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Article NO. Content

Title:

Taiwan Stock Exchange Corporation Procedures for Review of Call (Put) Warrant Listings  CH

Amended Date: 2018.07.23 
Categories: Primary Market > Review
5     When the TWSE receives an application for recognition of qualification to issue call (put) warrants, the applicant company shall pay to TWSE a reviewing fee of NT$200,000, and the TWSE case handler shall undertake a formal review of the application documents and attachments. Rules, deadlines, and matters to be reviewed shall be as follows:
  1. The case handler shall ascertain that a complete set of required documents has been submitted, and that the Attachments Checklist for Application for Recognition of Qualification to Issue Call (Put) Warrants has been filled out (Attachment 1). If the documents submitted are found to be incomplete, the issuer shall be requested to supplement the required documents within a prescribed period of time; where submission is made after the deadline, the case handler shall issue notice of rejection of the application, with a copy submitted to the competent authority.
  2. Key points of review:
    1. Accountant's auditing report:
      Where the issuer is a domestic company, the accounting firm certifying the financial reports for the most recent 2 years shall be an accounting firm approved by the competent authority. The auditing report shall be prepared in accordance with generally accepted accounting principles and shall state whether the report conforms to the Regulations Governing Preparation of Financial Reports by Securities Issuers or the Regulations Governing Preparation of Financial Reports by Securities Firms. Where the financial report is prepared in accordance with the Budget Act, the Auditing Act or related laws and regulations, the report shall be revised by a certified public accountant to adjust for the areas in which the report diverges from generally accepted accounting principles (GAAP). The revised financial report shall include an explanation of the areas of divergence and their effect. The aforementioned GAAP shall mean the following, as endorsed by the competent authority: International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC).
      Where the issuer is a foreign entity, the financial report may be prepared in accordance with the laws and regulations of the issuer's home country. A Taiwan certified public accountant shall issue an opinion regarding the differences in accounting principles applied in Taiwan and in the issuer's home country and the resulting effects on the financial report. The net worth resulting after the aforementioned adjustments shall conform to Article 5, paragraph 3 of the Regulations Governing the Issuance of Call (Put) Warrants by Issuers ("Issuance Regulations").
      When an accountant issues an auditing report with anything other than an unqualified opinion, the case handler shall note the relevant factors and reasoning, and assess the degree of influence of those factors on the financial report.
      If there has been a change in the issuer's certifying CPA within the most recent 3 years, the case handler shall request the issuer, the original certifying CPA and its successor to submit written explanations regarding the reasons for the change. The case handler shall gain an understanding of the factors and the reasoning involved.
    2. Financial reports:
    3. The case handler shall review the CPA's auditing or review report, any annotations thereto, and the section headings to determine that the form and content of the issuer's financial report conforms to regulations. The case handler shall become familiar with any unusual aspects of the report, and shall analyze any unusual factors in developing trends regarding the issuer's financial status and profitability, and fill out a Call (Put) Warrant Issuer's Financial Report Checklist (Attachment 2). Where any unusual circumstances are discovered, the CPA shall be requested to submit an additional clarification.
    4. The Issuer's Risk Management System:
    5. The case handler shall assess whether the issuer or its risk management institution has established a risk-management system, with risk-control computer equipment and appropriate risk-management personnel, and shall determine whether internal auditing and control systems have been established. The case handler shall assess whether there are any unusual aspects of the issuer's risk-management capabilities, and fill out a Checklist for the Call (Put) Warrant Issuer's Risk Management System and Strategies for Offsetting Foreseeable Risk (Attachment 3).
    6. Matters in the Review Rules Requiring Withholding of Approval:
    7. The case handler shall determine, based on the documents submitted by the issuer, whether the net worth as stated in the issuer's financial report, profitability, and relevant contracts conform to the provisions of the Issuance Regulations, and determine whether any conditions, as listed under Article 7 of those regulations, require withholding of approval. The case handler shall fill out an Approval Checklist for Application for Recognition of Qualification to Issue Call (Put) Warrants (Attachment 4).
    8. Lawyer's Legal Opinion:
    9. The case handler shall examine the lawyer's opinion and other related forms and documents submitted by the issuer with regard to whether the relevant approval certificates, letters of approval from the competent authorities, documents issued by the credit rating institution, and declarations submitted by the issuer and the issuer's status with respect to the circumstances under Article 7 of the Issuance Regulations have been thoroughly reviewed, the documents have been found to be valid, and the issuer conforms to relevant laws and regulations. The case handler shall then fill out a Checklist for Lawyer's Legal Opinion on Call (Put) Warrant Issuer's Qualification (Attachment 5).
  3. Review Rules and Schedule:
  4. When, after examining the relevant materials and filling out the required checklists, the case handler discovers a failure to submit all required documents or to provide complete information as required in the documents, the case handler shall request the issuer to supplement the required documents or information within a prescribed period of time. Where documents are not supplemented by the deadline, the case handler shall issue a notice of rejection of the application, with a copy submitted to the competent authority.
    After receipt of the Application for Approval of Qualification for Issuance of Call (Put) Warrants, the TWSE case handler shall, within 10 business days, complete the checklists under Appendices 1 to 5 and submit them to higher levels for review, except where the issuer is required to submit further clarification or where the documents submitted are incomplete, and provided that under special circumstances, the case handler may, with written approval, extend the review period.
    Where document inspection finds the application documents are complete, the issuer meets the requirements for qualification, and further review at higher levels finds the application in order, the TWSE will submit the application to the competent authority for approval along with an application assessment report and required attachments.