When registering to offer and issue overseas convertible bonds with warrants, an issuer shall specify in the issuance rules the following particulars:
When warrant obligations are fulfilled by the issuer, such fulfillment shall not be subject to the prohibition against issuance of shares below par value as set forth in Article 140 of the Company Act.
- For bonds with separable warrants: the total number of warrant units to be issued and the method for calculating the price of each unit.
- The methods of determining warrant exercise conditions (including exercise price, warrant exercise period, type of shares covered by the warrant, exercise ratio, and the number of shares that each warrant provides the right to purchase).
- Adjustment of exercise price.
- Procedures for exercising warrant rights and method of payment for shares.
- Where sponsoring issuance of overseas depositary receipts to fulfill warrant obligations: the type of underlying securities evidenced by the overseas depositary receipts, their source, the number of underlying securities evidenced by each unit of overseas depositary receipts, the names of depositary institutions and custodian institutions, the issuance plan for the overseas depositary receipts, and other agreed-upon terms and conditions.
- Statement of issuance methods: The statement of issuance methods shall state whether all the depositary receipts shall be publicly issued or whether a portion thereof shall be subscribed to by a specific person or persons through negotiation; if a portion thereof shall be subscribed to by a specific person or persons, then the statement of underwriting procedures shall state why the specific person or persons are being contacted to subscribe through negotiation, the number of depositary receipts to be thus subscribed to, the total dollar amount thereof, and the relationship between the specific person or persons and the issuer.
- Whether the obligation to fulfill warrant rights will be made by issuing new shares or delivery of outstanding shares (must be one or the other) ; provided that an emerging stock company shall fulfill the obligation only by issuing new shares.
- Other important matters agreed upon by the contracting parties.
Unless there is applicable precedent in international practice, Section 3 of Chapter III of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall apply mutatis mutandis to matters relating to the exercise of warrants attached to overseas corporate bonds.