Chapter III Issuance of Corporate Bonds
Section II Convertible Bonds
Exchange-listed or OTC-listed companies shall submit the Registration Statement for Issuing Convertible Bonds (Attachments 18 and 19), provide all information required therein, along with required documents to the FSC for registration. The companies can commence issuing convertible bonds only after the registration becomes effective.
Registration to issue convertible corporate bonds filed by an exchange-listed or OTC-listed company at which any of the circumstances set forth in Article 13, paragraph 1, subparagraph 2 exists shall become effective 20 business days from the date on which the FSC and FSC-designated institutions receive its registration form.
Registration to issue convertible corporate bonds submitted by an exchange-listed or OTC-listed company, except those filing in accordance with the preceding paragraph, shall become effective 12 business days after the date on which the FSC and FSC-designated institutions receive its registration form.
When an emerging stock company or a company whose shares are neither listed on an exchange nor traded at the business places of securities firms submits a registration in accordance with paragraph 1, the Registration Statement for Issuing Convertible Bonds will become effective 7 business days after its receipt by the FSC and FSC-designated institutions. However, the waiting period for effective registration is 12 business days in the case of a financial holding, banking, bill finance, or credit card enterprise.
Where registration is filed pursuant to paragraph 1 herein, Article 12, paragraph 2, Article 15, Article 16, and Article 21, paragraph 4 shall apply mutatis mutandis.
A convertible corporate bond issuance denominated in a foreign currency shall submit to the Taipei Exchange an application for trading over-the-counter.
The following items shall be specified in the terms of issuance and conversion when issuing convertible bonds:
2.Coupon rate and payment of interest.
3.Date of interest payment.
4.Type of corporate bonds, the face value of each bond and the aggregate amount of this issuance.
5.The availability of collateral or guarantee.
6.The name of trustee and material covenants.
7.Terms of repayment (e.g. repayment of principal upon maturity, payment of principal prior to maturity, terms of call or redemption, etc.).
8.The listing or trading at the business places of securities firms of convertible bonds of an exchange-listed or OTC-listed company.
9.Procedures regarding request for conversion.
10.Criteria for setting terms and conditions of conversion (including conversion price, conversion period and the classes/types of shares to be converted with).
11.Adjustment of conversion price.
12.The disposition of interests and dividends in the year of conversion.
13.The disposition of monetary value for the conversion of less than one share while processing a conversion.
14.Rights and obligations after conversion.
15.The number of times and date for the bondholder to submit the certificates of conversion to acquire new stocks.
16.Conversion shall be performed by either issuing new shares or delivering already issued shares, except that conversion 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 shall be effected only through the issuance of new shares.
17.Procedures for obtaining the convertible bonds.
18.Other important stipulations.
Where secured convertible corporate bonds are backed by the stocks of another company held by the issuer, the provisions of Article 25 shall apply mutatis mutandis.
The face value of convertible bond is limited to NT$100,000 or multiples thereof and the repayment period may not be longer than 10 years. Those bonds in the same issuance shall have the same repayment period.
When issuing convertible bonds, with the exception of listed or OTC companies, for which an underwriter shall be engaged to underwrite all bonds issued on a firm commitment basis, the bonds may not be underwritten and offered to the public.
From the end of a designated period of time following the issuance date of convertible corporate bonds until 10 days before the maturity date, the bondholder may request for conversion at any time in accordance with the procedures of conversion set by the issuer, except during the period in which transfer is suspended by laws.
The designated period of time referred to in the preceding paragraph shall be set by the issuer in its procedures for conversion.
Convertible corporate bonds issued by an exchange-listed, OTC-listed, or emerging stock company are not subject to the restriction of paragraph 1 that conversion may not be made during the 10 days before the maturity date.
The conversion of convertible bonds to stocks is not subject to the restriction of Article 140 of the Company Act that the issuing price of the stocks may not be below par value.
The conversion price for convertible bonds issued by an emerging stock company may not be lower than the weighted average trade price for the company's common shares during the period preceding the price determination date, nor may it be lower than the company's net value per share as reported in the financial reports for the most recent fiscal period, audited and attested (or reviewed) by a CPA, and a recommending securities firm shall be retained to give an opinion on the reasonableness of the issuing price.
The issuing and conversion price for convertible bonds issued by a company whose shares are neither listed on an exchange nor traded on an OTC market shall not be lower than the company's net value per share as reported in the financial reports for the most recent fiscal period, audited and attested (or reviewed) by a CPA, and a CPA shall be retained to give an opinion on the reasonableness of the issuing price.
When the bondholder requests for conversion, unless otherwise regulated by the FSC, the holder shall fill out a conversion request form and submit it along with the bond in question, or the passbook in which the bond is recorded, to the issuer or its agent for such purpose. The conversion will become effective at the time the said documents have arrived at the business places of the issuer or its agent. After receiving such request for conversion, the issuer or its agent shall enter the name of the bondholder into the shareholder register and it shall deliver the new shares or certificates of bond-to-stock conversion to the holder within 5 business days.
The shares or certificates of bond-to-stock conversion of listed, OTC, or emerging stock companies issued under the preceding paragraph can be traded in the market or at the business places of securities firms on the date of its delivery to shareholders.
Where the issuer makes delivery of newly issued shares under paragraph 1, it shall, within 15 days after the end of the current quarter, publicly announce the number of new shares issued in the preceding quarter.
For new shares issued in accordance with paragraph 1, the day, month, and year of effective registration as stated in the FSC notification may be substituted for the day, month, and year of amendment registration for issuance of new shares under Article 162, paragraph 1, subparagraph 2 of the Company Act; after such issuance of new shares, the issuer shall, at least once per quarter, submit an application for capitalization amendment registration to the competent authority for company registration, annexing the FSC's letter of approval for the original issuance of convertible corporate bonds.
For certificates of bond-to-stock conversion issued in accordance with paragraph 1, before the end of each fiscal year, the issuer shall present the consent letter from the FSC which previously approved the issuance of convertible bonds and apply with the competent authority over the corporate registration/incorporation to register the change in its capital and to issue new shares.
Convertible bonds, as well as certificates of bond-to-stock conversion and stocks for which conversion is requested in accordance with related laws, except those in scripless form, shall be in registered form.
Before the formal delivery of shares or certificates of bond-to-stock conversion in accordance with Article 34, these shares or certificates shall be certified by the certifying organization in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies.
The conversion price of the convertible bond shall be announced to the public by the issuer prior to the sale of the bonds.
The conversion price referred to in the preceding paragraph shall mean the face value of convertible bond required for converting it to one share of stock.