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Title:

Taiwan Stock Exchange Corporation Principles for Handling Information Disclosure on the Key Financials Section of the Market Observation Post System (MOPS)  CH

Amended Date: 2014.10.02
1     Basis:
These Principles are adopted pursuant to Article 8 of the Taiwan Stock Exchange Corporation Rules Governing Information Reporting by Companies of TWSE-Listed Securities and Offshore Fund Institutions with TWSE-Listed Offshore Exchange-Traded Funds, and the Taiwan Stock Exchange Corporation Rules Governing Implementation of the Stock Market Surveillance System.
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2     Name of the special section:
Pursuant to Article 8 of the aforementioned Rules Governing Information Reporting, the TWSE may, if it deems necessary, set up a special section on its designated Internet information reporting system, and publish thereon summarized financial information compiled from the information reported by companies with TWSE listed securities, to bring the information to the attention of investors. The name of the special section is the "Key Financials Section."
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3     Purpose:
The content of the Key Financials Section is taken from the data that the companies input into the Market Observation Post System (MOPS), and the information on the TWSE website. If there is any false representation in the disclosed information, each such company shall be liable in accordance with law. The Key Financials Section only provides a compilation of financial key points of the information disclosed on the MOPS, for users’ easy reference, and to remind and alert investors, and reinforce early-warning functions. Investors shall still carefully review the information related to the financial operations of each such company in the MOPS prior to conducting any investment.
4     Principles for Handling Information Disclosure
  1. Disclosure Items
    1. The content of the Key Financials Section comprises (1) industry categories, (2) ticker codes, (3) Company Name, and (4) Net Worth per Share, and also includes itemized information set out based on the following indicators:
      Indicator 1: where the trading method is altered or trading is suspended.
      Indicator 2: where the financial report for the most recent period shows net worth per share lower than NT$10, and deficits for the most recent three consecutive fiscal years.
      Indicator 3: where the financial report for the most recent period shows net worth per share lower than NT$10, debt ratio higher than 60 percent, and current ratio lower than one (excluding financial and insurance enterprises).
      Indicator 4: where the financial report for the most recent period shows net worth per share lower than NT$10, and net cash flow from operating activities for the most recent two fiscal years and the most recent period are both negative.
      Indicator 5: where the share pledge ratio on shareholding of all directors, supervisors, and 10 percent or greater shareholders reaches 90 percent or more for the most recent month.
      Indicator 6: where the balance of loans to others of the most recent month accounts for 30 percent or more of the net worth on the most recent financial report (excluding financial and insurance enterprises).
      Indicator 7: where the balance of endorsements and guarantees for the most recent month accounts for 150 percent or more of the net worth on the most recent financial report (excluding financial and insurance enterprises).
      Indicator 8: where the shareholding percentage of the directors and supervisors has been insufficient for three consecutive months; this rule does not apply to TWSE primary listed companies.
      Indicator 9: where any of the following circumstances exists:
      1. Material deficiency in the design or operation of the internal control system.
      2. Audit or review report issued by a CPA stating substantial doubt about the going concern assumption.
      3. Financial report for the most recent period showing current ratio lower than one, debt ratio higher than 70 percent, and high-liquidity assets lower than 20 percent of the sum of short-term debt, short-term notes payable, and long-term liabilities due within 1 year (need not apply to financial and insurance enterprises).
      4. Deficits for the most recent three consecutive fiscal years, and financial report for the most recent period showing high-liquidity assets lower than 20 percent of the sum of short-term debt, short-term notes payable, and long-term liabilities due within one year (need not apply to financial and insurance enterprises).
      5. Relevant data showing substantial doubt about asset preservation and debt repayment, or a likelihood of material adverse impact on shareholder equity.
      6. The stock having been published on the TWSE watch list within the most recent 30 days, and simultaneously having a price-to-earning ratio that is negative or is 60 or more, a price to book ratio of 6 or more, a closing price of NT$5 or more.
      7. Where the financial report for the most recent period shows net worth per share lower than NT$10, and the number of listed common shares does not reach 50 percent of the total number of the company's issued common shares.
      8. In the case of a TWSE primary listed company, the financial report for the most recent period shows that the operating revenue and the accounts receivable turnover as compared to those in the same period of the preceding fiscal year have declined by 50 percent or more and 30 percent or more, respectively, or alternatively, that the operating revenue and the inventory turnover as compared to those in the same period of the preceding fiscal year have declined by 50 percent or more and 30 percent or more, respectively.
      9. In the case of a TWSE primary listed company, the financial report for the most recent period shows that the operating revenue and the net income before tax as compared to those in the same period of the preceding fiscal year have declined by 30 percent or more and 50 percent or more, respectively, and the total amount of net income before tax for the most recent four quarters is below NT$120 million.
      10. A TWSE primary listed company has failed to duly designate an agent for litigious and non-litigious matters.
    2. For the purposes of Indicator 1, "trading suspended" means suspension of trading pursuant to Articles 50 and 50-3 of the TWSE Operating Rules.
    3. For the purposes of Indicator 9, "high liquidity assets" means cash and cash equivalents, financial assets at fair value through profit or loss–current, available-for-sale financial assets–current, held-to-maturity financial assets – current and non-current assets that are TWSE or GTSM listed securities (including unrealized valuation amount).
    4. The TWSE may make adjustments to the relevant indicators in the Key Financials Section based on the assessment on the general market environment, in order to alert users and improve early-warning efficiency.
    5. "Net worth" in these Principles means the equity attributable to owners of the parent on the balance sheet prepared under the regulations issued by the competent authority to govern the preparation of financial reports for the relevant industry. In the case of shares having no par value or a par value other than NT$10, the accumulated earnings (deficit) will be substituted for the net worth per share in the disclosure, and accumulated deficit will be substituted for the selection criteria of net worth per share lower than NT$10 in the aforementioned indicators.
  2. Disclose Method:
    1. When information disclosed in the Key Financials Section meets the conditions triggering any of the abovementioned indicators, it shall be marked in red, to remind the users to pay attention to the difference.
    2. If the information under any indicator meets any of the following conditions, the red mark shall be removed:
      1. Indicator 1: the reason for the altered trading method or suspension of trading is eliminated.
      2. Indicators 2 to 4: The financial report for the most recent period, audited or reviewed by the CPA, is found by the TWSE to be free of the circumstance triggering those indicators.
      3. Indicator 5: The share pledge ratio filed for the most recent month does not reached the amount triggering that indicator.
      4. Indicators 6 to 8: The data filed for the most recent month is found by the TWSE to be free of the circumstances triggering those indicators.
      5. Indicator 9: The financial report for the most recent period, audited or reviewed by the CPA, or any other relevant data, is found by the TWSE to be free of the circumstances triggering that indicator.
    3. When any of the indicators 2, 3, or 4 is marked in red in the Key Financials Section, the information regarding net worth per share in the Key Financials Section shall also be marked in red.
    4. The numeric values under each indicator shall be in parameter configuration, so that they can be flexibly adjusted based as necessary.
  3. Time for Information Updates
    Information disclosed in the Key Financials Section is from the content of the financial report for the most recent period that a company has filed and reported, and any other of the most recent information that a company has disclosed on the MOPS or on the TWSE website. Such information is automatically updated every night through the computer systems of the TWSE System Development Department, and the latest information is disclosed on the MOPS at 12 midnight (zero hundred hours) of the following day.
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5     These Principles, and any amendment hereto, shall enter into force following submission to and approval by the general manager.