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1     These key Points are promulgated in accordance with Articles 6 and 39 of the "the Guidelines for Handling the Offering and Issuance of Securities by the Issuer".
2     The underwriter should prepare its evaluation report in accordance with the following principles:
  1. The contents of the preceding evaluation report shall be definite and accurate. The verbal description contained therein should be easy to understand and charts may be provided, if necessary. No false information can be included in the report. Neither can the underwriter conceal any required material. The report must contain up-to-date information.
  2. When evaluating the registration/application for approval by the issuer, the underwriter shall take necessary assistance and evaluation procedures (including on-site inspection of the company's operation situation, interview or meeting with the directors, managers or other relevant people of the company, collect, sort, investigate, and compare relevant information and other necessary procedures) so that it can obtain sufficient and appropriate information which will serve as the basis for the preparation of the evaluation report. The underwriter should give solid evaluation opinions.
    The underwriter should document the process regarding its observation of these Key Points. Such record, along with the information and documents it acquires, shall be combined as the work draft. Such work draft shall be edited and kept in accordance with the following principles:
    1. the work draft should be complete and contain appropriately detailed information. The main content and index should also be furnished for the purpose of systematic editing.
    2. the work draft shall clearly record the evaluation procedures already been implemented and the resulting conclusions.
    3. The evaluators and relevant reviewing supervisors shall sign on the work draft to show they are accountable for its contents.
    4. The work draft shall be kept at least for five years for reference purpose.
  3. Where the underwriter provides the financial information of the last year, it shall add the financial statistics of the latest quarter in the registration/application year. The underwriter should note whether such financial statistics have been certified (reviewed) by the certified public accountant or they are only compiled by the underwriter itself. In the event the financial forecast is made more than nine months away from the end of the year, the forecast information for the next year should also be provided.
  4. Upon considering the nature of the issuer's business operation, the underwriter may retain the experts who have expertise and abundant experiences in the fields of technology, business, and finance to compare and analyze the current operation situation of the issuer and the future development for the subject issuance of securities and such experts should give independent and fair opinions to assist the underwriter with evaluation.
    When retaining the experts to give opinions, the underwriter should evaluate the professional qualifications of such experts, and examine their expertise and ability to determine whether they are reliable and objective. Where the expert opinions are used as basis of its evaluation, the underwriter should check whether the sources of the information used by the experts and the assumptions adopted by them are appropriate and consistent.
    The opinions of the aforementioned experts should be used as a reference for the evaluation report of the underwriter, and they should not be mentioned in the evaluation report itself. The underwriter shall give concrete conclusions after comprehensively considering the expert opinions and other appropriate and sufficient documents found. The underwriter shall effectively bear the final responsibility of the evaluation.
  5. After the presentation of the evaluation report and prior to the printing date of the prospectus, if any transactions or events which will affect the judgments of the interested parties occur, the underwriter shall disclose and evaluate the impacts of such transactions or events.
  6. All the required items for the evaluation report shall be included into the said report. A table of content shall be provided and the pages of the report shall be numbered. If the evaluation of some items are not required or exempted, the word "None" or "Inapplicable" shall be added after that particular item.
4     For Issuance of New Shares As a Result of Merger, Evaluation on the Following Items Shall be Made:
  1. Conclusion of the underwriter: opinions shall be prepared in accordance with III of these Key Points
  2. Contents of the evaluation report:
    1. Evaluation and concrete conclusion on the pros and cons of the following matters which are related to the finance of the issuer shall be made (attachment 2):
      1. main scope of its business operation and vision for development
      2. reputation/status in the industry
      3. supply of the main raw materials
      4. status of sale of the main products
      5. financial condition
      6. others
    2. List out the purposes for the subject merger and the impact of such merger on finance and business of the issuer.
    3. Whether this new issuance as a result of merger is in compliance with Articles 278, 316 and of Article 317-1 of the Company Law, and that no event under Article 270 thereof has occurred.
    4. Evaluate whether this new issuance as a result of merger is in compliance with Article 51 of the Operation Rules of Taiwan Stock Exchange Corporation and Article 16 of the Operation Bylaws of the Republic of China Over-the-Counter Securities Exchange for Securities Trading on the over-the-counter market, and opinions given by the preceding entities in accordance with relevant rule shall be provided.
    5. Whether this new issuance as a result of merger is in compliance with the Fair Trade Law.
    6. Evaluate the feasibility and necessity of the merger plan and the reasonableness of the schedule for merger, percentage of stocks exchange and the forecast benefits after merger.
5     For the issuance of convertible bonds, in addition to the explanation or evaluation required by point III of these Key Points, the following items shall also be included or evaluated:
  1. Whether this issuance of convertible bonds is in compliance with Articles 130, 246 and 247 of the Company Law, and that no event prescribed under Articles 249 and 250 thereof has occurred (please list out formula).
  2. Whether this issuance of convertible bonds is in compliance with the regulation of "Self-Regulating Rule for Underwriter to Counsel the Offering and Issuance of Convertible Bonds by the Issuer, Promulgated by the Taipei Securities Dealers Association."
  3. List out the following items of issuance and conversion conditions for this issuance, and evaluate their reasonableness and impact on the original shareholders and the holders of convertible bonds. (If the issuance plan does not include the following items, please indicate "none").
    1. the issuance price and the ways the conversion price is set
    2. rate of yield
    3. the owner of the interest and dividend on the year of conversion
    4. provisions on call back or redemption
    5. the rights of sell back of the bond holders
    6. restrictive provisions
    7. adjustment of conversion price
    8. other important covenants
  4. Analyze the following factors for calculating the price of convertible bonds item by item and provide the calculation material and evaluate their reasonableness:
    1. interest rate of face value
    2. years of issuance
    3. conversion price
    4. conversion period
    5. re-setting of conversion price
    6. right of sell back
    7. redemption right of the company
    8. the factors included in discount (liquidity discount, credit risk, etc.)
    9. the standard difference of the annual rate of return of stock price
    10. the reference stock price for calculating the warrant
    11. other factors considered for determining the issuance price
  5. List out the stock price information of the issuer for the past six months (attachment 34) and the price fluctuation for the past three months (including trend for stock price variation, the average range of fluctuation, and comparison with the stock index), and evaluate their impact on the setting of conversion price.
  6. List out the dividend policy of the issuer and evaluate its impact on the offerees of this bond issuance.
  7. Evaluate the effects on the rights of the shareholders after the issuance of convertible bonds:
    1. the impact on the financial burden of the issuer
    2. the possible dilution of shareholder equity and impact on the rights of the original shareholders
6     For the issuance of ordinary corporate bond, the following items shall be listed out or evaluated:
  1. the conclusion of the underwriter: opinion shall be prepared in accordance with Point III of these Key Points
  2. Contents of Evaluation:
    1. the market situation and the future development of the business the issuer is in.
      1. the current status of the business and the relation with the upper, mid, and down streams of that business.
      2. the competition analysis with those in the same business, including the name of the main competitors for the business items which have generated 30% or more of the company's annual revenue, the approximate market share of the preceding items, and the niche for the company.
      3. the future growth, development trend of the business, and the future demand and supply in the market.
    2. the business financial condition of the issuer:
      1. business situation:
        1. Market analysis: explain the supply of the main raw materials, the sale area of its main products or business, and evaluate its future growth
        2. Business scope: list out the scope of its business, the current products and their purposes, or items of services, and long and short-term business development plan.
      2. financial condition:
        1. list out the loss and profit for the past five years and make variation analysis (attachments 12 and 13)
        2. list out the financial analysis for the past five years and comparison with those in the same business (attachment 14), and evaluate the advantage and disadvantage
        3. list out the endorsement/guarantee, material undertaking, and loans extended to others, and the trading of derivatives by the issuer for the past three years, and evaluate their impact on the financial condition of the issuer
        4. if the issuer has ever issued corporate bond or ever made long term loans, whether it has repaid the principal and interest on schedule? Also explain whether such contracts have imposed material restrictions on the current finance, business or other matters of the issuer.
        5. Itemize any material property transaction, funds financing, and endorsement/guarantee with the related party for the past three years and up to the date the evaluation report by the underwriter is issued (attachment 18), or other transactions, and evaluate whether they are abnormal.
      3. The combination of business and finance, evaluate and itemize the advantageous and disadvantageous factors and the responsive measures.
    3. Evaluate the implementation of previous cash injections and the issuance of corporate bonds:
      1. Evaluate the implementation of previous cash injections and issuance plans of corporate bond which have not been completed. If the implementation progress is behind the schedule, evaluation on the reasonableness of such delay, the impact on the shareholder rights and the availability of any concrete improvement plans.
      2. If the previous cash injection and issuance plan of corporate bond have been substantially modified and not been completed, explain the revisions made, sources and utilization of capital, the reasons for modification, and the benefits prior to and after modifications.
      3. If the actual completion date of those completed plans are less than three years prior to the time of report (application), evaluate whether the projected benefits have been realized. If the expected goals on benefits are not achieved, evaluate the reasonableness of such failure and the impact on the rights of shareholders.
    4. Evaluate whether any one of the following events has occurred in this offering and issuance of securities:
      1. Whether this issuance of ordinary corporate bond is in compliance with Articles of 246 and 247 of the Company Law, and that no event prescribed under Articles 249 and 250 thereof has occurred. (Please list out the formula).
      2. Whether any event prescribed under Articles 7 and 8 of "Guidelines for Handling Offering and Issuance of Securities by the Issuer" has occurred, and explain the basis of the evaluation in details (attachments 32 and 33).
    5. Evaluate the following matters item by item, and evaluate comprehensively the feasibility, necessity, and reasonableness of this offering and issuance of securities:
      1. the reasonableness of this fund raising plan, the expected schedule, and the forecast benefits
      2. the necessity to use the funds to be raised to finance capital
      3. if the cash injection is going to be used for reinvestment purpose, evaluation on the following items shall be made:
        1. if planning to invest in a business requiring special approval, whether approval or permission letter from the competent authority has been obtained? Whether the conditions associated with such approval or permission will affect this offering and issuance of securities? If the approval or permission has not been obtained, whether it will affect the feasibility of this cash injection plan?
        2. Evaluate the necessity and feasibility of such reinvestment upon considering the fund utilization plan of the invested company and the relation between its business and that of the issuer.
        3. If the issuer holds 20% or more of the common stock of the invested company, the underwriter shall list out the expected schedule for capital utilization, the year of capital recuperation and the forecast annual benefits before capital recuperation, and evaluate whether the forecast benefits are reasonable and its impact on the profit earning ability of the issuer and dilution of earning of per share.
        4. If the invested business is one of the important economic development projects of the state, the underwriter shall list out and evaluate the impact of any reinvestment plan for the invested business within the next five years, the fund raising plans, and the items within the plans on the equity rate of return of the issuer.
        5. If the invested company uses the resource and technology of the issuer, evaluate the necessity of such use and the reasonableness of the considerations or technology licensing fees paid by the invested company.
      4. If this cash injection plan is going to be used for debt repayment or for increase of working capital, evaluation on the following items shall be made:
        1. Upon considering the cash flow, financial leverage, debt ratio (or the ratio between the assets owned and the risk-based assets), the underwriter shall explain the issuer's need of capital and the reason for capital shortage, and evaluate the necessity and reasonableness of debt repayment and working capital increase.
        2. Forecast the impact on the business revenue, profit earning ability of the issuer and the dilution of earning per share.
        3. If the cash injection plan is going to be used to repay debts, the underwriter shall evaluate the necessity and reasonableness of the original loans and examine whether the benefits have been realized. If the money is loaned to acquire land for construction or pay the costs for construction, the underwriter shall evaluate the necessity and reasonableness of the loans pursuant to the funds expected to be spent from the time of the acquisition of land to the completion of construction project, sources of capital shortage, and the schedule for cash injection and construction progress in different phases. In addition, it shall evaluate and forecast whether the prospective benefits are reasonable and whether they are realized upon considering the time and amount of the recognized loss and profit.
      5. If this cash injection is going to be used to acquire land for construction or to pay the construction costs, the underwriter shall list out in details the total capital to be spent from the time of the acquisition of land to the completion of construction project, sources for capital shortage, and the schedule for cash injection and construction progress in the different phases and shall evaluate and forecast whether the prospective benefits are reasonable upon considering the time and amount of recognized loss and profit.
      6. If the cash injection is going to be used to acquire unfinished construction and the issuer will assume the unfulfilled obligations of the seller, evaluations on the following items shall be made:
        1. the reason for seller's assignment
        2. the basis and reasonableness of the assignment price
        3. the legality of the assignment process and impact on the rights and obligations of the contracting parties
    6. Evaluate the reasonableness of this issuance of ordinary corporate bond
      1. the way the issuance price is set
      2. rate of yield
      3. call back or redemption provisions
      4. the right of sell back of the bondholders
      5. restrictive provisions
      6. other important covenants
    7. Evaluate whether the creditor rights are secured (list out any collateral, types and value of collateral, etc.). If the bonds are not secured, please disclose the items subject to the evaluation of credit rating entity and the results.
    8. List out for the past year whether the lead underwriter is a related party of the issuer? If yes, what is their relation. Is there any material property transaction, financing, or other transactions between them?
    9. Explain whether, from the date the most recent balance sheet is audited and certified (or reviewed) by the certified public accountant to the issuance date of the evaluation report prepared by the underwriter, any event prescribed under Item 2 of Paragraph 2 of Article 36 of the Securities & Exchange Trading Law has occurred and evaluate the impact of such event on the rights of the shareholder or stock price.
    10. Other necessary explanation and comment
7     For issuance of exchangeable corporate bond, in addition to explanation or comment prepared in accordance with Point III of these Key Points, notice or evaluation on the following items shall be included:
  1. List out the following items of issuance and exchange conditions for this issuance, and evaluate their reasonableness and impact on the original shareholders and the holders of exchangeable bonds. (If the issuance plan does not include the following items, please indicate "none").
    1. years for the issuer to hold the exchange target
    2. issuance price and the way the exchange price is set
    3. yield rate
    4. the owner of interest and dividend in the year of exchange
    5. call back or redemption provisions
    6. the rights of sell back of the bondholders
    7. restrictive provisions
    8. adjustment of exchange price
    9. procedures and payment for the request of exchange
    10. custody of the exchange target
    11. other important covenants
  2. List out the stock price information of the exchange target for the past six months (attachment 34) and the price fluctuation for the past three months (including trend for stock price variation, the average range of fluctuation, and comparison with the stock index), and evaluate their impact on the setting of exchange price.
8     If the issuer is conducting offering for the purpose of establishment, explanation or evaluation on the following items shall be included:
  1. Conclusive opinion of the underwriter:
    The conclusive opinions of the underwriter shall at least include two sections. The first section shall be devoted to explain the procedures for this offering for establishment, the consultation and evaluation procedures adopted by the underwriter and the legal basis for them. The second section shall cover the opinions of underwriter regarding whether the business plan provided by the issuer is reasonable and feasible (format as attachment 1-2).
    If any event happening to the issuer will affect its offering for establishment, a middle section shall be inserted between the preceding two sections and shall briefly discuss the relevant, material facts.
  2. Summary of the evaluation report:
    1. the process for corporate establishment and analysis on composition of the promoters.
    2. business scope of the operation of the issuer, advantage and disadvantage for future development, and the measures to be taken (attachment 2).
    3. Reasonableness and feasibility of the business plan and state its basis of evaluation.
    4. Other important matters.
  3. Contents of evaluation:
    1. process of corporate establishment: explain the reasons for offering for establishment, analysis on composition of promoters, shareholding dispersal, holding in the affiliated enterprises, and whether the qualifications of promoters meets the requirement of law.
    2. the competent authority in charge of its business activities and the relevant law and regulations.
    3. the market and future development for the business the issuer is engaged in.
    4. business plan of the issuer:
      1. explain the drafting, procedure, sources of material and references of the business plan
      2. the reasonableness and feasibility of the business plan:
        1. business scope: list out the main products or business items, and evaluate whether the business the issuer engages in is in compliance with relevant law and regulations.
        2. operation principles and directions: list out the operation principles and directions and evaluate the risk, growth, and feasibility thereof.
        3. business development plan: list out the long and short term business development plan, main target market, and competition strategy, and evaluate the possibility to achieve the plan.
        4. concrete implementation plan:
          1. facility of business premises: list out the reason for choosing the current business premises and factory location, and the way the transaction price is set, and evaluate its reasonableness.
          2. list out the education and experiences of the key managers, and evaluate whether they have met the requirement of law.
          3. organization: list out the functions, responsibility and delegation of power of each department, and evaluate whether such arrangement is reasonable and feasible ? Whether the operational efficiency can become higher?
          4. plan for need of human resource: list out the need of human resource, the way of recruitment, development, training, promotion, review, remuneration system, and benefits, and evaluate their reasonableness.
          5. list out the financial arrangement and items of the fund utilization plan, and evaluate their reasonableness
          6. whether the internal control and auditing system in accordance with rules promulgated by the competent authority has been established? Whether they are enforced effectively? (attachment 35)
    5. list out the business plan, marketing plan, and financial forecast for the next year (attachment 22), and evaluate their reasonableness and the possibility to achieve the goals.
    6. Itemize any material property transaction, fund financing, and endorsement/guarantee (attachment 18) between the promoters and related party, or any other transactions, and evaluate whether they are abnormal?
    7. List out whether for the past year the lead underwriter is a related party of the issuer? If yes, what is their relation? Whether there exists any material property transaction, fund financing or other transactions between them?
    8. Other necessary explanation and comment.
9     If the security holder makes public offer to unspecified persons, explanation or evaluation on the following items shall be included:
  1. Conclusive opinions of the underwriter:
    There shall at least be two sections for the conclusive opinions of the underwriter. The first section shall explain the procedures for this public offer, the evaluation procedures adopted by the underwriter, and the legal basis thereof. The second section explains the underwriter's opinions regarding whether the way of price setting for this public offer has been fully addressed, and whether the motive and purposes are reasonable. (format ---see attachment 1-3).
    If any thing occurs to the holder of securities or the issuer which will affect this public offer, a middle section shall be inserted between the preceding two sections and the relevant facts shall be succinctly summarized.
  2. Summary of the evaluation report:
    1. Evaluate the advantageous and disadvantageous factors and the measures to be taken regarding the following matters related to the business and finance of the issuer (attachment 2) and a concrete conclusion shall be made:
      1. the scope of the business operation and the future development.
      2. the reputation and status in the business
      3. financial condition
    2. explain the way of price setting in this public offer and evaluate the reasonableness.
    3. the reasonableness of motive and purpose of this public offer.
  3. Contents of the evaluation:
    1. the market situation and future development of the business the issuer is in.
    2. the financial condition and forecast of the issuer's business:
      1. Business situation:
        1. market analysis: explain the supply of the main raw materials, the sales market of main products or business, and the status of the issuer in the business (market share), and evaluate the future growth.
        2. business scope: list out the scope of the business operation, the current products and the purposes, or service items, and the long and short term business development plan.
      2. financial condition:
        1. list out the loss and profit for the past five years, and make variation analysis (attachment 12,13).
        2. list out the financial analysis for the past five years and compare that to those in the same business (attachment 14), and evaluate its strengths and weaknesses.
        3. whether the issuer has been involved in any material litigious, non-litigious, and administrative litigious cases for the past three years, or whether it has encountered financial difficulty.
        4. Itemize any material property transaction, funds financing, and endorsement/guarantee with the related party for the past three years and up to the date the evaluation report by the underwriter is issued (attachment 18), or other transactions, and evaluate whether they are abnormal.
      3. financial forecast and distribution plan of dividends: (attachment 24)
        1. list out the distribution of dividends for the past three years.
        2. if the issuer has publicized its financial forecast, evaluation on the reasonableness and possibility of achieving the goals of the business plan, manufacturing and sale plan, financial forecast for the future years, and the dividend distribution plan for the next year.
    3. the reasonableness and feasibility of this public offer.
      1. explain the way of price setting of this public offer and evaluate its reasonableness.
      2. explain the motives and purposes of this public offer and evaluate its reasonableness.
      3. Whether any events prescribed under Article 40 of the "Guidelines for Handling Offering and Issuance of Securities by the Issuer" has occurred (attachment 36).
      4. List out the stock prices information of the issuer for the past six months (attachment 34).
      5. List out the issued and outstanding corporate bonds (including oversea corporate bond), preferred shares, oversea depository receipt and oversea stock, and those adopted by the resolution of the Board of Directors or Shareholders Meeting to be issued within a year, and the market price of the exchange of convertible corporate bond and exchangeable bonds (attachments 26, 27, 28, 29 and 30), and evaluate the impact of the issuance conditions on the rights of subscribers within this particular issuance.
      6. List out any trading of the securities by the holders for the past three years and evaluate whether such trading is abnormal.
      7. Evaluate the impact of this issuance on the stock market and the stock price of the issuer.
    4. List out whether the holder of the securities is a related party of the issuer? If yes, what's their relation? Whether there exists any material property transactions, fund financing and endorsement/ guarantee (attachment 18) or any other transaction between them for the past three years and up to the issuance date of the evaluation report, and evaluate whether these transactions are abnormal.
    5. List out for the past year whether the lead underwriter is a related party of the issuer? If yes, what is their relation? Whether there exists any material property transactions, fund financing or other transactions between them.
    6. List out from the date the most recent balance sheet is audited and certified (reviewed) by the certified public accountant to the date of the evaluation report, whether any event prescribed under Item 2 of Paragraph 2 of Article 36 of the Securities & Exchange Law, exists and evaluate its impact on the shareholder equity or stock price.
    7. Other necessary explanation and comment.