| Article 2 |
"Material information" of OTC companies in these Procedures means the following matters:
1. Dishonor of a negotiable instrument due to insufficient deposits and notation of settlement subsequent to dishonor of a negotiable instrument, refusal of a financial institution to honor a transaction, inability to redeem a bond upon maturity or upon the request of the creditor, other loss of credit of an OTC company or a responsible person, parent company, or subsidiary thereof, creation or release of pledge on directors' shares, or a significant change in shareholding of the parent company, or, after dishonor of a negotiable instrument of an OTC company due to insufficient deposits or refusal of a financial institution to honor a transaction of an OTC company, any alteration of trading method, suspension of trading, or delisting of the stock thereof, and the status of any application to restore the original conditions.
2. Any material effect on company finances or business resulting from any litigious or non-litigious matter, administrative disposition, contentious administrative procedure, or motion for provisional attachment or provisional injunction, or compulsory execution thereof, with respect to an OTC company or a responsible person thereof.
3. Any material effect on company finances or business resulting from any serious decrease in output or complete or partial suspension of work, leasing out of a company plant or principal equipment, or pledge or mortgage of all or a principal portion of a company's assets.
4. Any event set forth in Paragraph 1 of Article 185 of the Company Act.
5. Reorganization or bankruptcy procedure of an OTC company or parent or subsidiary thereof, and any and all events occurring in the course of such procedure, including any petition made to a court and any notice given or ruling handed down by a court, or any ruling prohibiting transfer of shares or any precautionary measure ordered by a court under relevant laws such as the Company Act or the Bankruptcy Act, or any material change in any of the above matters.
6. Change in chairman, general manager, a juristic-person director or representative thereof, a juristic-person supervisor or representative thereof, an independent director, a natural person director, or a natural person supervisor, or change in one-third or more of directors, or departure of all independent directors from office.
7. Change of certified public accountant (CPA) for any reason other than internal adjustments within the certifying accounting firm.
8. Change of company spokesperson, acting spokesperson, financial officer, accounting officer, research and development officer, or internal audit officer.
9. Change in accounting year.
10. Any material effect on company finances or business resulting from any signing, amendment, termination, or rescission of an important memorandum of understanding (excepting a memorandum of understanding for a merger, consolidation, or spin-off), a plan for a strategic alliance or other business cooperation, or an important contract, change in any material respect of a business plan, completion of development of a new product, or successful development and formal entry into the full-scale production stage of an experimental product.
11. Resolution by the board of directors to carry out a capital reduction, merger or consolidation, spin-off, acquisition, exchange, conversion, or transfer of shares, dissolution, issue of new stock for capital increase, issue of corporate bonds, issue of employee stock option certificates, issue of other securities, private placement of securities, participation in the establishment of or conversion into a financial holding company, investment holding company, or subsidiary thereof, or any material change in any of the above matters; failure by companies participating in a merger, consolidation, spin-off, acquisition, or transfer of shares from another, to convene on the same day and pass resolutions by their boards of directors or shareholders' meetings, or inability for any reason to convene a subsequent shareholders' meeting of a company participating in a merger, consolidation, spin-off, acquisition, or transfer of shares from others, or veto by either side of the proposal for merger, consolidation, spin-off, acquisition, or transfer of shares from others; or resolution of the board of directors to cancel a merger or consolidation during the implementation of the merger or consolidation plan following the initial board resolution in favor of the merger or consolidation.
12. The date for convening an investor/press conference by a company and the relevant financial and business information.
13. Resolution by the board of directors to publish financial forecast information, inapplicability of such financial forecast information, or correction or updating of such financial forecast information, or a discrepancy, by a company that has published financial forecasts, between the self-assessed income publicly announced and reported within one month after the close of the fiscal year and the most recently publicly announced and reported financial forecasts, where such discrepancy is 20 percent or more and of an amount reaching NT$30 million and 0.5 percent of paid-in capital, or a discrepancy between the income before tax in the financial report publicly announced and filed for a given fiscal year and the self-assessed income before tax for the preceding fiscal year publicly announced and reported within one month after the close of that fiscal year, where such discrepancy is 20 percent or more and of an amount reaching NT$30 million and 0.5 percent of paid-in capital.
14. Resolution by the board of directors to distribute dividends or a change in dividend distributions by a resolution of the board of directors or a shareholders' meeting, or resolution of a record date for dividend distribution.
15. Resolution by the board of directors or a shareholders' meeting to directly or indirectly carry out an investment plan of an amount not less than 20 percent of the company's paid-in capital and NT$100 million, or any material change in any of the above matters.
16. A change by resolution of the board of directors in a plan for capital increase by cash or offering of corporate bonds after such plan has become effective upon registration, or such change in a plan for private placement of securities after passage by the board of directors or a shareholders' meeting.
17. Resolution of the board of directors on the date for convening a shareholders' meeting or special shareholders' meeting, the cause or subjects of such a meeting, or the date of suspension of changes to entries in the shareholders' register.
18. Important resolution of a shareholders' meeting or special shareholders' meeting.
19. Occurrence of a significant event of internal control-related fraud, non arms-length transaction, or defalcation of company assets.
20. Acquisition or disposal of assets by an OTC company, or a subsidiary thereof whose shares have not been publicly issued domestically, where within the applicable scope of assets under Article 3 of the Regulations Governing Acquisition or Disposal of Assets by Public Companies adopted by the Competent Authority and moreover in the presence of any of the circumstances set forth in Article 30 or 31 [of said Regulations] as requiring public announcement and reporting, with the exceptions of merger, consolidation, spin-off, acquisition, or transfer of shares from another, and of derivatives trading for which the information is reported on a monthly basis.
Where an OTC company under the preceding paragraph acquires or disposes of any domestic open-end fund including stock or bond funds, public announcement and reporting is not necessary, unless it is a privately placed fund; public announcement and reporting is required in the event of any unrealized losses on derivatives trading amounting to 3 percent or more of shareholders equity.
21. Resolution by the board of directors (or a shareholders' meeting) to permit a managerial officer (or a director) to engage in competitive conduct, or knowledge by a company that a managerial officer is operating business of the same kind independently or on behalf of another, or that a director is engaging in an activity within the company's scope of business independently or on behalf of another, where the investment or business activity engaged in is a mainland China area enterprise, and where there has been any failure to duly obtain permission from the board of directors (or a shareholders' meeting), or any material change in any of the above matters.
22. Endorsements and guarantees by the OTC company and any subsidiary thereof whose shares have not been publicly issued domestically in an amount reaching a level set forth in the subparagraphs of Paragraph 1 of Article 25 of the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies adopted by the Competent Authority; or total endorsements and guarantees by the OTC company itself in favor of enterprises in the same group reaching 50 percent or more of the company's net worth on its financial statements for the most recent period.
23. Monetary loans to other persons by an OTC company and subsidiaries thereof whose shares have not been publicly issued domestically, in an amount reaching a level set forth in the subparagraphs of Paragraph 1 of Article 22 of the Regulations Governing Loaning of Funds and Making of Endorsements/ Guarantees by Public Companies adopted by the Competent Authority.
24. This subparagraph is deleted.
25. Suspension of part or all business transactions between a company and a principal purchaser or supplier, where such purchaser or supplier accounted for 10 percent or more of the company's total amount of sales or purchases in the most recent fiscal year.
26. Occurrence of a disaster, group protest, strike, environmental pollution event, or any other material event, where the company incurs a material loss, or where a relevant authority orders suspension of work, suspension of business, termination of business, or revokes or voids a relevant permit, or imposes administrative fines reaching NT$100,000 or more, and where the circumstance is severe.
27. This subparagraph is deleted.
28. Dishonor of a negotiable instrument, filing for bankruptcy or reorganization, or any other similar circumstance, with respect to a related party of a company, or to a principal debtor of the company or a joint and several guarantor of a principal debtor; or inability by a principal debtor, in favor of whom the company has made an endorsement or guarantee, to settle a matured negotiable instrument, loan, or other obligation.
29. Any re-filing and public announcement of the regular annually filed internal control system statement of an OTC company due to any change in the content thereof; or obtaining of the Internal Control Special Audit Report for a special audit of internal controls conducted by a certified public accountant (CPA).
30. Failure by an OTC company to make a public announcement or a filing within a prescribed time limit; an error or omission in a financial report prepared by an OTC company, with respect to which Article 6 of the Enforcement Rules to the Securities and Exchange Act requires a correction to and further a restatement of the financial report; a certified public accountant (CPA) issues an audit or review report containing an opinion other than an unqualified or modified unqualified opinion on a publicly announced and filed financial report, except in cases where the CPA issues a qualified audit or review report for the reason of annual amortization of losses, as permitted by law, or for the reason that an amount of long-term equity investment and profit/loss thereupon presented in the first-quarter, third-quarter, or semiannual financial report is calculated on the basis of financial statements of the investee company that have not been audited or reviewed by a CPA.
31. Mass media reportage or provision of information by investors sufficient to affect the market status of an OTC company's securities.
32. Insufficient centralized custody ratio after an OTC company has placed stocks in centralized custody pursuant to regulations and prior to expiry of the custody period, as the result of withdrawal of any such stock, due to a court execution order or some other reason.
33. Occurrence of any of the changes in shareholding set forth in Paragraph 3 of Article 369-8 of the Company Act and receipt of notice of the same.
34. A provisional injunction ruling suspending one of the directors or supervisors from the exercise of powers, or a provisional injunction ruling suspending a director from the exercise of powers, making it impossible for the board of directors to exercise its powers.
35. Any circumstance required to be publicly announced and reported by the Regulations Governing Share Repurchase by Listed and OTC Companies promulgated by official letter of the Competent Authority.
36. Where capital amendment registration of an OTC company has been carried out due to capital reduction: the effect of the capital reduction on the company financial report (including any discrepancy between the amount of paid-in capital and the number of shares outstanding and the effect on net worth per share) and planned share conversion operations, and any subsequent failure to execute the share conversion plan.
37. Issuance of an undertaking by a company applying for OTC listing for the first time and subsequent inability to perform the undertaking; failure to carry out remedial procedures within three months of the day of the aforesaid occurrence.
38. Any matter required to be publicly announced and reported pursuant to the Regulations Governing Tender Offers for Purchase of the Securities of a Public Company promulgated by official letter of the Competent Authority.
39. Penalization of a financial holding company by the competent authority thereof for violation of any applicable provision of the Financial Holding Company Act; or loss of controlling shareholding, as defined in Article 4, Subparagraph 1 of the Financial Holding Company Act, in a banking subsidiary, insurance subsidiary, or securities subsidiary, and order by the competent authority to make corrections within a time limit or voidance of the company's permit by the competent authority.
40. This subparagraph is deleted.
41. Increase or decrease in the number of companies held by an investment holding company.
42. Resolution by the board of directors or a shareholders' meeting of an OTC company to apply for termination of OTC trading of its securities, or any material change in such a matter.
43. This subparagraph is deleted.
44. Expression of objection by an independent director of an OTC company to any policy resolution of the board of directors.
45. Forfeiture by the directors and supervisors as a whole of subscription rights to shares in a number reaching one-half or more of subscribable shares upon cash capital increase of an OTC company, and opening of the shares for subscription by a specific person or persons through negotiation.
46. Where an OTC company holds more than 70 percent of the total issued shares or total capital of a listed (or OTC) subsidiary thereof; or where 70 percent of the total issued shares or total capital of an OTC company is held by another listed (or OTC) company.
47. Withdrawal by an OTC company on its own initiative for any reason an application it has submitted for conversion of its stock to listed trading.
48. If an OTC company issues securities overseas, the making of any adjustment for differences in the overseas financial report due to inconsistency in the accounting principles applied in the two places with respect to financial information filed for any period in the place of overseas listing.
49. Any other major policy resolution of the board of directors or other matter having a material effect on shareholders' equity or securities prices of the OTC company or an affiliated company thereof.
If dishonor of negotiable instruments due to insufficient deposits referred to in Subparagraph 1 of the preceding paragraph has occurred, the date of dishonor, number, monetary amount, and correspondent bank(s) of any dishonored negotiable instrument(s) not yet notated as settled as of the end of the preceding month, cash budget statement for the current month, and status of execution of the cash budget statement for the preceding month shall be input by the 10th day of each month until remediation has been carried out. If there is inability to redeem an issued matured bond, the monetary amount and quantity unredeemed and status of negotiations with creditors as of the end of the preceding month, cash budget statement for the current month, and status of execution of the cash budget statement for the preceding month shall be input by the 10th day of each month until redemption has been completed in full.
With respect to a resolution by the board of directors to carry out a merger or consolidation, spin-off, acquisition, or transfer of shares as referred to in subparagraph 11 of Paragraph 1, if the counterparty is a foreign company, the OTC company shall promptly, completely, and accurately input information related to the resolution for, process of, and method of the merger or consolidation, acquisition, or transfer of shares, of the foreign business.
Under the circumstances in Subparagraph 32 of Paragraph 1, the OTC company shall, by the day next following the expiry of the time limit of which the company is notified by letter of the GreTai for replacing shares withdrawn from custody, input the amount of shares replaced and date of replacement.
Where any circumstance in any subparagraph of Paragraph 1 applies to any unlisted (non-OTC) major subsidiary of an OTC company, it shall be deemed material information of the OTC company. The term “major subsidiary” means any subsidiary of the OTC company as defined according to generally accepted accounting principles to which any of the following circumstances has applied in each of the most recent two fiscal years (with the information being based on the annual financial reports audited and attested by a certified public accountant), or any subsidiary that the certified public accountant deems to have a significant effect on the financial report of an audited company:
(1) Where 30 percent or more of the OTC company's operating revenue is derived from the single subsidiary.
(2) Where 50 percent or more of the OTC company's major materials or major commodities, in terms of its quantities or dollar purchase amounts thereof, is derived from the single subsidiary.
(3) Where 50 percent or more of the OTC company's total output value (including from self-production, contracting, and outsourcing) is derived from the single subsidiary.
(4) Where the OTC company's dollar amount of original investment in the single subsidiary reaches 40 percent of the OTC company's capital stock stated on the financial report and also NT$100 million or more.
(5) Where the aggregate dollar amount of the OTC company's monetary loans and guarantees and endorsements to the single subsidiary reaches 40 percent of its net worth and also NT$100 million or more.
(6) Where a single subsidiary's profit/(loss) before tax accounts for 50 percent of the OTC company's profit/(loss) before tax on its consolidated financial statements and also NT$100 million or more.
Where any circumstance in any subparagraph of Paragraph 1 applies to any non-listed, non-OTC held company or subsidiary of an OTC company that is an investment holding company or financial holding company, it shall be deemed material information of the OTC company. "Subsidiary" means a subsidiary under Subparagraph 4, Items 1 to 3, of Article 4 of the Financial Holding Company Act, or any other subsidiary that a certified public accountant engaged by the financial holding company to provide audit and certification services deems to have a material effect on the financial report of the company."Material information" of OTC companies in these Procedures means the following matters:
1. Dishonor of a negotiable instrument due to insufficient deposits and notation of settlement subsequent to dishonor of a negotiable instrument, refusal of a financial institution to honor a transaction, inability to redeem a bond upon maturity or upon the request of the creditor, other loss of credit of an OTC company or a responsible person, parent company, or subsidiary thereof, creation or release of pledge on directors' shares, or a significant change in shareholding of the parent company, or, after dishonor of a negotiable instrument of an OTC company due to insufficient deposits or refusal of a financial institution to honor a transaction of an OTC company, any alteration of trading method, suspension of trading, or delisting of the stock thereof, and the status of any application to restore the original conditions.
2. Any material effect on company finances or business resulting from any litigious or non-litigious matter, administrative disposition, contentious administrative procedure, or motion for provisional attachment or provisional injunction, or compulsory execution thereof, with respect to an OTC company or a responsible person thereof.
3. Any material effect on company finances or business resulting from any serious decrease in output or complete or partial suspension of work, leasing out of a company plant or principal equipment, or pledge or mortgage of all or a principal portion of a company's assets.
4. Any event set forth in Paragraph 1 of Article 185 of the Company Act.
5. Reorganization or bankruptcy procedure of an OTC company or parent or subsidiary thereof, and any and all events occurring in the course of such procedure, including any petition made to a court and any notice given or ruling handed down by a court, or any ruling prohibiting transfer of shares or any precautionary measure ordered by a court under relevant laws such as the Company Act or the Bankruptcy Act, or any material change in any of the above matters.
6. Change in chairman, general manager, a juristic-person director or representative thereof, a juristic-person supervisor or representative thereof, an independent director, a natural person director, or a natural person supervisor, or change in one-third or more of directors, or departure of all independent directors from office.
7. Change of certified public accountant (CPA) for any reason other than internal adjustments within the certifying accounting firm.
8. Change of company spokesperson, acting spokesperson, financial officer, accounting officer, research and development officer, or internal audit officer.
9. Change in accounting year.
10. Any material effect on company finances or business resulting from any signing, amendment, termination, or rescission of an important memorandum of understanding (excepting a memorandum of understanding for a merger, consolidation, or spin-off), a plan for a strategic alliance or other business cooperation, or an important contract, change in any material respect of a business plan, completion of development of a new product, or successful development and formal entry into the full-scale production stage of an experimental product.
11. Resolution by the board of directors to carry out a capital reduction, merger or consolidation, spin-off, acquisition, exchange, conversion, or transfer of shares, dissolution, issue of new stock for capital increase, issue of corporate bonds, issue of employee stock option certificates, issue of other securities, private placement of securities, participation in the establishment of or conversion into a financial holding company, investment holding company, or subsidiary thereof, or any material change in any of the above matters; failure by companies participating in a merger, consolidation, spin-off, acquisition, or transfer of shares from another, to convene on the same day and pass resolutions by their boards of directors or shareholders' meetings, or inability for any reason to conve |