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The Amendment to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers

Odin Hsu/Cyun-Ren Jhou/Maggie P. Chang


In furtherance of the bond market, the Financial Supervisory Committee (FSC) has amended the Regulations Governing the Offering and Issuance of Securities by Securities Issuers (the "Regulations") to improve and simplify the registration procedures of offering and issuing ordinary corporate bonds.
 
1.     In furtherance of the bond market, the Regulations simplify the registration procedures of offering and issuing ordinary corporate bonds and enhance the underwriters' function:
 
1.1   Taking into account the straightforward nature of ordinary corporate bonds, the Regulations (1) simplify the evaluation procedures and the application form thereof; (2) permit the investors who are not "professional investors" as defined in the Taipei Exchange Rules Governing Management of Foreign Currency Denominated International Bonds ("Professional Investors"), to invest in ordinary corporate bonds; (3) exempt such case being publicly underwritten from evaluation with respect to the items as set forth in Paragraph 1, Article 8 of the Regulations; and (4) reduce the required information of the prospectus to the basic information of the issuer, the issuance terms, the planned use of proceeds, the summary opinion by the underwriter and the risk factors relating to the credit risk, etc. 
 
1.2   To expedite the issuance process and eliminate the issuer's risk, the waiting period for the registration to take into effect has been shortened to be 3 business days upon submission of application; and the offering period has been specified to follow the relevant regulations stipulated by the Taipei Exchange.
 
1.3   To ensure the liquidity of the ordinary corporate bonds which are issued and sold to the non-Professional Investors, the Regulations require that all ordinary corporate bonds shall be listed for trading on the Taipei Exchange. Further, to ensure consistency in the issuance and review and approval of listing and to enhance administrative efficiency, the FSC may delegate to the Taipei Exchange the power of reviewing the application for registration of ordinary corporate bonds and may order Taipei Exchange or other delegated institutions to void or revoke the registration of any ordinary corporate bonds.
 
1.4   To strengthen the underwriting function of the underwriters with respect to the onshore corporate bond market, the Regulations require that all the ordinary corporate bonds shall be publicly underwritten by the underwriters.
 
2.     Considering that if the violation by an underwriter is serious, the quality of such underwriter may be questionable. Therefore, the Regulations stipulate that the FSC may return the application to the issuer or alternatively apply the longer waiting period being 20 business days in the event that the underwriter is found repetitively sanctioned for certain number of times. Further, to avoid affecting the issuer's subsequent application for listing its shares on the Taiwan Stock Exchange or Taipei Exchange and the subsequent listing schedule, the Regulations provide that the above rule by which the FSC may return the application does not apply to the IPOs of companies already listed in the emerging market.
 
3.     To facilitate bonus shares issuance and to shorten relevant registration processes, the period for the registration to take effect for the new bonus shares issuance has been shortened to be 3 business days.
 
4.     To simplify the registration documents and enhance administrative efficiency, for the issuance of ordinary corporate bonds and bonus shares, the Regulations simplify the documents required to be filed for registration, including the "Application Review Form" and so forth and delete the requirements that said documents shall be reviewed and opined on by experts In addition, the Regulations provide that the public announcement of the effective registration of bonus shares may be served by publishing it on the website of the FSC.

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