Article 1 |
These Regulations are prescribed in accordance with Paragraph 1 of Article 22 of the Securities and Exchange Act ("the Act"). |
Article 2 |
Unless otherwise regulated by other acts or regulations, the offering and issuing of securities shall be subject to these Regulations. |
Article 3 |
The Executive Yuan's Financial Supervisory Commission (FSC) shall supervise the offering and issuance, secondary distribution, and retroactive handling of public issuance procedures, issuance of new bonus shares, and capital reductions through effective registration or application for approval.
The terms "registration" and "effective registration" mean submission by the issuer of relevant documents to the FSC in accordance with law. Unless the documents are rejected by the FSC due to insufficient information contained in the said documents, or for the purpose of protecting the public interest, the registration will become effective after a designated number of business days from the date when the FSC or its designated institution receives the submission.
The terms "application for approval" and "approval of application" mean that the FSC will review and examine the documents furnished by the issuer. If nothing unusual is found, the FSC shall approve the offering and issuing plan.
The fact of effective registration or approval of application for the items set forth under paragraph 1 may not be cited as proof of the veracity of registration or application particulars, or to guarantee the value of the securities.
The term "business day" as used in Paragraph 2 means a day on which transactions are conducted in the securities market.
The term "company traded on an OTC market" as used in these Regulations means a company whose stock has been approved for trading on an OTC market in accordance with Article 3 or Article 3-1 of the GreTai Securities Market Regulations Governing Review of Securities Traded on Over-the-Counter Markets. |
Article 4 |
In the occurrence of any one of the following events, the issuer may not offer and issue securities:
1. Upon the occurrence of events prescribed under Paragraph 1 of Article 135 of the Company Act, no secondary distribution is allowed.
2. If the issuer is in violation of Paragraph 2 of Article 247 of the Company Act or any one of the events under Article 249 of the same law occurs, the issuance of corporate bonds without guaranty is prohibited. However, the restriction of Article 247 of the Company Act does not apply when the issuance of corporate bonds is in accordance with Article 28-4 of the Securities and Exchange Act.
3. No issuance of corporate bonds is allowed if the issuer is in violation of Paragraph 1 of Article 247 of the Company Act or any one of the events under Article 250 of the same law occurs. However, the restriction of Article 247 of the Company Act does not apply when the issuance of corporate bonds is in accordance with Article 28-4 of the Securities and Exchange Act.
4.No public issuance of preferred shares is allowed if any one of the events under Article 269 of the Company Act occurs.
5. The public issuing of new shares is prohibited in the event that any incident prescribed under Article 270 of the Company Act occurs. |
Article 5 |
When any significant events prescribed under Subparagraph 2 of Paragraph 2 of Article 36 of the Act which have great impact on the rights of shareholders and the value of stocks occur between the date of the issuer's submission of latest financial report and balance sheets and that when the registration becomes effective or the application for approval is granted, the issuer shall disclose this incident to the public and report to the FSC within two days after the occurrence of such event. In addition, the issuer shall provide to the FSC expert opinion on such occurrence based on the nature of the event involved and the evaluation from the certifying accountant regarding the impact of such event on the financial report.
From the date of reception of the registration (application) documents by the FSC and its appointed agency until the registration has become effective or the application has been approved, announced information shall be limited to the disclosure of facts, and shall not serve to announce financial forecast information.
If the issuer externally disseminates any information not in conformance with the registration (application) documents, it shall correct the relevant information and submit it to the FSC. |
Article 6 |
An issuer registering or applying for approval to offer and issue securities shall submit a prospectus.
If any one of the following events occurs when the issuer has registered or applied for approval, the issuer shall ask the lead securities underwriter to evaluate the situation and a lawyer to review the relevant legal issues. The above-mentioned underwriter and lawyer shall provide evaluation report and legal opinions in accordance with regulatory requirements:
1. The cash issuance of new shares, issuance of new shares due to merger, issuance of new shares due to an acquisition of shares from another company, or issuance of new shares due to an acquisition or split conducted in accordance with law, by a public company whose stocks have been listed on a stock exchange (hereinafter referred to as "listed") or by an OTC company.
2. Public sale of stock of a company whose stock is approved for trading in the business places of securities firms in accordance with Article 5 of the Gretai Securities Market Regulations Governing Review of Emerging Stocks Traded on Over-the-Counter Markets (hereinafter referred to as an "emerging stock company"), after the listing or OTC listing contract for the stock has been approved for record by the FSC, and before the company has issued new shares for cash and engaged a securities underwriter or recommending securities firm to handle the initial listing or OTC listing.
3. Companies whose stocks have not been listed on a stock exchange (hereinafter referred to as "unlisted") or whose stocks have not been traded in the business places of securities firms which have conducted cash offering of new shares and have allocated a certain percentage of their aggregate new shares to be publicly offered in accordance with Article 19.
4. The offering is used to establish a company.
5. The corporate bonds are to be offered publicly through a securities underwriter. If the issuer issues ordinary corporate bonds, it can be exempted from providing a securities firm evaluation report and legal opinion.
If the securities firms have obtained reports from the credit rating institutions approved or recognized by the FSC in the past year, they can be exempted from the requirement that the lead underwriter must issue an evaluation report.
The legal opinions in paragraph 2 and the preceding paragraph, and concluding opinions of the evaluation reports or rating report, shall be provided in the prospectus. |
Article 7 |
Upon the occurrence of any one of the following events, the FSC may reject the registration or application for approval from the issuer for offering and issuing securities:
1. The certifying CPA issues a disclaimer of opinion or an adverse opinion in the audit report.
2. The certifying CPA issues a qualified opinion in the audit report and such opinion has an impact on the fair presentation of the financial report.
3. The application review forms prepared by the issuer, reviewed by the certifying accountant, and produced by the securities underwriter show the occurrence of violation of laws or regulations or articles of incorporation of the issuer and such violation has affected the offering and issuing of securities.
4. The legal opinion issued by a lawyer indicates that there exists violation of law or regulations and such violation has affected the offering and issuing of securities.
5. The evaluation report from the underwriter fails to specify the feasibility, necessity, and reasonability of the subject offering and issuing plan.
6. The issuer files an application again under Paragraph 2 of the preceding article within three months after receipt of notice from the FSC in which the FSC has rejected the issuer's application, has refused to approve, has canceled the application, or the issuer has withdrawn its registration filing or application made under these Regulations. These restrictions shall not apply, however, to the issuance of new shares due to merger, issuance of new shares due to acquisition of shares of another company, or issuance of new shares due to an acquisition or split conducted in accordance with law.
7. Any one of the following descriptions applies to an issuer registering (applying for approval of) a cash capital increase or an issue of corporate bonds:
(1) the funds to be raised will be used in direct or indirect investment in mainland China;
(2) the aggregated amount directly or indirectly invested in the mainland China area violates the regulations of the Investment Commission, Ministry of Economic Affairs. However, the aforesaid restriction need not apply where the funds are to be used in purchase of domestic fixed assets and promise has been undertaken to refrain from increasing investment in mainland China.
8. Violation or failure to serious extent of performing the undertakings made upon application for listing in the stock exchange market or OTC market.
9. The FSC finds that there has been a material violation of relevant laws or regulations. |
Article 8 |
Where an issuer conducts an offering and issuance of securities as contemplated under paragraph 2 of Article 6, the FSC may reject or disapprove the registration or application upon the occurrence of any one of the following events:
1. Fifty percent of the original directors have changed during the year of registration/application or during the previous two years, and a shareholder has obtained its shares in violation of the provisions of Article 43-1 of the Act. However, this provision shall not apply where corrections have been made prior to the registration (application) date.
2. Any one of the events set forth under Paragraph 1 of Article 156 of the Act applies to a listed or OTC company. However, this restriction shall not apply to any company upon which restrictions have been imposed, in accordance with the provisions of Paragraph 2 of Article 139 of the Act, with respect to the trading of its shares on a stock exchange.
3. The offering and issuance plan in question is unfeasible, unnecessary, or unreasonable.
4. Any one of the following events has occurred in the implementation of a previous plan for the offering and issuance of securities, and the situation has not been improved:
(1) The process of implementation is seriously delayed without legitimate reason and the implementation has not been completed yet.
(2) The plan has undergone substantial change without due reasons and such change has not been completed. However, this provision shall not apply where more than three years have passed between the registration (application) date and the actual completion date of the plan.
(3) The plan has undergone substantial change, but said change has not yet been reported to a shareholders' meeting for approval.
(4) The company has failed in the most recent year to observe the regulations prescribed under subparagraphs 4 through 9 of paragraph 1 of Article 9, or under Article 11 of the Regulations Governing the Offering and Issuance of Overseas Securities by Issuers.
(5) No reasonable benefit derived and no legitimate reason is provided. However, in the event more than three years have passed since the completion date of the plan till the registration/application date, such restriction shall not apply.
5. An important part of the plan for the current offering and issuance of securities (such as issuance rules, source of funds, particulars of the plan, implementation schedule, and expected returns) has not been placed on the agenda of a board meeting or shareholders meeting in accordance with the Company Act and the issuer's articles of incorporation, or has not been adopted by resolution at such a meeting.
6. 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, has not yet rectified the situation, and now intends to conduct a cash capital increase or issue corporate bonds.
7. The company has entered into an irregular transaction of material significance, and has not yet rectified the situation.
8. The company intends to conduct a cash capital increase or issue corporate bonds, but it holds short-term investments, idle assets, or idle real property, has no plan to actively dispose of or develop such holdings, and their total value is equivalent to either: (1) 40 percent or more of shareholders' equity in the most recent financial report 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 issue that the company is registering (or applying for). However, this provision shall not apply when the funds to be raised will be used to purchase fixed assets and there is a concrete plan for fund raising evidencing the need to raise the funds.
9. Proceeds from the cash capital increase or corporate bond issuance are to be used to invest in a company engaged primarily in the trading of securities, or to establish a securities firm or a securities service enterprise.
10. The company has failed to prepare its financial statements in accordance with relevant acts or regulations, or with generally accepted accounting principles, and such violations are of material significance.
11. The company has violated the provisions of Article 5, paragraph 2.
12. The internal control system is seriously deficient in design or implementation.
13. The company's share price fluctuated abnormally during the month prior to the date of registration (application).
14. Any one of the following descriptions applies to the shareholdings of the entire body of the company's directors or supervisors:
(1) 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.
(2) The percentage 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 (or applying for); 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.
(3) During the fiscal year in which the registration (application) is made, or during 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.
15. The issuer or its current chairperson or general manager, or a de facto responsible person, has received a fixed sentence or a heavier punishment from a court in the past three years.
16. The court has decided that the issuer has an obligation for damages under the Act and the issuer has not met that obligation yet.
17. Pledge of company asset(s) as loan guarantee for any third party. However, the restriction shall not apply to loan guarantee for subsidiary due to business necessity.
18. There is an issue of new shares due to a merger, or an issue of new shares for the purpose of acquiring the shares of another company, or an issue of new shares for the purpose of an acquisition or split conducted in accordance with law, and any one of the following descriptions obtains:
(1) There has been a material violation of the provisions of Chapter 2, Section 5 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.
(2) The assigned or purchased shares are not the newly issued shares of another company, the long-term holdings of another company, or previously issued shares held by the shareholders of another company.
(3) The ownership rights over the assigned shares or the acquired business or assets are not impaired or encumbered in any way, such as through the creation of pledge thereupon or placing of restrictions on the purchase or sale thereof.
(4) There has been a violation of Article 167 paragraph 3 or 4 of the Company Act.
(5) An audit report with unqualified opinion was not issued by a CPA for a financial report of an absorbed company for the most recent fiscal year; provided, that this provision does not apply where an audit report with qualified opinion was issued together with an unqualified opinion regarding the balance sheet.
19. The event prescribed in Article 12, paragraph 1, subparagraph 3, item 6 occurs, and the directors, supervisors, and shareholders who hold 10% or more of total issued shares of the issuer fail to undertake to place a certain percentage of their shares under the custody of a centralized securities depository enterprise.
20. The FSC deems it necessary, in to protect the public interest, to reject or disapprove the issuer's application.
The term "company engaged primarily in the trading of securities" as referred to in subparagraph 9 of the preceding paragraph shall mean a company in which the issuer has directly invested, or in which a subsidiary of the said issuer has invested under the equity method, provided that its cash, cash equivalents, short-term investments, and securities issued by the issuer account for 50% 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% or more of the revenue or profit/loss of such company.
If the issuer is a securities, futures, or financial enterprise, it is not required to include short-term investments in its calculations when totaling the value of the assets set forth under subparagraph 8 of paragraph 1. The provisions subparagraph 9 of paragraph 1 need not apply if the issuer is an insurance enterprise, or if it is an emerging stock company conducting a cash capital increase through a new share issue in accordance with the provisions of Article 6, paragraph 2, subparagraph 2.
The provisions prescribed in subparagraphs 8 of paragraph 1 need not apply where an issuer, for the purpose of enjoying tax incentives, conducts a cash capital increase to raise funds not greater in amount than the upper limit set by the competent authority or NT$100 million.
With respect to the issuance of new shares due to merger, issuance of new shares due to acquisition of shares of another company, or issuance of new shares due to an acquisition or split conducted in accordance with the law, the following parts of paragraph 1 need not apply: subparagraph 1, those provisions of subparagraph 4 that relate to implementation of a previous plan for cash capital increase or the issuance of corporate bonds, and subparagraphs 13, 15, and 19.
The provisions of subparagraphs 1, 13 and 19 of paragraph 1 need not apply where an issuer has engaged a securities underwriter to publicly underwrite its ordinary corporate bonds. |
Article 9 |
After the registration of (application for) a planned offering and issuance of securities has become effective (been approved), the issuer shall act in accordance with the following regulations:
1. Within 30 days after receipt of notice indicating that the registration has become effective or the application has been approved, the issuer shall act in accordance with Articles 252 or 273 of the Company Act.
2. With exception of the issuance of new shares due to merger, issuance of new shares due to acquisition of shares of another company, issuance of new shares due to acquisition or split conducted in accordance with law, issuance of ordinary corporate bonds, and issuance of employee stock option certificates, an issuer shall retain a financial institution to collect payments and deposit them in the designated account opened by the issuer, and shall, prior to collecting payments, respectively enter into a payment collection agreement with the retained financial institution and an agreement for deposit in the designated account with the bank thereof, and within two days from the signing of such agreements shall enter the name of the financial institution and the date of the agreement into the website specified by the FSC for reporting of information. The collection of payments and deposit thereof in a designated account shall not be handled by the same business unit in a bank. The financial institution of
the designated account shall only allow an issuer to withdraw or use the money after the financial institution has received all the money due. Within two days after receipt of all the money due, the issuer shall enter the information on full collection of the proceeds into the website specified by the FSC for reporting of information.
3. Except where otherwise provided for by the FSC, within 30 days after the receipt of the approval letter for permission of incorporation or the amendment registration certificate of issuing new shares from the Ministry of Economic Affairs, the issuer of public offering shall have the securities certified in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies. The securities shall be delivered to subscribers or offerees and a public announcement shall be made prior to the delivery; provided that in case where physical securities are not printed, certification of stocks and corporate bonds shall be exempt in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies.
4. Before issuing corporate bonds, the issuer shall enter into a contract with a centralized securities depository enterprise, agreeing therein to provide information related to the issue, and to lend its cooperation when asked to help with cancellation of the previous owner, repayment of principal, and payment of interest.
5. Before the utilization plan of the cash capital increase or corporate bond issuance is completed, the company having cash capital increase or issuing corporate bonds shall disclose the progress of the said plan in its annual report. In the case of the issuance of corporate bonds, within two days of the completion of the funds offering and prior to the tenth day of each month during the issuance period of the corporate bonds, information related to the issuance of the corporate bonds shall be input into the website specified by the FSC for reporting of information.
6. Within ten days after the end of each quarter, the quarterly report on the plan for cash capital increase or corporate bond issuance and capital utilization shall be posted to the website specified by the FSC for reporting of information in accordance with FSC regulations.
7. Where a listed or OTC company conducts a cash capital increase or corporate bond issue, it shall contact the original underwriter or the certifying CPA to comment on the reasonableness of the progress made regarding capital utilization and of the purposes for unused capital, and on whether there has been any departure from the capital utilization plan, and within ten days after the end of each quarter shall post this information together with the information referred to in the preceding subparagraph to the information reporting website specified by the FSC.
8. Listed or OTC companies issuing new shares due to a merger issuance of new shares due to acquisition of shares of another company, or issuance of new shares due to acquisition or split conducted in accordance with law, shall, within ten days after the end of each quarter during the first year after completion and registration of the merger, acquisition of shares of another company, or acquisition or split, ask the original lead underwriter to provide an assessment opinion as to whether any of the aspects of the merger would have an effect on the finances, business, and shareholders' rights and interests of the issuer, and input the same into the website specified by the FSC for reporting of information.
8. In the event of a change to an item in the plan for cash capital increase or corporate bond issuance or if the monetary amount of a particular item is changed, thus causing the total amount required for the original item to either decrease or increase by an amount equivalent to 20% or more of the funds that need to be raised, the company shall amend the plan and, within two days after the amendment has been ratified by resolution of the board of directors, make a public announcement and submit the amendment to a shareholders' meeting for ratification. If the company is a listed or OTC company, upon such amendment and thereafter within ten days after the end of each quarter, the listed or OTC company shall contact the original underwriter to comment on the reasonableness of the progress made regarding capital utilization and of the purposes for unused capital, and key in the aforesaid change and comment in combination with information as referred to in subparagraph 6 into the website specified by the
FSC for reporting of information.
In the event the issuer conducts a shelf registration to issue corporate bonds, any change to the filed material for the first issuance of corporate bonds occurring within the scheduled issuance date shall be reported to the FSC and be put in public announcement. |
Article 10 |
Except where a physical certificate is not printed, when the issuer produces certificates evidencing payment for the purpose of cash capital increase or corporate bond issuance, such certificates shall be certified prior to delivery by the certifying institutions in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies. Before the amendment registration is approved by the competent authority over corporate registration, the company may use the documents evidencing the effective registration or approval for cash capital increase or corporate bond issuance and those evidencing all money for shares or bond has been paid in to serve us the basis for certification.
Except where a physical certificate is not printed, the aforementioned certificate evidencing payment may be made in the minimum trading unit prescribed by the Stock Exchange or GreTai Securities Market or the "units" section can be left blank so that the subscriber or offeree can request the issuing company to produce shares or corporate bonds in fractional units.
Except where a physical certificate is not printed, the aforementioned certificate evidencing payment shall list the date and document reference number for the effective registration and approval of application. Or the receipts can be produced before the registration becomes effective or the application approved and be stamped with the date and document reference number for effective registration or approval of application afterwards.
In connection with the issuance of marketable securities, in case where physical certificate is not printed in accordance with Article 8 of these Regulations, certification in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies need not apply.
In case where delivery of certificate and payment are made through book entry in accordance with Article 8 of these Regulations, the issuance or cancellation shall be handled in accordance with relevant rules of the centralized securities depository enterprises. |
Article 11 |
The FSC may revoke or void the registration or approval after the issuer's registration or application for offering and issuing securities has become effective or approved by it if any one of the following events occurs:
1. The subscription payment has not been fully raised and paid in cash after three months from the date of receipt of effective registration or approval of application from the FSC.
2. Any one of the events prescribed under Paragraph 1 of Article 251 or Paragraph 1 of Article 271 of the Company Act occurs.
3. The issuer is in violation of Paragraph 1 of Article 20 of the Act.
4. The issuer is in violation of Article 5.
5. Where the issuer violates or fails to execute its undertakings as submitted to the FSC upon registration (application) for public offering or issuance of securities and the situation is serious.
6. The issuer is in violation of these Regulations or the restrictions or prohibitions effective at the time when the FSC notifies the issuer that its registration has become effective or application has been approved.
In the event a holder of securities makes a secondary distribution to unspecified persons, the FSC may revoke the registration when the situation prescribed under the aforementioned Subparagraphs 3, 5 or 6 occurs after the registration with it has become effective.
From the date on which the registration becomes effective or the application is approved until the date of completion of the securities offering, if the content of a publicly disclosed financial forecast or other released information is at variance with the registration or application documents, and where the securities prices or shareholders' rights and interests have been effected substantially, the FSC may revoke or void the effectiveness of the report or application approval.
After the effective registration or approval is revoked, if the issuer or holder has received money from others for purchasing securities, it shall return such payment with interests as regulated by laws within ten days upon receipt of the cancellation notice from the FSC and be responsible for damages. |