  1. Where, in a case in which the foreign issuer has filed for registration of an issue of domestic straight corporate bonds, the offering period exceeds the prescribed period under the Taipei Exchange Rules Governing the Review of Foreign Securities for Trading on the TPEx and the Taipei Exchange Rules Governing Management of Foreign Currency Denominated International Bonds.
  2. Where, in a case other than one falling under the preceding paragraph, the securities have not been fully subscribed and the cash proceeds therefrom have not been fully collected within 3 months from the date on which the notification of effective registration from the FSC is received; provided that the FSC may grant an extension of 3 months upon application therefor with legitimate reasons and provided further that such extension shall be limited to one.
  3. Where the particulars registered are in violation of laws and regulations, or there are any misrepresentations or false statements contained in the application.
  4. Where the foreign issuer has failed to apply to the TWSE or TPEx, respectively, for exchange listing or OTC listing or for emerging stock registration, for TDRs, or for domestically offered and issued stocks, or bonds, or where the securities fail to meet exchange (or OTC) listing criteria.
  5. Where the foreign issuer fails to complete the exchange listing or OTC listing or emerging stock registration for its initial public issuance of stock within 6 months from the date on which the notification of effective registration from the FSC has been received.
  6. A serious breach of, or failure to perform, a commitment made at the time securities were offered and issued.
  7. Otherwise for the protection of the public interest, or in the event of a violation of FSC regulations or of a restrictions or prohibitions imposed by the FSC when giving notice of effective registration.

    From the date on which the filing is effectively registered until the date of completion of the securities offering, if the content of any publicly disclosed financial forecast or information released by the foreign issuer is at variance with the filing documents, and where there is a material effect on the price of securities or shareholders' equity, the FSC may revoke or void the effective registration.
    Where an effective registration is obtained by a foreign issuer for the offering and issuance of securities but is subsequently voided or revoked by the FSC pursuant to the provisions of the preceding two paragraphs, securities not yet issued shall not be issued, and in case the proceeds thereof have already been collected, the foreign issuer shall return the proceeds, along with interest computed in accordance with law, within 10 days after receiving the notice of voidance or revocation from the FSC; in case securities have already been issued, the depositary institution shall sell the securities under the custody of the custodian institution and deliver the sales proceeds, after deduction of indispensable fees and expenses, to the holders of securities.
    Where an effective registration is obtained by a foreign issuer for the offering and issuance of bonds or stocks but is subsequently voided or revoked by the FSC pursuant to the provisions of paragraphs 1 or 2 of this Article after the collection of the proceeds, the foreign issuer shall return the proceeds already collected, along with interest computed in accordance with law, through the designated institution within 10 days after receiving the notice of voidance or revocation from the FSC.
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Article 9-1      When a foreign issuer files for a case under Article 5, paragraph 1, subparagraph 2 or 6, or Article 58, paragraph 1, the FSC may engage the TWSE or the TPEx to handle the case.
     When the TWSE or the TPEx is engaged by the FSC to handle a case under the preceding paragraph, if, after effective registration, any circumstance under paragraph 1 or 2 of the preceding Article, or Article 58, paragraph 4 is discovered, the FSC may order the engaged institution to void or revoke the effective registration.
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Article 21     A primary exchange (or OTC) listed company or emerging stock company shall, 7 days before the date on which the regular shareholders meeting is convened, transmit an electronic file of its annual report to the information reporting website specified by the FSC. The content of the annual report shall be in the Chinese language or a Chinese-English bilingual format. However, if an English-Chinese bilingual format is used and there is any discrepancy in the interpretation of the meaning of the respective texts, the Chinese version shall prevail.
    The annual report of the preceding paragraph shall contain the information listed below, and additionally shall comply, mutatis mutandis, with the Regulations Governing Information to be Published in Annual Reports of Public Companies:
  1. Inside front cover of the annual report:
    1. Board of directors name list (for independent directors domiciled in Taiwan, nationality and principal job experience shall also be specified).
    2. Name, title, contact phone number, and e-mail address of the designated agent within the ROC.
  2. Content of the annual report:
    1. Company overview, including company and group introductions, group structure, and risk matters.
    2. The matters of special note shall include an explanation of any material differences from the rules of the ROC in relation to the protection of shareholder equity.
Article 43     A foreign issuer intending to issue and offer bonds domestically shall file a Registration Statement for Offering and Issuance of Bonds by foreign issuers corresponding to the nature of the issue (Attachments 17 to 19), specifying the required particulars, and annexing the required supporting documents, and may proceed to the issuance only after effective registration has been obtained from the FSC.
    Where a foreign issuer, having already sponsored issuance of TDRs on the TWSE or on an OTC market, registers the offering and issuance of convertible corporate bonds or corporate bonds with warrants, may sponsor issuance of TDRs to enable execution of conversions or the performance of stock option obligations, in which case such TDRs shall carry the same rights and obligations as TDRs traded on the TWSE or on an OTC market.
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Article 45     A foreign issuer that files to register the offering and issuance of straight corporate bonds and that meets the conditions of each of the following subparagraphs may submit the Shelf Registration Statement for Issuance of Straight Corporate Bonds by a foreign issuer (Attachment 20), complete with all required information and all required documents, to the FSC for effective registration and complete the issuance within the expected issuance period.
  1. The issuer is a primary exchange (or OTC) listed company that has been domestically listed, or whose securities have been trading on the OTC market, for a combined total of a full 3 years, or is a secondary exchange (or OTC) listed company whose stocks, or securities representing its stocks, have been listed and traded on one of the overseas securities markets approved by the competent authority for a full 3 years. However, in either of the following circumstances, this restriction shall not apply:
    1. An issuer filing to issue straight corporate bonds is a company controlled by another company, the bonds are fully guaranteed by the controlling company, and the stock of the controlling company has been listed and traded on one of the overseas securities markets approved by the competent authority for a full 3 years.
    2. The issuer is an overseas financial institution that has been approved by the FSC to establish a domestic branch in the ROC, and the stock of the financial institution's parent holding company has been listed and traded on one of the overseas securities markets approved by the competent authority for a full 3 years.
  2. The issuer's net worth, as stated in the CPA audited and attested financial report for the most recent year, is not less than NT$500 million.
  3. The issuer is not currently in material breach of contract or material default on the payment of principal and interest, with respect to any previously issued corporate bonds or other debt, or more than 3 years have passed since the date of resolution of any previous instance of such breach or default.
  4. The issuer has not been sanctioned by the FSC or the competent authority of its overseas country of listing within the past 3 years for any breach of information disclosure regulations.
  5. Any plan for a cash capital increase or issuance of corporate bonds that received effective registration from the FSC or the competent authority of the overseas country of listing within the past 3 years has been executed according to schedule and with no material alteration.
  6. The CPA engaged by the issuer has received no warning or any other more serious sanction under the law within the past 3 years due to work related to the offering and issuance of securities.
  7. The lead underwriter engaged by the issuer has received no sanction pursuant to law or regulation ordering it to dismiss a director, supervisor, or managerial officer, or any other equally or more serious sanction, within the past 3 years due to work related to the offering and issuance of securities.
    Article 5 shall apply mutatis mutandis to a foreign issuer that files for registration in accordance with the preceding paragraph.
    The expected issue period referred to in paragraph 1 shall not exceed 2 years counting from the date of effective registration. The foreign issuer shall set the period at the time of registering with the FSC.
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Article 46     When issuing straight corporate bonds within the expected issue period as referred to in the preceding article, the foreign issuer shall, on the next business day after it has completed collecting the payment, submit the Supplementary Shelf Registration Statement for Issuance of Straight Corporate Bonds by a foreign issuer (Attachment 21) complete with all required information, together with the required documents, to the FSC for recordation.
    With respect to issuance by a foreign issuer of straight corporate bonds during the expected issue period referred to in the preceding article, the FSC may cancel a foreign issuer's current supplementary issue of straight corporate bonds if there is any violation of Article 7 or paragraph 1 of the preceding article.
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Article 50     For the issuance and offering of bonds, a prospectus shall be prepared. The content of the prospectus shall be prepared as follows:
  1. The provisions of Article 17 and Article 34, respectively, shall apply mutatis mutandis to the issuance of corporate bonds with equity characteristics by primary exchange (or OTC) listed companies and secondary exchange (or OTC) listed companies.
  2. The provisions of the latter part of paragraph 1, and paragraph 2, of Article 20 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall apply mutatis mutandis to the issuance of straight corporate bonds by foreign issuers. However, in the case of secondary exchange (or OTC) listed companies and those meeting the conditions specified by the FSC, on the back cover of the prospectus, the name of the company and name of its responsible person may be specified in lieu of the company seal and signature or seal of the responsible person, and the English prospectus(es) prepared in accordance with the laws and regulations of the country of registration and the country of listing shall also be attached.
     The prospectus referred to in the preceding paragraph shall also specify the following particulars:
  1. Offering Plan for the bonds and the agreed-upon matters.
  2. The concluding opinion of the evaluation report of the securities underwriter and legal opinion issued by a lawyer.
  3. Credit rating certificate issued by a credit rating institution (if any).
  4. Other outstanding bonds.
  5. Trustee agreement.
  6. Paying agency agreement, conversion agency agreement or subscription agency agreement.
  7. Letter of creation of security or provision of guarantee, if any.
  8. Any matters requiring attention in connection with restrictions on securities transactions by foreigner nationals, tax burdens, and tax payment procedures, of the foreign issuer's country of registration and country in which its shares are listed.
  9. The highest, lowest and average market prices for the most recent 6 months of the securities issuable upon conversion, in case of convertible bonds or upon exercise of warrant, in case of corporate bonds with warrants, on the stock exchange where its stocks are listed.
  10. Other important matters agreed upon by the parties or required to be specified by the FSC.
    Where a foreign issuer meets the provisions set out in the proviso to subparagraph 15 of paragraph 1 of the preceding article, the governing law and the court with jurisdiction over litigation shall be disclosed in prominent lettering on the cover of the prospectus.
    The draft prospectus shall be transmitted, as an electronic file in the format prescribed by the FSC, to the information disclosure website specified by the FSC and, within 30 days from the date of receipt of the notice of effective registration, the final amended prospectus shall be transmitted as an electronic file to the information disclosure website specified by the FSC.
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Article 58     In the event that the foreign issuer intends to apply for listing on the stock exchange or for OTC trading of stock that has not been publicly issued under the Act, it shall submit the Registration Statement (Attachment 35), specifying the required particulars, and annexing the required documents such as the stock issue prospectus, to the FSC to file for retroactive handling of public issuance procedures. The filing will become effective after 12 business days from the date on which the FSC and FSC-designated institutions receive its Registration Statement.
    The Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses shall apply mutatis mutandis to the information to be provided in the stock issue prospectus under the preceding paragraph.
    Article 4, paragraphs 2 to 4, Article 5, paragraphs 2 , 3, 5, and 6, and Article 20 shall apply mutatis mutandis to submission of the Registration Statement under paragraph 1.
    If, after effective registration for initial public issuance under paragraph 1, there is discovered any violation of Article 4, paragraphs 2 to 4 herein, or of Article 20, paragraph 1 of the Act, or any circumstance under Article 9, paragraph 1, subparagraph 7, the FSC may void or revoke the effective registration.
    A foreign issuer conducting initial public issuance of stock under paragraph 1 shall concomitantly conduct initial public issuance of any employee stock warrants and equity securities that have previously been issued under laws or regulations of the country of registration.
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Article 62     A primary exchange (or OTC) listed company or emerging stock company conducting a capital reduction shall file a Registration Statement (Attachment 37), specifying the required particulars, together with the required supporting documents, with the FSC. Such filings will become effective, respectively, 12 business days or 7 business days immediately from the date the FSC and the institution designated by the FSC receive the Capital Reduction Registration Statement.
    Article 4, paragraphs 2 to 4 and Article 5, paragraphs 2, 3, 5, and 6 shall apply mutatis mutandis to cases under the preceding paragraph.
    If, after effective registration, there is discovered any circumstance under Article 9, paragraph 1, subparagraph 6 or 7 or any violation of Article 4, paragraphs 2 to 4 herein, the FSC may void or revoke the effective registration.
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