Important Measure January 2022
2022-03-29
1. Amendments to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, Stipulating Relevant Regulations Regarding Shelf Registration for Common Stocks (Date of Promulgation: 26 January 2022)
To enhance the flexibility and efficiency of capital raising, after referencing foreign shelf registration and domestic issuance practices, the Financial Supervisory Commission (FSC) decided to allow domestic companies to adopt shelf registration for common stocks, and partially amended the Regulations Governing the Offering and Issuance of Securities by Securities Issuers. Key amendments include the registration procedure and qualification for shelf registration, as well as the procedure for filing with the FSC and the required documents for supplementary issuance of new stocks. The amendments also stipulate the terms of revoking and termination of the shelf registration for common stocks.
2. Partial Amendments to the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses (Date of Promulgation: 26 January 2022)
To align with international standards, improve the quality of information disclosure for corporate implementation of sustainable development, strengthen the information disclosure of cyber security risk management, and follow the policy of allowing domestic companies to adopt shelf registration for common stocks, the FSC issued amendments to the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses on 26 January 2022. Key amendments are as follows:
I. Improve the quality of information disclosure in corporate implementation of sustainable development:
i. Strengthen environmental and social information disclosure: The FSC amended the disclosure of the corporate’s social responsibility to its sustainable development, and revised the contents of the attached schedules with updates of relevant disclosure guidelines.
ii. Information disclosure for strengthening corporate governance: The amendment stipulates that companies shall specify their diversification policies, the professional qualifications and experience of individual directors and supervisors, and describe whether their independent directors are in compliance with independence requirements.
II. Strengthen information disclosure on cyber security management: The amendment stipulates that companies shall clearly describe information such as cyber security policy, specific management plan and resources invested in cyber security management, and disclose the impact of cyber security risks on their finance and business and countermeasures, as well as their losses suffered and possible impact due to a severe cyber security incident and countermeasures.
III. Follow the policy of allowing domestic companies to adopt shelf registration for common stocks: The amendment stipulates the adoption of shelf registration for common stocks in a prominent font on the cover of the prospectus, and disclose relevant information such as the total proposed, already issued, and the remaining amount of new shares under the shelf registration, as well as the period within which the prospectus for subsequent supplementary issuance of new stocks shall be transmitted to the website designated by the FSC.
3. Partial Amendments to the Regulations Governing the Acquisition and Disposal of Assets by Public Companies (Date of Promulgation: 28 January 2022)
To follow the practical operation and to strengthen the management of related-party transactions, after referencing the norms of major international securities markets and suggestions from external parties, the FSC amended the Regulations Governing the Acquisition and Disposal of Assets by Public Companies with the following key amendments:
I. Strengthen the management of related-party transactions: The amendment stipulates that, for the acquisition or disposal of assets with a related party by a public company or its subsidiary that is not a domestic public company, if the transaction amount reaches 10% of the total assets of the public company, the public company shall submit relevant materials to the shareholders' meeting for approval before proceeding in order to protect shareholders' rights and interests. However, for the dealing of a public company with its parent company or subsidiary, or the dealing between its subsidiaries, the transaction is exempted from the resolution of the shareholders' meeting.
II. Improve the quality of opinions issued by external experts:
i. To clarify the procedures to be followed by external experts, the amendment stipulates that when professional appraisers and their appraising officers, certified public accountants (CPAs), attorneys or securities underwriters issue appraisal reports or opinions, in addition to handling relevant operations required when undertaking and executing cases, they shall follow the self-regulatory rules of the respective associations.
ii. For a construction enterprise which cannot obtain the appraisal report immediately due to legitimate reasons, after obtaining the appraisal report within two weeks from the date of the fact, if the difference between the appraisal result and the transaction price reaches a certain proportion, then a CPA’s opinion is required. Considering the practical operation time required, the amendment relaxes the time period for a construction enterprise to obtain the aforementioned CPA's opinion to two weeks from the date of obtaining the appraisal report.
III. Relax information disclosure requirements of certain transactions:
i. The amendment relaxes that public companies are exempted from making public announcements for trading of foreign government bonds with credit ratings not lower than the sovereign rating of Taiwan.
ii. The amendment relaxes that professional investors are exempted from making public announcements for their subscription to foreign government bonds and their subscription to or redemption of Exchange Traded Notes (ETNs) in the primary market.
4. The FSC Announced Disclosure Rules for Offshore ESG Funds
To strengthen the integrity of ESG investment policies in the investor information summary of offshore ESG funds, as well as to align the supervision on offshore and onshore funds, the FSC announced the Disclosure Rules for offshore ESG funds on 11 January 2022. Key points are as follows:
I. The following contents are required to be disclosed in the investor information summary of offshore ESG funds: ESG investment objectives and measurement standards, investment strategies and methods, allocation of investment proportion, reference performance benchmark, exclusion policy and risk warnings. In addition, the master agent shall disclose ESG-related information on a regular basis.
II. For offshore funds already approved as ESG funds, the contents disclosed in the investor information summary shall be rectified and submitted to the FSC for approval within six months of the promulgation of the Disclosure Rules. If the contents disclosed fail to conform to the requirements or to rectify investor information summary, the warning of “This fund is not an ESG-themed offshore fund” shall be indicated after the name of the offshore fund. In addition, if ESG or sustainability is part of the name of the fund, its name in Chinese shall be adjusted to avoid misunderstanding.
III. For offshore funds already approved that are not ESG-themed but plan to apply as ESG funds, their master agents shall follow the aforementioned Disclosure Rules to disclose relevant information in the investor information summary, and apply to the FSC for approval.
IV. For offshore funds that do not conform to the Disclosure Rules, their master agents and distributors may not market them as sustainability or ESG- themed funds.
To enhance the flexibility and efficiency of capital raising, after referencing foreign shelf registration and domestic issuance practices, the Financial Supervisory Commission (FSC) decided to allow domestic companies to adopt shelf registration for common stocks, and partially amended the Regulations Governing the Offering and Issuance of Securities by Securities Issuers. Key amendments include the registration procedure and qualification for shelf registration, as well as the procedure for filing with the FSC and the required documents for supplementary issuance of new stocks. The amendments also stipulate the terms of revoking and termination of the shelf registration for common stocks.
2. Partial Amendments to the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses (Date of Promulgation: 26 January 2022)
To align with international standards, improve the quality of information disclosure for corporate implementation of sustainable development, strengthen the information disclosure of cyber security risk management, and follow the policy of allowing domestic companies to adopt shelf registration for common stocks, the FSC issued amendments to the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses on 26 January 2022. Key amendments are as follows:
I. Improve the quality of information disclosure in corporate implementation of sustainable development:
i. Strengthen environmental and social information disclosure: The FSC amended the disclosure of the corporate’s social responsibility to its sustainable development, and revised the contents of the attached schedules with updates of relevant disclosure guidelines.
ii. Information disclosure for strengthening corporate governance: The amendment stipulates that companies shall specify their diversification policies, the professional qualifications and experience of individual directors and supervisors, and describe whether their independent directors are in compliance with independence requirements.
II. Strengthen information disclosure on cyber security management: The amendment stipulates that companies shall clearly describe information such as cyber security policy, specific management plan and resources invested in cyber security management, and disclose the impact of cyber security risks on their finance and business and countermeasures, as well as their losses suffered and possible impact due to a severe cyber security incident and countermeasures.
III. Follow the policy of allowing domestic companies to adopt shelf registration for common stocks: The amendment stipulates the adoption of shelf registration for common stocks in a prominent font on the cover of the prospectus, and disclose relevant information such as the total proposed, already issued, and the remaining amount of new shares under the shelf registration, as well as the period within which the prospectus for subsequent supplementary issuance of new stocks shall be transmitted to the website designated by the FSC.
3. Partial Amendments to the Regulations Governing the Acquisition and Disposal of Assets by Public Companies (Date of Promulgation: 28 January 2022)
To follow the practical operation and to strengthen the management of related-party transactions, after referencing the norms of major international securities markets and suggestions from external parties, the FSC amended the Regulations Governing the Acquisition and Disposal of Assets by Public Companies with the following key amendments:
I. Strengthen the management of related-party transactions: The amendment stipulates that, for the acquisition or disposal of assets with a related party by a public company or its subsidiary that is not a domestic public company, if the transaction amount reaches 10% of the total assets of the public company, the public company shall submit relevant materials to the shareholders' meeting for approval before proceeding in order to protect shareholders' rights and interests. However, for the dealing of a public company with its parent company or subsidiary, or the dealing between its subsidiaries, the transaction is exempted from the resolution of the shareholders' meeting.
II. Improve the quality of opinions issued by external experts:
i. To clarify the procedures to be followed by external experts, the amendment stipulates that when professional appraisers and their appraising officers, certified public accountants (CPAs), attorneys or securities underwriters issue appraisal reports or opinions, in addition to handling relevant operations required when undertaking and executing cases, they shall follow the self-regulatory rules of the respective associations.
ii. For a construction enterprise which cannot obtain the appraisal report immediately due to legitimate reasons, after obtaining the appraisal report within two weeks from the date of the fact, if the difference between the appraisal result and the transaction price reaches a certain proportion, then a CPA’s opinion is required. Considering the practical operation time required, the amendment relaxes the time period for a construction enterprise to obtain the aforementioned CPA's opinion to two weeks from the date of obtaining the appraisal report.
III. Relax information disclosure requirements of certain transactions:
i. The amendment relaxes that public companies are exempted from making public announcements for trading of foreign government bonds with credit ratings not lower than the sovereign rating of Taiwan.
ii. The amendment relaxes that professional investors are exempted from making public announcements for their subscription to foreign government bonds and their subscription to or redemption of Exchange Traded Notes (ETNs) in the primary market.
4. The FSC Announced Disclosure Rules for Offshore ESG Funds
To strengthen the integrity of ESG investment policies in the investor information summary of offshore ESG funds, as well as to align the supervision on offshore and onshore funds, the FSC announced the Disclosure Rules for offshore ESG funds on 11 January 2022. Key points are as follows:
I. The following contents are required to be disclosed in the investor information summary of offshore ESG funds: ESG investment objectives and measurement standards, investment strategies and methods, allocation of investment proportion, reference performance benchmark, exclusion policy and risk warnings. In addition, the master agent shall disclose ESG-related information on a regular basis.
II. For offshore funds already approved as ESG funds, the contents disclosed in the investor information summary shall be rectified and submitted to the FSC for approval within six months of the promulgation of the Disclosure Rules. If the contents disclosed fail to conform to the requirements or to rectify investor information summary, the warning of “This fund is not an ESG-themed offshore fund” shall be indicated after the name of the offshore fund. In addition, if ESG or sustainability is part of the name of the fund, its name in Chinese shall be adjusted to avoid misunderstanding.
III. For offshore funds already approved that are not ESG-themed but plan to apply as ESG funds, their master agents shall follow the aforementioned Disclosure Rules to disclose relevant information in the investor information summary, and apply to the FSC for approval.
IV. For offshore funds that do not conform to the Disclosure Rules, their master agents and distributors may not market them as sustainability or ESG- themed funds.
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Update：
2022-03-29