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Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings(2023.02.01) |
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19
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Where, upon application, a subsidiary, other than a government-owned enterprise, applies for the listing of its stock but is unable to meet the requirements set forth in all the subparagraphs below, the TWSE shall disagree to the listing, notwithstanding the fact that its application meets the criteria set forth in these Rules:
- A consolidated financial statement of the parent company and all of its subsidiaries which is prepared in accordance with the accounting principles of the home country of its parent company and an audit opinion issued by a CPA in the Republic of China stating the differences between the accounting principles applicable in the Republic of China and the accounting principles applicable in the home country of the parent company and the impact of such differences on such financial statement shall be submitted along with the application, unless the applicant company is applying for listing pursuant to paragraph 2 or 4 of Article 4, or Article 5, Article 6, or Article 6-1, or in the fiscal year of the application for listing and the most recent fiscal year the amount of purchase/sales transactions between it and its parent company is less than 10 percent of its total purchase/sales amount.
- According to the consolidated financial statement submitted pursuant to the preceding paragraph, the total amount of net worth shall be NT$1 billion or more in the most recent fiscal year and the profit before tax shall each represent 3 percent or greater of the total amount of net worth in each of the most recent two fiscal years, provided that such shall not apply where such event is the product of business nature, market demand and supply condition, government policy, or any other reasonable cause.
- The total number of shares of the applicant company held by the parent company and all of its subsidiaries, and by those companies' directors, supervisors, representatives, and greater than 10 percent shareholders, and by related parties thereof, shall not exceed 70 percent of the total number of its issued shares. If this 70 percent limit is exceeded, the applicant company shall conduct a pre-listing initial public offering to reduce the percentage of shares held by the aforesaid persons to 70 percent or lesser. However, the same does not apply where persons, other than those restricted by this subparagraph with respect to the total amount of shareholdings, hold a total of no less than 300 million shares in the applicant company; or, in the case the share has no par value or the par value per share is not NT$10, where persons, other than those restricted by this subparagraph with respect to the total amount of shareholdings, hold a total of such shares with a net value of not less than NT$6 billion in the applicant company.
- If the stock of the parent company is already traded on the TWSE (or the TPEx), at the time of its application for TWSE listing, the pro forma operating revenue or net operating income as stated in the pro forma consolidated financial statements for each of the most recent 4 quarters, excluding the financial data for the applicant company, and reviewed by a CPA, was not down by 50 percent or more from the operating revenue or operating income stated in the consolidated financial statements for the same period, and the parent company has not transferred any material customers or business within the most recent two fiscal years. However, this need not apply if the parent company and the subsidiary have different business types, industrial classifications, or product types, and moreover are not mutually competitive, or if it resulted from another reasonable cause.
When a subsidiary applies for TWSE listing pursuant to the proviso of subparagraph 6 of the preceding paragraph, any transfer of shares within the three years prior to the application for TWSE listing for purposes of reducing the parent company's shareholding in the subsidiary shall have been conducted in a manner in which the pre-emptive subscription right is given to the original shareholders of the parent company or another manner not detrimental to the rights and interest of the shareholders of the parent.
The proviso of the sixth subparagraph of paragraph 1 shall not apply where the parent company of the applicant company is a TWSE- or TPEx-listed investment holding company.
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20
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An investment holding company applying for listing of its stock may apply only as a professional investment company and only with the purpose of controlling the business operations of other companies, and shall be approved for the listing of its stock if it meets the requirements of the following subparagraphs:
- Years of incorporation: Three full years have elapsed following registration of incorporation, or the years of actual operation of any of its held companies exceed three years.
- Equity: The net worth on the financial reports for the most recent quarter reaches NT$1 billion or more.
- Profitability: The ratio of profit before tax to net worth as stated on the financial report for each of the most recent two fiscal years reaches three percent or higher.
- Dispersion of share ownership: The standard of Article 4, subparagraph 4 is met.
- The company does not engage in any business other than investment.
- The company shall have two or more held companies, and the held companies may not be professional investment companies and may not hold shares of the applicant company.
- At least 70 percent of the net operating income in the financial reports shall come from the held companies.
- The sum total of the book value of its investment in the held companies shall equal 50 percent or more of each of its investments accounted for using equity method and net worth, as stated in the parent company only financial report.
- The company has not engaged in any borrowing or lending of funds with a non-financial institution.
- The ratio of total equity to total assets in the financial report for the most recent fiscal year shall reach one-third or more.
- In the event of an issuer listed in the food industry or whose income from catering business occupies at least 50 percent of its total operating revenue in the last fiscal year, at least one of the held companies that it holds shall comply with Article 4, paragraph 1, subparagraph 5.
A held company shall mean any of the following:
- An invested company of which an investment holding company directly holds more than 50 percent of the issued voting shares or has made a capital contribution of more than 50 percent.
- An invested company of which an investment holding company through its subsidiaries indirectly holds more than 50 percent of the issued voting shares or has made a capital contribution of more than 50 percent.
- An invested company of which an investment holding company directly, and indirectly through its subsidiaries, holds more than 50 percent of the issued voting shares or has made a capital contribution of more than 50 percent.
- A company of which an investment holding company directly or indirectly elects or appoints more than half of the directors for the board of directors.
If an investment holding company applying for listing of its stock has a net worth on the financial reports for the most recent quarter reaching NT$800 million or more, and its held company or companies contribute 50 percent of its total operating revenues, and the central competent authority for the relevant industry has provided an unequivocal opinion stating that such company or companies are technology enterprises or cultural and creative enterprises with market potential, it may be exempted from the application of paragraph 1, subparagraphs 1 and 3.
If the held company is required to be a professional investment company because the investment holding company has invested via a third location, it may be exempted from application of the provision of paragraph 1, subparagraph 6 that a held company may not be a professional investment company.
Notwithstanding that an investment holding company applying for the listing of its stock meets the listing criteria set forth in these Rules, the TWSE shall disagree to its listing if the circumstance in Article 9, paragraph 1, subparagraph 8 applies to any of its held companies, and the TWSE may disagree to its listing if any of the circumstances in Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, or 12 applies to any of its held companies and the TWSE deems the listing inappropriate.
In case a held company more than 70 percent of whose shares are held by an investment holding company that is already domestically listed on the TWSE (or TPEx) shall have public sales of shares prior to listing to reduce the shareholding to below 70 percent.
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20-2
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An application by a venture capital company for the listing of its stock will be granted if said companymeets the conditions set forth in Article 4 and below:
- Its articles of incorporation states the company’s intent of sustainable operations.
- Capital: At the time it applies for listing, its paid-in capital is NT$2 billion or more and the number of shares of its publicly offered and issued common stock is 100 million or more.
- It does not engage in any business other than as stipulated by the Rules Governing Guidance to Venture Capital Enterprises.
- At the time it applies for listing, the number of shares it holds in any public company does not exceed 30 percent of the total issued voting shares of said company.
- At the time it applies for listing, the total investment it holds in any invested company does not exceed 20 percent of the total assets shown in the applicant’s current financial reports.
- Both at the time it applies for listing and as at the date of financial reports in the last two fiscal years, its total investment reaches 60 percent or more of its total assets, except where the percentage requirement is met after the adjustments for change in value being a net increase in investment assessed at fair value are deducted from the total assets.
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28-6
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If a foreign issuer that is a subsidiary of a parent company applies for TWSE primary listing of its stock, and complies with the provisions of this Chapter but cannot meet all of the following requirements, the TWSE shall not approve its stock listing:
- It shall submit the consolidated financial statement of the parent company and all of its subsidiaries. If that statement is not prepared in accordance with the applicable regulations governing the preparation of financial reports adopted by the competent authority for the relevant industry, the foreign issuer shall disclose any items with material discrepancies and the amount of any monetary impact of those discrepancies, and an opinion expressed by an ROC-licensed CPA regarding those items, unless the applicant company is applying for listing pursuant to Article 28-1, paragraph 2, 5 or 6, or in the fiscal year of the application for listing and the most recent fiscal year the amount of purchase/sales transactions between it and its parent company is less than 10 percent of its total purchase/sales amount.
- As calculated based on the consolidated financial statement submitted pursuant to the preceding subparagraph, the profitability shall meet the requirement in Article 28-1, paragraph 1, subparagraph 4, provided that the aforesaid profitability requirement need not apply where such event is the product of business nature, market demand and supply condition, government policy, or any other reasonable cause.
- The total holdings of its shares by the parent company and all of its subsidiaries, and by those companies' directors, supervisors, representatives, and greater than 10 percent shareholders, and by related parties thereof, may not be more than 70 percent of the total number of its shares. If those total holdings exceed 70 percent, the foreign issuer shall reduce that percentage to 70 or lower when it conducts the pre-listing public sale of its shares. The same does not apply, however, where one or more persons, other than those subject to the shareholding restriction in terms of the total number of shares as set out in this subparagraph, hold 300 million shares or more; in the case of a foreign issuer whose shares have no par value or a par value other than NT$10, the same shall apply where one or more persons, other than those subject to the shareholding restriction in terms of the total number of shares as set out in this subparagraph, hold a total of such shares with a net value of not less than NT$6 billion in the applicant company.
- 6.If the stock of the parent company is already traded on the TWSE (or the TPEx), at the time of its application for TWSE listing, the pro forma operating revenue or net operating income as stated in the pro forma consolidated financial statements for each of the most recent 4 quarters, excluding the financial data for the applicant company, and reviewed by a CPA, was not down by 50 percent or more from the operating revenue or operating income stated in the consolidated financial statements for the same period, and the parent company has not transferred any material customers or business within the most recent two fiscal years. However, this need not apply if the parent company and the subsidiary have different business types, industrial classifications, or product types, and moreover are not mutually competitive, or if it resulted from another reasonable cause.
When a subsidiary applies for TWSE listing pursuant to the proviso of subparagraph 6 of the preceding paragraph, any transfer of shares within the three years prior to the application for TWSE listing for purposes of reducing the parent company's shareholding in the subsidiary shall have been conducted in a manner in which the pre-emptive subscription right is given to the original shareholders of the parent company or another manner not detrimental to the rights and interests of the shareholders of the parent.
The proviso of the sixth subparagraph of paragraph 1 shall not apply where the parent company of the applicant company is a TWSE- or TPEx-listed investment holding company.
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33
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An application for listing of stocks at the TIB by a subsidiary that maintains the parent and subsidiary relationship at the time of the application shall be rejected if it fails to meet the following requirements, despite that it has complied with the applicable provisions of these Rules:
- The parents company and all its subsidiaries and their directors, supervisors and representatives, and shareholders holding more than 10 percent of the company’s total shares, and their related parties all together shall not hold more than 70 percent of the total issued shares of the applicant. Where the above shareholding exceeds 70 percent, there should be prelisting public sales of shares to reduce the shareholding to less than 70 percent.However, the same does not apply where persons, other than those restricted by this subparagraph with respect to the total amount of shareholdings, hold a total of no less than 50 million shares; or, in the case the share has no par value or the par value per share is not NT$10, where persons, other than those restricted by this subparagraph with respect to the total amount of shareholdings, hold a total of such shares with a net value of not less than NT$1 billion in the applicant company.
- Where the stocks of its parent company are traded at the TWSE/TPEx centralized securities exchange market, the pro forma operating revenues or operating income shown in the pro forma consolidated financial statements that excludes the applicant’s financial data, audited by CPA, for the most recent four quarters at the time of the application indicate no decline of over 50 percent compared to the consolidated financial statements for the current term, and no transfer of business of any major client of the parent company has occurred during the most recent two fiscal years. The above, however, may be waived if the parent company and the subsidiary engage in different types of business, conduct business in different industries or have different types of products and are not competing with each other, or it is due to other reasonable cause.
Where a subsidiary applies for listing at the TIB in accordance with the proviso of subparagraph 3 of the preceding paragraph, when the parent company transfer shares to reduce its shareholding in the subsidiary during the three years prior to the application for listing, the shares to be transferred should be offered for subscription by existing shareholders on a priority basis or the transfer should be made in a way that will not injure the equity of the shareholders’ of the parent company.
The proviso of the third subparagraph of paragraph 1 shall not apply where the parent company of the applicant company is a TWSE- or TPEx-listed investment holding company.
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