OVERSEAS SECURITIES ISSU-ANCE REGULATIONS AMENDED

03/01/2004

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To take account of amendments to the Regula-tions Governing Investment in Securities by Overseas Chinese and Foreign Nationals, to as-sist enterprises in raising funds, and in response to current changes in the economic environment, on 31 December 2003 the Ministry of Finance announced amendments to the Regulations Governing the Offering and Issuance of Over-seas Securities by Issuers. The main points are as follows:

Two-track Review System

To speed up the review process, new provisions establish a registration system for issuances. If an issuer submits copies of all the relevant documents (including a letter of consent from the foreign exchange authority or the competent authority for the industry concerned) to the Se-curities and Futures Commission (SFC) and to agencies designated by it, registration of the is-suance becomes effective 12 business days after receipt of the registration documents by the SFC and its designated agencies. Issuers that do not file for registration will be subject to the prior approval system.

Emerging Market Companies May Issue Over-seas Convertible Bonds And Bonds with Stock Warrant

Under new provisions, a company listed on the emerging stock market of the GreTai Securities Market may offer and issue overseas convertible bonds and bonds with stock warrant, but it may honor the conversion or subscription rights under such instruments only by issuing new shares.

Changes in Line with Amendments to Regula-tions Governing Investment in Securities by Overseas Chinese and Foreign Nationals

The provision that a holder of global deposi-tary receipts issued on the basis of a capital increase and new share issuance may not re-quest their redemption within three months after their issuance is abolished.

The provision that a holder of overseas shares issued on the basis of a capital increase by cash could not sell them on ROC markets within three months after their issuance is abolished.

Additional Grounds for Rejection of Issuances

If the directors or supervisors of an issuing company are in breach of Article 26 of the Se-curities and Exchange Act, and fail to increase their shareholdings to the required level after being given notice to do so by the SFC, or if the issuer or its chairperson, CEO, or de facto re-sponsible officer is the subject of a confirmed court conviction for an act of bad faith commit-ted in the past three years, the SFC may reject a registration filing by the issuer for an issuance of overseas securities, or may refuse to approve an issuance.

Enhanced Disclosure Requirements

After offering and issuing overseas securities, an issuer must enter information on changes af-fecting the securities, and the number remaining in circulation, on the information disclosure website designated by SFC, and must report such information to the foreign exchange authority. Under the new regulations, the above disclosures must be made twice monthly, instead of once a month. Information up to the 15th of each month must now be reported by the 20th of each month, and the time limit for disclosure after the end of each month is also reduced from ten days to five.