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1. The Development of the Green Bond Market in Taiwan

To help green energy technology industries raise funds, and to promote sustainable environmental development, the TPEx promulgated “Operational Directions for Green Bonds” on April 21, 2017.TPEx established the green bond accreditation mechanism.On April 29, 2021, the TPEx promulgates “Operational Directions for Sustainable Bonds” and repeals “Operational Directions for Green Bonds” and “Operational Directions for Sustainability Bonds”. Since that, the sustainable bond market includes green bonds, social bonds and sustainability bonds.

2. Definition of the Green Bond

Green Bond indicates the financing tool which all of the funds raised by the issuer are to be used for expenditures or loan on green investment projects, including climate change, environmental protection, renewable energy and carbon reduction…etc.

In accordance with the Taipei Exchange Operational Directions for Sustainable Bonds, bonds with Green Bond Qualification accredited by Taipei Exchange, and applied to the Taipei Exchange for TPEx trading can be listed as Green Bond.

3. The Process of Green Bond Issuing And Listing

  • Corporate Bond (excluding professional board international bond issued by foreign issuers)
    For issuing green bonds, the issuer should first apply to the TPEx for green bondaccreditation. After obtaining the accreditation, the issuer should then apply to thecompetent authority for effective registration. Once the issuer has obtained theeffective registration letter, the issuer should apply to the TPEx for bond listing 4or 5 business days before the listing date. After the issuance of the bonds, anannual announcement on the status of allocation of the proceeds should be maderegularly
  • Note:

    *Foreign issuer,who issue general board NTD-denominated foreign straight bond or general board interntional bond,should apply to the Central Bank for a letter of approval before applying for the bond issuance.

    **The 3-day accreditation review period does not include time for the issuers to request the TPEx to preview the relevant documents prior to formal application

  • Professional Board NTD-denominated foreign straight bond (for foreign issuers)
    For issuing green bonds, the foreign issuer shall first obtain a preliminary review opinion issued by the TPEx, and then, within 1 month from the date the preliminary review opinion is issued, apply for approval from the Ministry of Economic Affairs or a subordinate agency authorized thereby or other agency or institution delegated thereby. Upon obtaining a letter of approval therefrom, the foreign issuer shall apply to the TPEx for green bond accreditation and issuance of a letter of approval for TPEx trading. After obtaining the green bond accreditation and the letter of approval from the TPEx, the foreign issuer shall submit relevant documentation to the Foreign Exchange Department of the Central Bank for recordation, with a copy to the TPEx. Afterwards, the foreign issuer should apply tothe TPEx for bond listing 4 business days before the listing date. After the issuance of the bonds, an annual announcement on the status of allocation of the proceeds should be made regularly.
  • *Note:The 3-day accreditation review period does not include time or the issuers to request the TPEx to preview the relevantdocuments prior to formal application.

  • Professional Board International Bond (for foreign issuers)
    For issuing green bonds, the issuer should first apply to the TPEx for green bond accreditation. After obtaining the green bond accreditation, the foreign issuer shall submit relevant documentation to the Foreign Exchange Department of the Central Bank for recordation, with a copy to the TPEx. Afterwards, the issuer should apply to the TPEx for bond listing 4 business days before the listing date. After the issuance of the bonds, an annual announcement on the status of allocation of the proceeds should be made regularly.
  • *Note:The 3-day accreditation review period does not include time or the issuers to request the TPEx to preview the relevantdocuments prior to formal application.

4. Apply for Green Bond Accreditation

4.1. The Application Documents

An issuer applying for green bond accreditation shall apply to the TPEx by submitting a Sustainable Bond Accreditation Application Form, along with the required documents, and specifying the required particulars.

The required documents shall include:

  • Green bond framework
  • An assessment opinion or certification report issued by a domestic or foreign certification body stating that the framework meets the TPEx Operational Directions for Sustainable Bonds or international market financial practices (Domestic government agencies and state-owned enterprises may designate governmental organizations to issue the assessment opinion or certification report.)
  • Documentary proof that the domestic or foreign certification body meets the requirements of the TPEx Operational Directions for Sustainable Bonds(Applicable where the assessment opinion or certification report of the framework is issued by a domestic or foreign certification body)
  • A statement from the Sukuk obligors, who guarantee to perform all public announcements and report obligations pursuant to the regulations of the TPEx
  • Other necessary documentary proof or materials
4.2. The process and deadlines for green bond accreditation applications
  • TPEx shall complete the review process within 3 business days after receiving the application documents.
  • An issuer shall apply to the TPEx for trading of the bonds on the TPEx within 6 months from the issuance date of the accreditation certificate.

5. Eligible of Bond Instrument

An issuer issuing the following securities may apply to the TPEx for green bond accreditation.

  • Government Bonds.
  • Straight corporate bonds.
  • Financial debentures.
  • New Taiwan dollar (NTD) denominated foreign straight bonds.
  • Foreign Currency Denominated International Bonds, with the exception of securities having equity characteristics.
  • Sukuk (Islamic fixed income security)

In addition to those listed above, green bonds also include beneficial securities or asset-backed securities for which the issuer applies for TPEx trading pursuant to Article 7-1 of the TPEx Rules Governing the Review of Securities for Trading on the TPEx.

6. Use of proceeds of Green Bond

Proceeds of Green Bonds must be exclusively applied to invest, finance or re-finance in full new and/or existing eligible Green Projects.

  • To pay for the expenditures of green projects
  • To pay back the debt incurred in the green investment of green projects
  • To provide loans to green investment projects (If the bond issuer or Sukuk obligor are financial institutions.)

As for beneficial securities or asset-backed securities, all of the assets in the asset pool should come from green investment projects.

7. Categories of Eligible Green Projects

In accordance with the Taipei Exchange Operational Directions for Green Bond, categories of potential eligible Green Projects are listed below. These projects must be substantial improvement to benefit the environment. The eligible green projects are listed below.

  • Development of renewable energy and energy technology.
  • Improvement of energy efficiency and energy conservation.
  • Greenhouse gas reduction.
  • Waste recycling or reuse.
  • Agricultural and forestry resource conservation.
  • Biodiversity conservation.
  • Pollution prevention and control.
  • Water resource conservation, purification, or reclamation, recycling, and reuse.
  • Other climate change adaptation or matters approved by the TPEx.
    The green investment plan mentioned in the preceding paragraph shall not be a fossil fuel power generation project, but it is not limited to those that meet the technical selection criteria set by the green bond standards adopted in customary practice in international financial markets.

8.The Requirement of External Review or certification

Before the issuance of bond Requirement
Green Bond Framework Assessment opinion or certification report issued by a certification body on the green bond framework.
After the issuance of bond Requirement
Allocation Report An assessment opinion or certification report issued by a certification body on the allocation report.

Aside from a domestic or foreign certification body, domestic government agencies and state-owned enterprises may designate governmental organizations to issue the assessment opinion or certification report.

9. The Information Disclosure of Green Bonds

Before the issuance of bond Requirement
Disclose the Framework in the prospectus Issuers should disclose the Green Bond
Framework in their prospectus.
Disclose the assessment opinion or certification report of the Framework Issuers should disclose such information on the Market Observation Post System (MOPS): The Green Bond Framework and the assessment opinion or certification report issued by external reviewer.
After the issuance of bond Requirement
Disclose the allocation report Issuers shall report the status of use of the funds yearly during the life of the green bonds or the period of use of the funds raised by the bonds.
Disclose the assessment opinion or certification report of the allocation report Issuers shall report the assessment opinion or certification report on the status of use of the funds after the proceeds are fully allocated. The aforementioned information should be disclosed on the Market Observation Post System (MOPS).
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