June 2025
Bondholders of Convertible (Exchangeable) Bonds and Corporate Bonds with Equity Warrants May Still Request Conversion (Exchange) or Warrant Exercise During the Share Transfer Suspension Period of Shareholders’ Meetings (Taiwan)
To enhance the investment value and liquidity of convertible (exchangeable) bonds and corporate bonds with equity warrants, and to strengthen investor rights, the Financial Supervisory Commission (“FSC”) amended certain provisions of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers (“Regulations”) on May 5, 2025. These amendments ease restrictions that previously prevented corporate bondholders from requesting conversion (exchange) or warrant exercise during the share transfer suspension period of annual or extraordinary shareholders’ meetings. The amendments will take effect on July 1, 2025.
Key Amendments to the Regulations:
1. Bondholders of Convertible (Exchangeable) Bonds and Corporate Bonds with Equity Warrants May Request Conversion (Exchange) or Warrant Exercise During the Share Transfer Suspension Period of Shareholders’ Meetings.
In practice, prolonged share transfer suspension periods for shareholders’ meetings may hinder bondholders’ ability to exercise their conversion (exchange) or warrant exercise rights. To address this issue, the amendment explicitly lifts this restriction during the share transfer suspension periods for annual and extraordinary shareholders’ meetings, thereby enhancing investment flexibility.
According to the amended Paragraph 7 of Article 26, Paragraphs 1 and 2 of Article 32, and Paragraphs 1 and 2 of Article 45 of the Regulations, from a designated period after issuance until ten days prior to maturity, and except during the statutory share transfer suspension period, bondholders of convertible (exchangeable) bonds and corporate bonds with equity warrants may request conversion (exchange) or warrant exercise at any time in accordance with the issuer’s applicable procedures. The term “statutory share transfer suspension period” does not include the suspension periods for annual or extraordinary shareholders’ meetings.
2. Restriction on Altering the Shareholders’ Register During the Suspension Period Remains
Under the amended Paragraph 7 of Article 26, Paragraph 1 of Article 34, and Paragraph 1 of Article 47 of the Regulations, even if an issuer or its agent accepts conversion (exchange) or warrant exercise requests during the share transfer suspension period for a shareholders’ meeting, in accordance with Paragraph 3 of Article 165 of the Company Act, the issuer is not permitted to update the shareholders’ register during this suspension period. As such, registration of the share transfer may only be completed after the suspension period ends.
Key Amendments to the Regulations:
1. Bondholders of Convertible (Exchangeable) Bonds and Corporate Bonds with Equity Warrants May Request Conversion (Exchange) or Warrant Exercise During the Share Transfer Suspension Period of Shareholders’ Meetings.
In practice, prolonged share transfer suspension periods for shareholders’ meetings may hinder bondholders’ ability to exercise their conversion (exchange) or warrant exercise rights. To address this issue, the amendment explicitly lifts this restriction during the share transfer suspension periods for annual and extraordinary shareholders’ meetings, thereby enhancing investment flexibility.
According to the amended Paragraph 7 of Article 26, Paragraphs 1 and 2 of Article 32, and Paragraphs 1 and 2 of Article 45 of the Regulations, from a designated period after issuance until ten days prior to maturity, and except during the statutory share transfer suspension period, bondholders of convertible (exchangeable) bonds and corporate bonds with equity warrants may request conversion (exchange) or warrant exercise at any time in accordance with the issuer’s applicable procedures. The term “statutory share transfer suspension period” does not include the suspension periods for annual or extraordinary shareholders’ meetings.
2. Restriction on Altering the Shareholders’ Register During the Suspension Period Remains
Under the amended Paragraph 7 of Article 26, Paragraph 1 of Article 34, and Paragraph 1 of Article 47 of the Regulations, even if an issuer or its agent accepts conversion (exchange) or warrant exercise requests during the share transfer suspension period for a shareholders’ meeting, in accordance with Paragraph 3 of Article 165 of the Company Act, the issuer is not permitted to update the shareholders’ register during this suspension period. As such, registration of the share transfer may only be completed after the suspension period ends.
