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Title: Taipei Exchange Operation Directions for Sustainable Bonds
Date: 2021.04.29 ( Announced )

Article Content

 
Article 1     These Operation Directions are specially adopted to develop sustainable financing and establish a mechanism for TPEx trading of sustainable bonds in Taiwan.
Article 2     In these Operation Directions, the term "sustainable bonds" means green bonds, social bonds, or sustainability bonds that have been accredited by the TPEx.
Article 3     In the preceding article, the term "green bond" means a bond whose proceeds are used exclusively for green projects; "social bond" means a bond whose proceeds are used exclusively for social projects; "sustainability bond" means a bond whose proceeds are used exclusively for a combination of both green projects and social projects.
Article 4     In the preceding article, the term "green project" means investment in the following matters, with substantial benefit for improving the environment:
  1. Development of renewable energy and energy technology.
  2. Improvement of energy efficiency and energy conservation.
  3. Greenhouse gas reduction.
  4. Waste recycling or reuse.
  5. Agricultural and forestry resource conservation.
  6. Biodiversity conservation.
  7. Pollution prevention and control.
  8. Water resource conservation, purification, or reclamation, recycling, and reuse.
  9. Other climate change adaptation or matters approved by the TPEx.
    A green project mentioned in the preceding paragraph may not be a fossil fuel power generation project. This restriction does not apply, however, to those that meet the technical screening criteria set by green bond standards adopted in customary practice in international financial markets.
Article 5     "Social project" in Article 3 means investment in the following matters, with substantial benefit for society:
  1. Affordable basic infrastructure.
  2. Access to essential services.
  3. Affordable housing.
  4. Employment generation, and programs designed to prevent and/or alleviate unemployment stemming from socioeconomic crises.
  5. Food security and sustainable food systems.
  6. Socioeconomic advancement and empowerment.
  7. Other matters approved by the TPEx.
Article 6     An issuer issuing the following securities may apply to the TPEx for sustainable bond accreditation if the securities meet the requirements set out in Article 7.
  1. Straight corporate bonds or financial debentures for which the issuer applies for TPEx trading pursuant to Article 6, 7, or 15 of the TPEx Rules Governing the Review of Securities for Trading on the TPEx.
  2. New Taiwan dollar (NTD) denominated foreign straight bonds for which the issuer applies for TPEx trading pursuant to Article 36 of the TPEx Rules Governing the Review of Foreign Securities for Trading on the TPEx.
  3. Securities for which the issuer applies for TPEx trading pursuant to Article 3 of the TPEx Rules Governing Management of Foreign Currency Denominated International Bonds, except for securities having equity characteristics.
  4. Beneficial securities or asset-backed securities for which the issuer applies for TPEx trading pursuant to Article 7-1 of the TPEx Rules Governing the Review of Securities for Trading on the TPEx.
Article 7     When an issuer applies for sustainable bond accreditation, it shall comply with the following requirements according to the project under the type of sustainable bond accreditation and the type of securities for which it is applying:
  1. Straight corporate bonds: All the proceeds raised by the issuer are to be used for expenditures on the projects, or to pay back debts incurred in the projects. All the proceeds raised by a foreign financial institution are to be used for loans to the projects, for expenditures on the projects, or to pay back debts incurred in the projects.
  2. Financial debentures: All the proceeds raised by the issuer are to be used for loans to the projects, for expenditures on the projects, or to pay back debts incurred in the projects.
  3. Beneficial securities or asset-backed securities: All the assets in the asset pool originate from the projects.
  4. Sukuk (Islamic fixed income security): All the proceeds obtained by the Sukuk obligor(s) are to be used for expenditures on the projects, or to pay back debts incurred in the projects. If the Sukuk obligor is a foreign financial institution, all the proceeds obtained by it are to be used for loans to the projects, for expenditures on the projects, or to pay back debts incurred in the projects.
    The meaning of "asset pool" in subparagraph 3 of the preceding paragraph shall be determined in accordance with the Financial Asset Securitization Act.
Article 8     An issuer applying for sustainable bond accreditation shall adopt a Bond Framework, which shall include the following components:
  1. Description of the projects and of the evaluation of their green or social benefits.
  2. Process for project evaluation and selection.
  3. Plan for management of proceeds.
  4. Matters relating to reporting on post-issuance management of proceeds.
    An assessment opinion or certification report shall be issued by a certification body stating that the Bond Framework under the preceding paragraph meets the requirements of these Operation Directions or of green bond, social bond, or sustainability bond principles adopted in international financial market practices, according to the type of sustainable bond accreditation for which the issuer is applying. If, however, an issuer applying for green bond accreditation is a state-owned energy supply enterprise, and furthermore the project is investment under Article 4, paragraph 1, subparagraph 1 or 2, it may submit its proposed budget that has been reviewed and passed by the Executive Yuan or the Legislative Yuan, and a statement explaining the relevance between the budget plan and the plan for the use of the proceeds raised by the green bonds, and issue its own assessment opinion regarding the Bond Framework meeting the requirements of these Operation Directions or principles adopted in international financial market practices.
    The term "energy supply enterprise" in these Operation Directions means an energy supply enterprise as defined in Article 4 of the Energy Administration Act.
Article 9     An issuer applying for sustainable bond accreditation shall apply to the TPEx by submitting a Sustainable Bond Accreditation Application Form (Form 1, 2, or 3), along with the required documents, and specifying the required particulars.
Article 10     When an issuer applies for sustainable bond accreditation, the TPEx shall complete the review process within 3 business days from the date the application documents are delivered. Notwithstanding the above, under special circumstances the TPEx may file for approval of an extended review period.
    Once the application documents under the preceding paragraph have been reviewed and found by the TPEx to be complete and in compliance with these Operation Directions, the TPEx may issue a sustainable bond accreditation certificate. If the review finds the application documents to be incomplete or to contain inadequate information, the TPEx shall request the applicant to supplement the documents or information within a prescribed time period. If the applicant fails to make the supplementation within that period, the TPEx shall issue a notice of rejection.
    An issuer shall, within 2 months from the issuance date of the accreditation certificate under the preceding paragraph, apply to the TPEx for TPEx trading of the bonds. The accreditation certificate shall become invalid if the issuer fails to do so within that period. However, if an application for extension with good cause is filed and the application is approved by the TPEx, a 2-month, one-time-only extension may be granted.
Article 11     An issuer shall disclose the content of the Bond Framework in the prospectus. However, the issuer may disclose the content of the Bond Framework in another issuance document if the issuer is not required to and does not prepare a prospectus in accordance with the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses, the Regulations Governing Information to be Published in Financial Institution Prospectuses for Offering and Issuance of Securities, or the Regulations Governing Information to be Published in Prospectuses for Public Offerings of Beneficiary Securities by Trustee Institutions and Public Offerings of Asset-Backed Securities by Special Purpose Companies.
    Before issuance of the bonds, the issuer shall disclose the Bond Framework and the assessment opinion or certification report of Article 8 through the Internet information reporting system designated by the TPEx.
Article 12     During the life of the sustainable bonds or the period of allocation of the proceeds raised by the bonds, the issuer shall, within 30 days from the date of public disclosure of the annual financial report, publicly disclose the status of allocation of the proceeds through the Internet information reporting system designated by the TPEx. However, if the issuer has good cause, it may apply to the TPEx to make the public disclosure by a regular annual deadline set by the issuer.
    The issuer shall, annually by the deadline under the preceding paragraph, have a certification body issue an assessment opinion or certification report on whether the status of allocation of the proceeds conforms to the Framework. If, however, a green bond issuer is a state-owned energy supply enterprise, and furthermore the project is investment under Article 4, paragraph 1, subparagraph 1 or 2, it may issue its own assessment opinion based on the itemized accounting of the implementation of the relevant budget.
    The issuer shall, within the time limit in the preceding paragraph, enter the assessment opinion or certification report on the status of use of the proceeds into the Internet information reporting website designated by the TPEx.
Article 13     For the purposes of these Operation Directions, a certification body means a body that, in accordance with customary practice in the international financial markets or with domestic practice, possesses the professional expertise to assess or certify Sustainable Bond Frameworks or the status of use of the proceeds, and that has relevant assessment or certification experience.
    If there is any misrepresentation or non-disclosure in an assessment opinion or certification report issued by a certification body, the TPEx may void or revoke the sustainable bond accreditation that is based on the assessment or certification by the body, and refuse within a period of 1 year to accept assessment opinions or certification reports issued by the body.
Article 14     If there is any misrepresentation or non-disclosure in a relevant application document submitted or information reported by an issuer under Article 9, 11, or 12, the TPEx may void or revoke the sustainable bond accreditation.
    If an issuer fails to carry out the reporting procedures under Article 12 or the allocation of the proceeds does not conform to the Framework, the TPEx may notify the issuer to remedy or correct the failure within a prescribed time period. If the issuer fails to remedy or correct the failure within that period, the TPEx may revoke the sustainable bond accreditation.
    If there is a change in the allocation of the proceeds, resulting in any noncompliance with the provisions of Article 7, the issuer shall apply to the TPEx for revocation of the sustainable bond accreditation.
Article 15     These Operation Directions, and any amendments hereto, will be publicly announced and enter into force after submission to and approval by the competent authority. Any addition, deletion, or amendment to the forms annexed to these Operation Directions will enter into force after approval by the president of the TPEx.