Chapter VII Distribution of Bonus Shares and Capital Reductions
To issue bonus shares or carry out a capital reduction, a public company shall submit for registration to the FSC a registration statement, (Attachments 32 and 33) specifying all required particulars, and the required documents.
Registration under the preceding paragraph shall become effective when the number of business days specified in the subparagraphs below has elapsed from the date upon which the FSC and FSC-designated institutions receive the registration statement:
1.3 business days for issuance of new bonus shares.
2.12 business days for capital reduction by a TWSE or TPEx listed company.
3.7 business days for capital reduction by an emerging stock company, or a company whose shares are neither listed on an exchange nor traded at the business places of securities firms.
4.12 business days for a registration case by a financial holding, bank, bills finance, credit card, or insurance enterprise.
The provisions of Article 5, paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis to cases handled under paragraph 1.
If, after effective registration, any circumstance in Article 11, paragraph 1, subparagraphs 4 to 7, the FSC may revoke or void the effective registration.
When capital reserve is capitalized in accordance with Article 41, paragraph 2 of the Act, the combined amount of any portions capitalized in any 1 year in accordance with Article 241, paragraph 1, subparagraph 1 or 2 of the Company Act may not exceed 10 percent of paid-in capital. However, where a company undergoes an organizational change (such as a merger, acquisition, or reorganization) that results in the capitalization of undistributed earnings after the organizational change, this restriction does not apply.
An amount transferred to capital reserve in accordance with Article 241, paragraph 1, subparagraph 1 of the Company Act may not be capitalized until the fiscal year after the competent authority for company registrations approves registration of the capital increase or whatever other matter generated that portion of capital reserve.
In any of the following circumstances, the FSC may reject a filing for issuance of bonus shares or capital reduction by a public company:
1.The attesting CPA issues an adverse opinion or disclaimer of opinion in the audit report.
2.The attesting CPA issues a qualified opinion in the audit report, and such qualified opinion has an impact on the fairness of presentation of the financial reports.
3.The Application Review Forms prepared by the issuer and reviewed by the attesting CPA reveal any violation of laws or regulations or the articles of incorporation, where the violation is serious.
4.Any of the following circumstances exist with respect to a report of capitalization of earnings:
A.The balance after statutory allocation of special reserves from undistributed earnings in accordance with paragraph 1 of Article 41 of the Act is inadequate for distribution.
B.The exchange-listed or OTC-listed company fails to prescribe a concrete dividend policy in the articles of incorporation.
C.Material failure by an exchange-listed, OTC-listed, or emerging stock company to establish a remuneration committee pursuant to paragraph 1 of Article 14-6 of the Act or material failure to comply with laws or regulations applicable thereto.
5.A capitalization of capital reserves has been reported, and one of the following circumstances exists:
A.Losses have been incurred in the most recent 2 consecutive years.
B.A provision in Article 72-1 has been violated.
6.Failure to adopt an electronic means as one of the methods for exercising voting power pursuant to Article the proviso to paragraph 1 of 177-1 of the Company Act.
7.Violation of or failure to fulfill commitments made at the time of application for listing or trading at the business places of securities firms, where the circumstances are serious.
8.The FSC discovers any violation of laws or regulations, where the circumstances are serious.
9.Other circumstances as deemed necessary by the FSC to protect the public interest.
A public company carrying out issuance of new bonus shares or capital reduction shall comply with the following provisions:
1.It shall comply with Article 273 of the Company Act within 30 days of delivery of the notification of effective registration.
2.Within 30 days of receiving the letter of approval of amendment registration for issuance of new shares from the Ministry of Economic Affairs, the company shall have the securities certified in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies, deliver the securities to the subscribers, and make a public announcement prior to the delivery. However, if physical securities are not printed, the requirement of certification in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies does not apply.
A public company that carries out issuance of bonus shares or capital reduction and makes delivery by the book-entry method shall comply with regulations pertaining to centralized securities depository enterprises, and need not print physical securities.