|
Article 10
|
The term "material non-arms-length transaction" as used in Article 9, paragraph 1, subparagraph 4 of the Rules shall mean the occurrence of any of the following circumstances with respect to the applicant company, provided that publicly-owned enterprises operated under the relevant accounting laws shall not be subject to this restriction:
- Where the purpose, terms, or price of purchase or sale of goods, or where the occurrence of a transaction, or its form or substantive nature or the procedure involved, are at variance with those of a normal transaction or are obviously unreasonable.
- Where, in regard to transactions for acquisition or disposal of assets that require public announcement and reporting in accordance with the competent authority's Regulations Governing the Acquisition and Disposal of Assets by Public Companies, the company fails to reasonably demonstrate the legality of its internal decision-making process, the necessity of the transaction, ample disclosure of related financial statements, or reasonable price and payment terms and conditions.
- Occurrence of any of the following circumstances with regard to real estate transactions during the most recent 5 years, as determined by the signing date of any such transaction:
- A real estate purchase from a related party in which the price of the purchase is higher than the assessed value obtained in accordance with the methods given under Article 16 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies, and which does not comply with Article 17 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.
- A sale of real estate to a related party in which the price of the sale is lower than the assessed value obtained in accordance with the methods given under Article 16 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.
- Terms of payment in a purchase or sale of real estate with a related party obviously different from those of ordinary real estate transactions, and for which there is no legitimate reason.
- The applicant company purchases or sells land at approximately the same time in an area adjacent to land purchased or sold by a related party, where there is an obvious difference in price, and where there is no legitimate reason for such difference.
- The revenues from sales of products or leasing of real estate to a related party in the final quarters of the most recent 5 fiscal years exceeds 20 percent of yearly operating revenues, and where no legitimate reason exists for the excess.
- Purchase or sale of real estate to a non-related party where other evidence exists to show that the transaction is obviously at variance with normal transactions, and where there no legitimate reason exists for the difference.
- Where massive funds are lent to others for purposes other than the financing necessary for business transactions between companies.
- When, for other trades with related parties and transactions of financial business, of which the necessity and the legality of the decision-making process, and the reasonableness of the price or the payment or receipt of funds cannot be reasonably verified.
The provisions regarding the purchase or sale of real estate involving a related party under subparagraph 3 of the preceding paragraph shall also apply where either of the two previous owners had the status of related party, provided that there may be exemption from application if the period from the date on which the trading counterpart was to acquire the property under the contract to the date of execution of the present contract exceeds 5 years.
The term “related party” as referred to in the preceding two paragraphs shall have the same definition of the term in Article 18 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and shall include circumstances in the following subparagraph, except where an applicant company can prove it has no control, joint control or material impact:
- A shareholder holding more than 10% shares in the applicant company and its affiliated enterprise as defined under Chapter VI-1 of the Company Act (the “affiliated enterprise”).
- An individual related to the the director, supervisor or manager of the applicant company in any of the following ways:
- A relative within the second degree of kinship with the aforementioned persons or their spouse (including domestic partner treated as spouse, which shall apply hereinafter in this paragraph).
- Where the aforementioned persons are legal entities, their parent company, subsidiary or a company controlled by the same company or individual shareholder having control over these corporations.
- An individual related to a shareholder holding more than 10% shares in the applicant company or the director, supervisor and manager of and a shareholder holding more than 10% shares in the affiliated enterprise in any of the following ways:
- Spouses.
- Relatives within the second degree of kindship with the aforementioned persons or their spouse.
- Where the aforementioned persons are legal entities, their parent company, subsidiary or a company controlled by the same company or individual shareholder having control over these corporations.
- An invested company and its subsidiary in which the director, supervisor and manager of and a shareholder holding more than 10% shares in the applicant company, its parent company and key subsidiary, individually holds, or together with their spouse or a person related in the ways as described in the above two subparagraphs hold, directly or indirectly, more than one-half of the total number of voting shares or the total capital.
Where an applicant company profits from any of the circumstance set forth under paragraph 1, it shall meet the listing criteria for profitability after deduction of those profits.
|
|
Article 26
|
As used in Article 28-8, paragraph 1, subparagraph 3 of the Rules, " material non arms-length transaction" means that any of the following circumstances applies to a foreign issuer or a company controlled by it that is applying for a primary listing:
- The purpose, price, terms and conditions, or the handling procedures for a purchase or sale of goods are at variance with those of an ordinary transaction or are obviously unreasonable.
- When, for various trades with related parties and transactions of financial business, there is no verification of reasonable necessity for the trade, or of the legality of the decision-making process for the trade, or the reasonableness of the price or the payment or receipt of funds.
With respect to “has not been rectified” in the same subparagraph, rectification as so determined means one of the following subparagraphs has been met:
- Where a person other than the applicant company profits from non-arms-length transactions, the person receiving the profits has returned the profits to another person who should have received the profits.
- The non-arms-length transactions have been found as not involving criminal activities by the prosecutors, investigators or judicial authorities of the jurisdiction where the company is incorporated, the jurisdiction where its main business activities are taking place, and the Republic of China.
- The non-arms-length transactions have terminated and the legal relationship has been restored to status quo ante.
The term “related party” as referred to in the first paragraph shall have the same definition of the term in Article 18 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and shall cover what is described in the following subparagraph, except where an applicant company can prove it has no control, joint control or material impact:
- A shareholder holding more than 10% shares in the applicant company and a company having a controlling or subordinate relationship with the applicant company or a company between which the applicant company has cross-investment.
- An individual related to the director, supervisor or manager of the applicant company in any of the following ways:
- A relative within the second degree of kinship with the aforementioned persons or their spouse (including domestic partner treated as spouse, which shall apply hereinafter in this paragraph).
- Where the aforementioned persons are legal entities, their parent company, subsidiary or a company controlled by the same company or individual shareholder having control over these corporations.
- An individual related to a shareholder holding more than 10% shares in the applicant company or the director, supervisor and manager of and a shareholder holding more than 10% shares in a company having a controlling or subordinate relationship with the applicant company or a company between which the applicant company has cross-investment in any of the following ways:
- Spouses.
- Relatives within the second degree of kindship with the aforementioned persons or their spouse.
- Where the aforementioned persons are legal entities, their parent company, subsidiary or a company controlled by the same company or individual shareholder having control over these corporations.
- An invested company or its subsidiary in which the director, supervisor and manager of and a shareholder holding more than 10% shares in the applicant company, its parent company and key subsidiary, individually holds, or together with their spouse or a person related in the ways as described in the above two subparagraphs hold, directly or indirectly, more than one-half of the total number of voting shares or the total capital.
Where an applicant company profits from any of the circumstance set forth under paragraph 1, it shall meet the listing criteria for profitability after deduction of those profits.
|