Proposed Amendment Draft to "Regulations Governing the Offering and Issuance of Securities by Securities Issuers" and related regulations in launching new innovative boards
2021-01-26
To assist the development of innovative industries, improve fund raising channels, and expand the scale of our capital market, the Financial Supervisory Commission (FSC) has announced on December 3, 2020 that the Taiwan Stock Exchange (TWSE) and Taipei Exchange (TPEx) will respectively launch the Taiwan Innovation Board (TIB) and the Pioneer Stock Board (PSB) under emerging stock market within its multi-tiered capital market framework to facilitate innovative businesses in raising funds on the capital market.
In response to the new innovative boards, deregulation, and amendment of the Company Act, the FSC proposes amendment to the "Regulations Governing the Offering and Issuance of Securities by Securities Issuers", the "Regulations Governing the Offering and Issuance of Securities by Foreign Issuers", the "Regulations Governing the Offering and Issuance of Overseas Securities by Issuers", the "Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses", the "Standards Governing Eligibility of Securities for Margin Purchase and Short Sale", and the "Regulations Governing Book-Entry Operations for Centrally Deposited Securities". The amendments are summarized as follows:
I. In response to new innovative boards:
(I) To accelerate innovative enterprises' entry into the capital market to raise capital, seek growth and reduce the burden of preparations and lead time, explicit rules are put in place to allow companies who apply for listing and trading on the TWSE TIB or for registration on the PSB for trading on the TPEx and file for initial public offerings to submit the financial statements for the last fiscal year included in the prospectus.
(II) Given most innovative enterprises are in the early stage of their businesses, the operational risks are higher, and their securities can be traded only by qualified investors. Hence, provisions are made to require that the fact be stated in a clearly visible font on the cover of the prospectus to inform investors.
(III) TIB listed companies that issue new shares for capital in its IPOs as well as in its transferring to the main board, should follow the existing rules for first time TWSE/TPEx listing and for moving listing from TWSE to TPEx or TPEx to TWSE, including to provide experts’ evaluation opinions, to set aside a certain percentage for public offerings, and the 7-business-day effective registration rule will also apply, while the necessity requirement for fundraising plans and the restriction on large idle funds will not apply.
(IV) Calculation methods for benchmark prices of emerging stocks on the PSB are added in response to the fact that the trading method for emerging stocks on the PSB follows the automatic matching mechanism and the price negotiation mechanism for TPEx listed stocks. The trading method differs from negotiated trading based on prices quoted by recommending securities firms.
(V) Given the trading volume and liquidity for PSB listed companies remain to be seen, securities traded on margin will not be included in the early stage.
II. Deregulation: The Business Mergers And Acquisitions Act was amended on July 8, 2015 to allow a wider range of considerations. In practice, most mergers are completed by a combination of cash and shares to obtain all shares of the acquired companies and assume all rights and obligations of the acquired companies. Most companies will also have made merger agreements and detailed post-merger business plans. To give these companies more flexibility in raising capital, "merger and acquisition" was added as an eligible purpose of fundraising. In addition, where the acquired company is not a company engaged primarily in securities trading, and the fundraising plan meets the feasibility, necessity, and reasonableness requirements, the company may be exempted from the rejection provision on large idle funds.
III. In response to change of article numbers in the Company Act and change of the paragraphs quoted and the full adoption of International Financial Reporting Standards in 2015, the transitional provisions for phased adoption of IFRS for public companies have been deleted.
The FSC said that, in addition to being published in the official gazette of the Executive Yuan, these draft amendments will be published on the FSC website. If you have any comments, please visit the webpage “Notice of Draft Regulations” on the website “Laws and Regulations Retrieving System” of the FSC, and state your views or consult the Securities and Futures Bureau of the FSC within 30 days from the day after the announcement.
Contact: Mr. Tseng, Head of Corporate Finance Division, Securities and Futures Bureau
Telephone: (02)2774-7401
Please direct all correspondence and inquiries to
http://fscmail.fsc.gov.tw/FSC-SPS/SPSB/SPSB01002.aspx
In response to the new innovative boards, deregulation, and amendment of the Company Act, the FSC proposes amendment to the "Regulations Governing the Offering and Issuance of Securities by Securities Issuers", the "Regulations Governing the Offering and Issuance of Securities by Foreign Issuers", the "Regulations Governing the Offering and Issuance of Overseas Securities by Issuers", the "Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses", the "Standards Governing Eligibility of Securities for Margin Purchase and Short Sale", and the "Regulations Governing Book-Entry Operations for Centrally Deposited Securities". The amendments are summarized as follows:
I. In response to new innovative boards:
(I) To accelerate innovative enterprises' entry into the capital market to raise capital, seek growth and reduce the burden of preparations and lead time, explicit rules are put in place to allow companies who apply for listing and trading on the TWSE TIB or for registration on the PSB for trading on the TPEx and file for initial public offerings to submit the financial statements for the last fiscal year included in the prospectus.
(II) Given most innovative enterprises are in the early stage of their businesses, the operational risks are higher, and their securities can be traded only by qualified investors. Hence, provisions are made to require that the fact be stated in a clearly visible font on the cover of the prospectus to inform investors.
(III) TIB listed companies that issue new shares for capital in its IPOs as well as in its transferring to the main board, should follow the existing rules for first time TWSE/TPEx listing and for moving listing from TWSE to TPEx or TPEx to TWSE, including to provide experts’ evaluation opinions, to set aside a certain percentage for public offerings, and the 7-business-day effective registration rule will also apply, while the necessity requirement for fundraising plans and the restriction on large idle funds will not apply.
(IV) Calculation methods for benchmark prices of emerging stocks on the PSB are added in response to the fact that the trading method for emerging stocks on the PSB follows the automatic matching mechanism and the price negotiation mechanism for TPEx listed stocks. The trading method differs from negotiated trading based on prices quoted by recommending securities firms.
(V) Given the trading volume and liquidity for PSB listed companies remain to be seen, securities traded on margin will not be included in the early stage.
II. Deregulation: The Business Mergers And Acquisitions Act was amended on July 8, 2015 to allow a wider range of considerations. In practice, most mergers are completed by a combination of cash and shares to obtain all shares of the acquired companies and assume all rights and obligations of the acquired companies. Most companies will also have made merger agreements and detailed post-merger business plans. To give these companies more flexibility in raising capital, "merger and acquisition" was added as an eligible purpose of fundraising. In addition, where the acquired company is not a company engaged primarily in securities trading, and the fundraising plan meets the feasibility, necessity, and reasonableness requirements, the company may be exempted from the rejection provision on large idle funds.
III. In response to change of article numbers in the Company Act and change of the paragraphs quoted and the full adoption of International Financial Reporting Standards in 2015, the transitional provisions for phased adoption of IFRS for public companies have been deleted.
The FSC said that, in addition to being published in the official gazette of the Executive Yuan, these draft amendments will be published on the FSC website. If you have any comments, please visit the webpage “Notice of Draft Regulations” on the website “Laws and Regulations Retrieving System” of the FSC, and state your views or consult the Securities and Futures Bureau of the FSC within 30 days from the day after the announcement.
Contact: Mr. Tseng, Head of Corporate Finance Division, Securities and Futures Bureau
Telephone: (02)2774-7401
Please direct all correspondence and inquiries to
http://fscmail.fsc.gov.tw/FSC-SPS/SPSB/SPSB01002.aspx
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Update：
2021-01-26