Search Result

Article Content

 
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 Review of Call (put) Warrants Traded on the TPEx.
Article 2     The basic principles for preparation of public prospectuses is as follows:
  1. 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.
  2. 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.
Article 3     The following items shall appear in order on the cover of the public prospectus:
  1. The name and a specimen of the seal of the issuing company.
  2. That the prospectus is prepared for the purpose of issuing call (put) warrants.
  3. A brief explanation of the following items:
    1. The issuance date and the duration of the warrant issue.
    2. Details of the underlying index, security, or basket of securities.
    3. The type of call (put) warrant, the total number of units issued, and the amount of the issue.
    4. The terms and conditions of issuance (items such as the issuance price, exercise price or exercise level, 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:
      1. the capped price or capped index level of the warrants, and the fact that when the closing price of the underlying security or the closing level of the underlying index reaches the capped price or capped index level, that day will be deemed the final trading day for that warrant and it will reach maturity on the second following business day, with a uniform requirement for automatic cash settlement at the closing price of the underlying security or the closing index of the underlying index on the last day of trading of the warrant.
      2. In the case of an issue of callable bull contracts or callable bear contracts: “the knock-out price or index level of the contracts,” “the fact that when the closing price of the underlying security or the closing level of the underlying index reaches the knock-out price or index level, that day will be deemed the contract’s last trading day, and that the contract reaches maturity on the second following business day thereafter, with automatic cash settlement at the simple arithmetic mean trade price of the underlying securities or the simple arithmetic mean of the underlying index 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 underlying security 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 on the last trading day of the contracts shall be used.”
    5. The method by which the issuance price was calculated:
      1. In the case of an issue of TPEx listed call (put) warrants: the description shall include the price of the underlying security or the underlying index, the exercise price or exercise level, 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 TPEx listed security or index as their underlying.
      2. In the case of an issue of callable bull contracts or callable bear contracts:
        1. The issuance price shall be calculated as “the difference between the price of the underlying security or index and the strike price or strike index × multiplier + the funding cost.”
        2. Funding costs shall be calculated as “annual funding cost × strike price or strike index × (number of days till expiry date ÷ 365) × multiplier”
      3. Details of the guarantor and the guaranty agreement or collateral.
      4. The leveraging effect and leverage premium.
      5. The shares (or beneficial units or depositary receipt units or index points) represented by each unit.
    6. The following text, printed in a conspicuous manner:
      1. "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. Call (put) warrants whose underling is a foreign security or index are not subject to any price fluctuation limit, and buyers should also consider the exchange rate and other associated risks."
      2. "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."
      3. "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."
    7. The printing date.
Article 4     The following items relating to the given issue shall be printed in order on the inner cover of the public prospectus:
  1. 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.
  2. The name, address, and telephone number of the underwriter (omit if none).
  3. The issuer's name, address, and telephone number.
  4. The name, address, and telephone number of the credit-rating institution.
  5. The name of the attorney at law and the name, address, and telephone number of the attorney's law firm.
  6. 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.
  7. The name, address, and telephone number of the guarantor institution (omit if none).
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.
Article 6     The following items shall be set forth in the public prospectus:
  1. The issuance plan for the call (put) warrants.
  2. The audit opinion provided by the CPA.
  3. The attorney's opinion on the issue's legality.
  4. Credit rating information on the issuer and the guarantor.
  5. Information on the underlying index, security, or basket of securities.
  6. The law of the ROC as the governing law for all disputes arising out of the call (put) warrants.
  7. 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.
  8. Other important matters stipulated in the prospectus.
  9. Any items required by the competent authority or regulations of the TPEx to be contained in the prospectus.
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.
Article 8     The following matters shall be set forth in the issuance plan:
  1. The issuance date and the duration of the warrant issuance.
  2. Details of the underlying index, security, or basket of securities (when the underlying securities of the issued warrants are domestic stocks whose financial report of the most recent period audited or reviewed by a certified public accountant shows losses, there shall also be a statement of the reason for issuing warrants on the underlying securities; when the underlying securities are foreign stocks or depositary receipts, there shall also be a statement on the status of their liquidity).
  3. The type of call (put) warrants, the total number of units issued and total amount of the issue.
  4. The terms and conditions of issuance (items such as the issuance price, exercise price, exercise level, exercise period, and the number of shares represented by each unit (or units of beneficial interest or depositary receipt units or index points).
  5. The method by which the issuance price was calculated:
    1. The description shall include the price of the underlying security or the underlying index, the exercise price or exercise level, 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 TPEx listed security or index as their underlying security.
    2. An issue of callable bull contracts or callable bear contracts:
      1. The issuance price shall be calculated as “the difference between the price of underlying security or index and the strike price or strike index × multiplier + funding costs”
      2. Funding cost shall be calculated as “annual funding cost × strike price or strike index × (number of days till expiry date ÷ 365) × multiplier”
  6. An issuance of capped (or knock-out) call/put warrant (or callable bull/bear contracts) shall comply with the following rules:
    1. Capped call (put) warrants:
      1. Matters that shall be printed in conspicuous typeface: “the capped call/put price or capped index level of the warrants” and “the fact that when the closing price of the underlying security or the closing level of the underlying index reaches the capped price or capped index level, that day will be deemed the final trading day for that warrant and it will reach maturity on the second following business day, with automatic cash settlement at the closing price of the underlying security or the closing level of the underlying index on the last day of trading of the warrant.”
      2. The designated capped call price or index level shall be 150% or more of the strike price or strike index; the capped put price or index level shall be 50% or less of the strike price or index.
    2. Callable bull contracts or callable bear contracts:
      1. Matters that shall be printed in conspicuous typeface: “the knock-out price or index level of the contracts,” “the fact that when the closing price of the underlying security or the closing level of the underlying index reaches the knock-out price or index level, that day will be deemed the final trading day for that contract and it will reach maturity on the second following business day, with automatic cash settlement at the simple arithmetic mean price trade price of the underlying security or the simple arithmetic mean of the underlying index on the following business day of the last trading day of the contracts,” “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 the trading of underlying security is halted or suspended on the following business day of the final trading day of the contracts or on the expiry date, the closing price of the underlying security on the final trading day of the contracts shall be used.”
      2. The designated knock-out price or index level shall be between the closing price of the underlying security or the closing level of the underlying index and the strike price or strike index level (inclusive of the strike price or index level), and in addition, the knock-out price or index level of a callable bull contract shall be 90% or less of the closing price of the underlying security or closing index level of the underlying index, and the knock-out price or index level of a callable bear contract shall be 110% or more of the closing price of the underlying security or closing level of the underlying index.
      3. The issuer shall prescribe the conditions for resets. The strike price and knock-out price or the strike index level and knock-out index level, after adjustment for a reset, shall take effect on the first day of TPEx listing; the setting of the price and index level shall still comply with the above-mentioned regulations.
  7. Details of the guarantor and the guaranty agreement or collateral.
  8. Matters required to be published in accordance with Article 8 of the Taipei Exchange Directions for Call (Put) Warrant Liquidity Provider Operations.
  9. Procedures for exercising the warrant and the terms for cancellation of already-exercised call (put) warrants.
  10. Procedures for delivery/settlement when the holder exercises the warrant. If the issuer of a call warrant to be settled in securities may elect cash settlement, or if the holder of a put warrant to be settled in securities may elect cash settlement, such facts shall be set out in conspicuous typeface.
  11. Predetermined risk-offsetting strategies.
  12. Stipulations regarding adjustment of the exercise 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 exchange-traded fund (ETF) by a securities investment trust enterprise (SITE). 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.
  13. Methods of handling merger by the company issuing the underlying securities, or an alteration of the terms of trade, halt of trading, suspension oftrading, 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.
  14. Methods of handling TPEx listing of the call (put) warrants, or halt of trading, suspension of trading, or delisting imposed by the TPEx.
  15. Clarification of whether or not there are plans for a reverse issue of call (put) warrants against the same underlying securities or index within the coming 3 months.
  16. 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.
  17. Other matters which the issuance plan shall set forth pursuant to the regulations of the TPEx or the competent authority.
Article 9     The following matters shall be set out by the issuer:
  1. The date of its establishment.
  2. The addresses and telephone numbers of its headquarters and branches.
  3. 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.
  4. The company's major lines of business and the relative weighting of each.
  5. 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.
  6. Summaries of balance sheets and statements of comprehensive income for the preceding 2 years.
  7. A financial analysis, to include at a minimum the following items:
    1. Financial structure:
      1. Debt-asset ratio.
      2. Ratio of long-term funds to property and equipment.
    2. Solvency:
      1. Liquidity ratio.
      2. Quick ratio.
      3. Interest coverage ratio.
    3. Cash flow:
      1. Cash flow ratio.
      2. Cash flow adequacy ratio.
      3. Cash flow reinvestment ratio.
  8. 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.
Article 10     The following items shall be set forth in relation to the underlying index or security:
  1. The company profile, when the underlying is not an index (when the underlying is an exchange-traded securities investment trust fund, the names of the constituent stock companies it represents shall be indicated).
  2. Information on the underlying index or underlying security's price (shall include 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).
  3. Consolidated balance sheets and statements of comprehensive income for the underlying securities for the most recent 2 years, if the underlying securities are stocks or depositary receipts.
Article 11     These Directions, and any amendments hereto, shall take force upon ratification by the competent authority.