| Article 1 |
These Directions are adopted pursuant to Article 13 of the Regulations Governing the Issuance of Call (Put) Warrants by Issuers and Article 9 of the Taipei Exchange Regulations Governing the Review of Call (put) Warrants for Trading on the TPEx.
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| Article 2 |
The basic principles for preparation of public prospectuses is as follows:
- Information published in the public prospectus shall be full, accurate, and detailed, presented in concise and understandable language, and shall contain no falsehoods or omissions.
- Information published in the public prospectus shall be up to date. Any trade or other event occurring prior to publication sufficient to influence the judgment of an interested party shall be disclosed.
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| Article 3 |
The following items shall appear in order on the cover of the public prospectus:
- The name and a specimen of the seal of the issuing company.
- That the prospectus is prepared for the purpose of issuing call (put) warrants.
- A brief explanation of the following items:
- The issuance date and the duration of the warrant issue.
- Details of the linked underlyings.
- The type of call (put) warrant, the total number of units issued, and the amount of the issue. In the case of an issue of extendable callable bull contracts or extendable callable bear contracts, the type of warrant shall be annotated with the wording "extendable."
- The terms and conditions of issuance (items such as the issuance price, strike price or point, and exercise period), and, in the case of an issue of capped call/put warrants (or callable bull/bear contracts)?, the following matters shall be printed in a conspicuous typeface:
- In the case of an issue of capped call warrants or capped put warrants: the "cap price or point of the warrants", and the fact that "when the closing price of the underlying security, the average price at closing of the underlying spot gold, the closing level of the underlying index, or the simple arithmetic mean trade price of the underlying futures during the last minute before 1:30 p.m. reaches the cap price or point, that day will be deemed the last trading day for that warrant and it will reach maturity on the second following business day, with a uniform requirement for automatic cash settlement based on the closing price of the underlying security, the average price at closing of the underlying spot gold, the closing index of the underlying index, or the simple arithmetic mean trade price of the underlying futures during the last minute before 1:30 p.m. on the last trading day of the warrant."
- In the case of an issue of callable bull contracts or callable bear contracts, or extendable callable bull contracts or callable bear contracts: the "knock-out price or point of the contracts," and the facts that "when the closing price of the underlying security, the average price at closing of the underlying spot gold, the closing index of the underlying index, or the simple arithmetic mean trade price of the underlying futures during the last minute before 1:30 p.m. reaches the knock-out price or point, that day will be deemed the contract’s last trading day, and the contract will reach maturity on the second following business day, with automatic cash settlement based on the simple arithmetic mean trade price of the underlying securities, the average price at closing of the underlying spot gold, the underlying settlement index, or the settlement price of the underlying futures, on the business day following the last trading day of the contract"; "if there is no trade price for the underlying security, the benchmark price at the opening of trading of the underlying security on the expiry date of the contracts shall be used"; "if trading of the underlying security, the underlying spot gold, or the underlying futures is halted or suspended on the business day following the last trading day of the contracts or on the expiry date, the closing price of the underlying security, or the average price at closing of the underlying spot gold, or the daily settlement price of the underlying futures on the last trading day of the contracts shall be used." The underlying settlement index and the daily settlement price of the underlying futures mentioned above shall be handled in accordance with Article 11, paragraph 1, subparagraph 6, subparagraph 7, and subparagraph 8, item G of the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.
- The method by which the issuance price was calculated:
- In the case of an issue of TPEx listed call (put) warrants: the description shall include the price or point of the linked underlying, the strike price or point, the duration of the warrant issue, the interest rate, the rate of fluctuation of the underlying security, and other elements used in the calculation, and a table of comparison listing other warrants in the preceding year with the same linked underlyings.
- In the case of an issue of callable bull contracts or callable bear contracts, the issuance price shall be calculated in accordance with Article 11, paragraph 1, subparagraph 8, item E of the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.
- The leveraging effect and leverage premium.
- The shares (or beneficial units or depositary receipt units or index points or futures points or spot gold units) represented by each unit.
- The following text, printed in a conspicuous manner:
- "Call (put) warrants are a high-risk investment. Buyers should be aware of the possibility that the warrant may have no value at expiration, and should be prepared to accept loss of the purchase price of the warrant. Trading of call (put) warrants for which the underlying is an exchange-traded fund (ETF) with foreign component securities or that tracks a foreign futures index, or is a foreign security or index, or spot gold that is registered for TPEx trading, is not subject to any price fluctuation limits. When trading call (put) warrants that have foreign securities or indices as the underlyings, you should also consider the exchange rate and other associated risks. When trading call (put) warrants that have futures as the underlyings, you should pay attention to the various price risks of the underlying futures that may be encountered during the trading hours set in the rules for the respective futures contracts during the duration of the warrants."
- "The issuer may not use the fact of having obtained qualification to issue call (put) warrants or of having obtained the TPEx's approval for TPEx listing of its planned warrants as verification of any matter in its application or in any promotion guaranteeing the value of the call (put) warrants."
- "Should any of the content of this prospectus be false or conceal any material fact, the issuer, its responsible person, and any other person who has placed their signature or seal upon it shall bear legal liability."
- The printing date.
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| Article 4 |
The following items relating to the given issue shall be printed in order on the inner cover of the public prospectus:
- The plan for circulation of the public prospectus, explaining where the prospectus will be displayed, how it will be circulated, and how to request a copy.
- The name, address, and telephone number of the underwriter (omit if none).
- The issuer's name, address, and telephone number.
- The name, address, and telephone number of the credit-rating institution.
- The name of the attorney at law and the name, address, and telephone number of the attorney's law firm.
- The name of the certified public accountant (CPA) who attested the issuer's most recent yearly financial report, and the name, address, and telephone number of the accountant's accounting firm.
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| Article 5 |
The back cover of the public prospectus shall bear the signature or seal of the responsible person of the issuing company, while the underwriter of the call (put) warrants and the underwriter's responsible person, in carrying out the underwriting pursuant to relevant regulations, shall place their signatures or seals on the parts of the prospectus for which they were responsible.
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| Article 6 |
The following items shall be set forth in the public prospectus:
- The issuance plan for the call (put) warrants.
- The audit opinion provided by the CPA.
- The attorney's opinion on the issue's legality.
- Information on the issuer.
- Information on the linked underlyings.
- The law of the ROC as the governing law for all disputes arising out of the call (put) warrants.
- The District Court of Taipei, Taiwan as the jurisdictional court for litigation, and the stipulations of any arbitration clause that may be contained in the prospectus.
- Other important matters stipulated in the prospectus.
- Any items required by the competent authority or regulations of the TPEx to be contained in the prospectus.
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| Article 7 |
A public prospectus shall include all content required under the Criteria, and shall contain a paginated table of contents and an abstract of the prospectus content. Where required content is not available or may be omitted pursuant to the TPEx's approval, such items shall be marked as "not available" or "omitted."
Where there is duplication of content within a prospectus, it is permissible to set out the given content in only one place, with a page number reference provided elsewhere in the text for the same content.
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| Article 8 |
The following matters shall be set forth in the issuance plan:
- The issuance date and the duration of the warrant issuance.
- Details of the linked underlyings: if the linked underlyings are domestic stocks and furthermore the most recent financial report of the stock issuer audited or reviewed by a certified public accountant shows losses, there shall be a statement of the reason for issuing warrants on the linked underlyings; if the linked underlyings are foreign stocks or depositary receipts, there shall be a statement on the status of their liquidity; if the linked underlyings are futures, there shall be a statement of the futures contract name and delivery month.
- The type of call (put) warrants, the total number of units issued and total amount of the issue. In the case of an issue of extendable callable bull contracts or extendable callable bear contracts, the type of warrant shall be annotated with the wording "extendable."
- The terms and conditions of issuance: include items such as the issuance price, strike price or point, exercise period, and the number of shares or units of beneficial interest or depositary receipt units or index points or spot gold units or futures points represented by each unit. If the warrants are extendable, there shall also be a statement of the matters set out in Article 11, paragraph 1, subparagraph 8, item D of the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.
- The method by which the issuance price was calculated:
- The description shall include the price or point of the linked underlying, the strike price or point, the duration of the warrant issue, the interest rate, the rate of fluctuation of the underlying security and other elements used in the calculation, and a table of comparison listing other warrants in the preceding year with the same linked underlyings.
- In the case of an issue of callable bull contracts or callable bear contracts: the issuance price shall be calculated in accordance with Article 11, paragraph 1, subparagraph 8, item E of the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.
- In the case of an issue of capped (or knock-out) call/put warrants (or callable bull/bear contracts), there shall also be a statement of the cap (or knock-out) price or point, and a statement in conspicuous typeface of the matters set out in Article 11, paragraph 1, subparagraph 8, item F of the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx. If the warrants are extendable, there shall be a statement of the requirements in connection with extension as set out in Point 8, subparagraph 3 of the Taipei Exchange Procedures for the Review of Call (Put) Warrants.
- Matters required to be published in accordance with Point 8 of the Taipei Exchange Directions for Call (Put) Warrant Liquidity Provider Operations.
- Procedures for exercising the warrant and the terms for cancellation of already-exercised call (put) warrants.
- Procedures for delivery/settlement when the holder exercises the warrant. If the issuer of a call warrant to be settled in securities (physical delivery) may elect cash settlement, or if the holder of a put warrant to be settled in securities (physical delivery) may elect cash settlement, such facts shall be set out in conspicuous typeface.
- Predetermined risk-offsetting strategies.
- Stipulations regarding adjustment of the strike price of the call (put) warrant and related matters at the time of distribution of dividends and bonuses, increases or decreases in capital, stock splits or reverse splits, and other related action by the company issuing the underlying security, or upon distribution of dividends or other related action on an underlying ETF by a securities investment trust enterprise (SITE) or futures trust enterprise (FTE). Where the issuer does not apply the TPEx reference formula (see Annex) in making such adjustments, that fact shall be set out in conspicuous typeface in the public offering prospectus. If the underlying is a foreign security, the issuer shall adopt its own formula for adjustment.
- Methods of handling of a merger by the company issuing the underlying securities, or an alteration of the terms of trade, halt of trading, suspension of trading, or termination of trading of its securities on the TPEx, or suspension of compilation of the underlying index by the index provider, or the TPEx delisting of an underlying ETF due to the dissolution, bankruptcy, or voidance of approval of a SITE or futures trust enterprise (FTE), or public announcement by the TAIFEX of halt of trading, suspension of trading, or delisting of the underlying futures.
- Methods of handling TPEx listing of the call (put) warrants, or halt of trading, suspension of trading, or delisting imposed by the TPEx.
- Clarification of whether or not there are plans for a reverse issue of call (put) warrants against the same linked underlyings or index within the coming 3 months.
- Source and method of disclosure for information such as when the securities exchange on which the underlying foreign security is traded announces halting of trading, or suspension of trading, or delisting, of the security, or when the index provider announces suspension of compilation of the underlying foreign index.
- Other matters which the issuance plan shall set forth pursuant to the regulations of the TPEx or the competent authority.
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| Article 9 |
The following matters shall be set out by the issuer:
- The date of its establishment.
- The addresses and telephone numbers of its headquarters and branches.
- The names, positions concurrently held in other companies, and dates on which posts were assumed for each of the general manager, assistant general manager, directors, supervisors, and heads of all departments.
- The company's major lines of business and the relative weighting of each.
- Any material litigation, non-litigation matter, or administrative suit in which the company is currently involved, including the facts of the dispute, principal interested parties, date on which proceedings began, and current status of the proceedings shall be disclosed.
- Summaries of balance sheets and statements of comprehensive income for the preceding 2 years.
- A financial analysis, to include at a minimum the following items:
- Financial structure:
- Debt-asset ratio.
- Ratio of long-term funds to property and equipment.
- Solvency:
- Liquidity ratio.
- Quick ratio.
- Interest coverage ratio.
- Cash flow:
- Cash flow ratio.
- Cash flow adequacy ratio.
- Cash flow reinvestment ratio.
- Information on off-balance-sheet financial instruments and other matters requiring disclosure.
Where an issuer is a foreign institution, adjustments may be made to the items required under each of the subparagraphs of the preceding paragraph in accordance with the laws and regulations of its home country, subject to the TPEx approval.
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| Article 10 |
The following items shall be specified in relation to the linked underlying:
- Profile of the linked underlying: If the underlying is a stock or depositary receipt, state the profile of the issuing company; if the underlying is an ETF, state the names of the companies of the component stocks it represents or the name of the foreign futures index it tracks; if the underlying is spot gold, state the fineness and custodian institution; if the underlying is an index, state the name of the index; if the underlying is futures, state the specifications of the underlying futures contract.
- Trading information on the linked underlying: If the underlying is a security, the information shall include the volume of trade for the preceding 1-year period, and the highest, lowest, and monthly closing prices; when the underlying is an index, it shall include the highest and lowest levels reached by the index, and the monthly closing levels, during the preceding year; if the underlying is spot gold, it shall include the volume of trade for the preceding 1-year period, and the highest, lowest, and monthly average price at closing; if the underlying is futures, the information shall include the average daily volume of each month of the most recent quarter, the daily trading volumes of the previous month, and the open interest of the most recent day .
- Consolidated balance sheets and statements of comprehensive income for the linked underlyings for the most recent 2 years, if the underlying securities are stocks or depositary receipts.
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| Article 11 |
These Directions, and any amendments hereto, shall take force upon ratification by the competent authority.
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