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The Financial Supervisory Commission (the FSC) promulgated the amended Regulations Governing the Offering and Issuance of Securities by Securities Issuers (the "Regulations") on 26 June 2014. The main purposes of the amendments are to ease restrictions on emerging stock companies raising capital in the public markets, broaden bond investor base for qualified professional investors, remove the prohibition of conversion or exercise of the warrants of convertible bonds or the bonds with equity warrants issued by companies whose shares are traded on emerging stock market, the GreTai Securities Market (GTSM) or the Taiwan Stock Exchange (TWSE) during the 10-day period immediately before the expiration date, and simplify the required documents for reporting the issuance of bonus shares. The major amendments are as follows:
I.According to the Regulations before amendment, except for initial public offering for listing on the TWSE or GTSM, emerging stock companies cannot make public offering for cash capital increase. Considering that the emerging stock companies may need injection of outside capital to increase their scale of operations, the FSC amended the Regulations. After the amendment, an emerging stock company may, following the examples of companies whose shares are traded on the TWSE or GTSM, allocate 10 percent of the aggregate number of new shares for public offering when conducting cash capital increase, and the shareholders meeting may resolve to allocate a higher proportion of new shares for public offering.
II.In the past, qualified professional investors in the bond market are limited to the "Professional Institutions" defined under the Financial Consumer Protection Act. To broaden bond investor base for professional investors and to diversify asset allocation for domestic professional clients, the amendment expands the range of the qualified professional investors to include "Professional Investors" defined under the GreTai Securities Market Rules Governing Management of Foreign Currency Denominated International Bonds.
III.Convertible bonds and bonds with equity warrants issued by companies whose shares are traded on emerging stock market, the GTSM or the TWSE have been issued in dematerialized form; therefore, the procedure for repaying principal and interest when due shall not be affected even if bondholders exercise their conversion rights or warrants during the 10-day period immediately before the expiration date. Hence, the prohibition on bondholders from exercising their conversion rights or warrants during the 10-day period immediately before the expiration date is accordingly deleted.
IV.To simplify the required documents for reporting the issuance of bonus shares, the requirements for basic data form for the issuer, the auditor's report and the audited financial statements are accordingly deleted and replaced by the expert opinion based on the reviewing of those documents.
