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Article 9
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Where any of the circumstances listed below exists at an issuer, the FSC may reject its plan for offering and issuance of overseas securities:
- Any of the circumstances referred to in Article 156, paragraph 1 of the Act.
- The plan for the current offering and issuance of overseas securities is unfeasible, unnecessary, or unreasonable.
- The implementation of any previous plan for offering and issuance, or private placement, of securities has been accompanied by any of the following problems and no improvement has been made:
- The implementation is seriously behind schedule without justifiable reason and has not been completed.
- The plan was materially changed without justifiable reason; provided, however, that this provision shall not apply where the time between the actual completion of the plan and the filing of the registration exceeds 3 years.
- The securities offering and issuance plan was materially changed without being submitted to and approved by a shareholders' meeting.
- The issuer has not complied in the most recent 1 year with Article 11 herein and with Article 9, paragraph 1, subparagraphs 4 through 9 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers.
- Failure to faithfully comply with the Directions for Public Companies Conducting Private Placements of Securities, where the circumstances are of material significance.
- Reasonable benefits have not been achieved without justifiable reason; provided, however, that this provision shall not apply if the period between the actual completion date of the plan and the registration date is more than 3 years.
- An important part of the plan for this offering and issuance of overseas securities (such as issuance rules, source of funds, project particulars, implementation schedule, and expected benefits) has not been proposed and submitted to a board meeting or shareholders meeting for discussion and resolution/approval in accordance with the Company Act and the issuer's articles of incorporation.
- The company has lent large amounts of capital to others in excess of financing needs resulting from the company's business transactions with other companies or firms, and no improvement has yet been made at the time of registration.
- The company has entered into an irregular transaction of material significance, and has not rectified the situation at the time of filing the registration .
- The company 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 equity attributable to owners of the parent in the most recent CPA-audited and -attested financial report, or (2) 60 percent of the total amount of funds to be raised through the overseas securities issue that the company is registering to issue; provided, however, that this provision shall 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 for fund raising evidencing the necessity to raise the funds.
- The company has provided security for a loan to another party in violation of Article 5 of the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, where the circumstances are serious, and the violation has not been rectified.
- The overseas securities being offered and issued are to be purchased by a subscriber that is related to the issuer, or the ultimate source of the funds used to purchase the issue is a party related to the issuer. The meaning of the term "related party" shall be determined in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
- The total dollar amount of direct or indirect investment in mainland China exceeds the upper limit set by the Investment Commission, Ministry of Economic Affairs; provided, however, that this provision shall not apply where the capital utilization plan for the present offering is to purchase domestic property, plant and equipment and a commitment is made not to increase investment in the mainland.
- Any one of the following descriptions applies to shareholdings of the entire body of the company's directors or supervisors:
- The percentage of their equity stake is in violation of Article 26 of the Act and the FSC has notified them to make up for the shortfall but they have not yet done so.
- The percent 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 shall 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.
- During the fiscal year in which the registration is made, and also in 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.
- The company's financial statements in the most recent 2 years have not been prepared in accordance with relevant acts, regulations, and generally accepted accounting principles, and such violations are significant.
- In the past 3 years, a court has rendered a final and unappealable judgment against the issuer or its current chairperson, general manager, or de facto responsible person due to violation of laws governing business operations such as the Act, Company Act, Banking Act, Financial Holding Company Act, and Business Accounting Act, or due to a breach of good faith crime such as corruption, malfeasance, fraud, breach of fiduciary duty, or embezzlement.
- New shares are issued for the purpose of a merger, for the purpose of acquiring the shares of another company, or for the purpose of an acquisition or separation conducted in accordance with law, and such issue has been conducted under any of the following conditions:
- The issue involves a material violation of the provisions of Chapter II, Section V of the Regulations Governing the Acquisition or Disposal of Assets by Public Companies.
- The acquisition of shares or of a corporation involves shares that are not newly issued by another company, or the non-current equity investment holdings of another company, or outstanding shares that are held by the shareholders of another company.
- The ownership rights of the acquired shares, business, or assets are impaired or encumbered in some way, such as through the creation of pledge thereupon or placing of restrictions on the purchase or sale thereof.
- The provisions of Article 167, paragraph 3 or 4 of the Company Act are violated.
- An audit report with unqualified opinion was not issued by a CPA regarding the financial report on the acquired company for the most recent fiscal year, except where an audit report with qualified opinion was issued together with an unqualified opinion regarding the balance sheet.
- The internal control system is materially flawed in terms of either design or enforcement.
- The company's share price has fluctuated abnormally during the month prior to the date of registration of the offering and issuance.
- The provisions of Article 8, paragraph 2 are violated.
- A listed company, OTC company, or emerging stock company fails to appoint a remuneration committee in accordance with Article 14-6, paragraph 1 of the Act, or fails to comply with applicable laws and regulations regarding remuneration committees, where the circumstances are of material significance.
- Failure to adopt electronic transmission as one of the methods for exercising voting rights in accordance with the proviso to paragraph 1 of Article 177-1 of the Company Act.
- 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.
- Other acts and regulations are violated, or where the FSC deems disapproval necessary for protection of the public interest or national reputation.
The term "engaged primarily in the business of trading of securities" as referred to in subparagraph 7 of the preceding paragraph shall mean, of a company merged by the issuer, that the merged company's 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.
Subparagraphs 4 to 10 of paragraph 1 are not applicable in the case of registrations to use outstanding shares to sponsor issuance of overseas depositary receipts, or to use outstanding shares to engage in trading on offshore stock exchanges.
The provisions of paragraph 1, subparagraphs 3, 5, and 10 shall not apply where the issuer registers to sponsor issuance of overseas depositary receipts through capital increase, which in turn is done in order to acquire a foreign company, to acquire the shares of a foreign company, or to issue new shares for the purpose of an acquisition or separation of a foreign company conducted in accordance with the law.
When an issuer that is a financial holding company, banking enterprise, securities enterprise, or futures enterprise, calculates the assets of paragraph 1, subparagraph 7, it need not include investments in financial asset items distinguished as current in such calculations. An issuer that is an insurance enterprise need not apply the provisions of paragraph 1, subparagraph 7.
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