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Relevant Laws

Title：Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings (2023.09.05)
Article 4     Where an issuing company applying for the listing of its stock meets the criteria listed below, the TWSE will agree to list its stock:
  1. Duration of corporate existence: It has been incorporated and registered under the Company Act for at least three years at the time of the application for listing; provided, this restriction shall not apply to public (state-owned) enterprises or to privatized public enterprises.
  2. Paid-in capital: At the time it applies for listing, its paid-in capital is NT$600 million or more and the number of shares of its publicly offered and issued common stock is 30 million shares or more.
  3. Profitability: The profit before tax in its financial reports meets either of the following criteria, and it does not have any accumulated deficit in the final accounting for the most recent fiscal year:
    1. The profit before tax for the most recent two fiscal years represents 6 percent or greater of the share capital stated on the financial report for the annual final accounts.
    2. The profit before tax for the most recent two fiscal years represents on average 6 percent or greater of the amount of paid-in capital in its final accounts and the profitability for the most recent fiscal year is greater than that for the immediately preceding fiscal year; or
    3. The profit before tax for the most recent five years represents 3 percent or greater of the share capital stated on the financial report for the annual final accounts.
  4. Dispersion of share ownership: The number of registered shareholders is 1,000 or more. Excluding company insiders and any juristic persons in which such insiders hold more than 50 percent of the shares, the number of registered shareholders is at least 500, and the total number of shares they hold is 20 percent or greater of the total issued shares, or at least 10 million.
  5. 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 shall comply with the following:
    1. Establish a laboratory to engage in self-inspection.
    2. Deliver the raw materials, semi-finished products and finished products whose inspection is outsourced, to a laboratory or inspection institution certified or accredited by the Ministry of Health and Welfare, Taiwan Accreditation Foundation or an institution engaged by the Ministry of Health and Welfare, for inspection.
    3. Request a reasonable opinion from an independent specialist on its food safety monitoring plan, inspection cycle, items for inspection etc.
    Where an issuing company applying for the listing of its stock has a market value of NT$5 billion or more and meets the criteria listed below, the TWSE will agree to list its stock:
  1. The company meets the conditions set forth in subparagraphs 1, 2, 4 and 5 of the preceding paragraph.
  2. Its operating revenue in the most recent fiscal year exceeds NT$5 billion and is better than the previous fiscal year.
  3. Its cash flow from operating activities in the most recent fiscal year is positive.
  4. The net worth on the financial reports for the most recent quarter is not lower than two-thirds of the capital stock identified in the financial report.
    Where an issuing company applying for the listing of its stock has a market value of NT$6 billion or more and meets the criteria listed below, the TWSE will agree to list its stock:
  1. The company meets the conditions set forth in subparagraphs 1, 2, 4 and 5 of the first paragraph.
  2. Its operating revenue in the most recent fiscal year exceeds NT$3 billion and is better than the previous fiscal year.
  3. The net worth on the financial reports for the most recent quarter is not lower than two-thirds of the capital stock identified in the financial report.
    The TWSE will agree to list the stock of an issuing company applying for the listing of its stock in accordance with the second paragraph or the preceding paragraph only if the value of the number of the securities to be listed and available for trading multiplied by the offering price for the price at which the security opens on its first day in the initial public offering has met the minimum requirement on the market value applicable to its application, except where its stock is already listed and traded on the GreTai Securities Market.
Article 9     Notwithstanding the fact that an issuing company applying for the listing of its stock meets the listing criteria set forth in these Rules, the TWSE may disagree to its listing if the issuing company has any of the events listed below, except for any of those in subparagraphs 8, 9, or 10 under which the TWSE shall disagree to its listing, and is deemed by the TWSE to be inappropriate for listing:
  1. It has any of the events set forth in Article 156, paragraph 1, subparagraphs 1 and 2 of the Securities and Exchange Act, or has made misrepresentation or false statement or conducted unlawful activities that may affect the price of its securities after listing thereof, and will cause fear that the market order may be affected or the public interests may be harmed.
  2. Its financial or business affairs are not independent from other person(s).
  3. It has had any material labor dispute or environmental pollution sufficient to affect its normal financial and business operations, and has not made improvement.
  4. It has been discovered any material non-arms-length transaction and has not made improvement.
  5. After the capital increase through a new share issue which has been effected or is being effected in the year in which it applies for listing is included in the amount of paid-in capital in its final account for the respective year, it does not meet the listing criteria.
  6. It has failed to effectively implement its written accounting system, internal control system, or internal audit system, or has failed to prepare financial reports in accordance with relevant laws and regulations and generally accepted accounting principles, and the event of this failure is considered as material.
  7. There has been serious deterioration in its business operation.
  8. Where the applicant company conducted any activities in violation of the principle of good faith in the most recent five years, or where its directors, general manager or de facto responsible person violated the same principle in the most recent three years.
  9. If an applicant company has less than five directors or same-sex directors on its board of directors, or its independent directors number less than three persons or less than one-third of the number of directors; or if any of its board of directors are unable to independently exercise their functions; or if it has not appointed the remuneration committee pursuant to Article 14-6 of the Securities and Exchange Act and related provisions. Additionally, among the elected independent directors, at least one of them must be a professional in accounting or finance.
  10. Where the applicant company has been registered for trading as an emerging stock on the TPEx in the fiscal year of the listing application and the most recent fiscal year thereto, and there has been, from the TPEx registration date onward, any trading of stock issued by the applicant company by any incumbent director, or shareholder holding 10 percent or greater of its total issued shares other than on the emerging stock market; provided, this restriction shall not apply where such trading is for purposes of underwriting under Article 11 of these Rules or for other legitimate reason.
  11. Where the shares of the applicant company are held by a TWSE (or TPEx) listed company and TPExmeet any of the following conditions, and any equity transfer conducted by the TWSE (or TPEx) listed company during the most recent three years for purposes of reducing its shareholding ratio in the applicant company has not been conducted in a manner giving pre-emptive subscription rights to the existing shareholders, or in other manner not detrimental to the rights and interests of the shareholders of the TWSE (or TPEx) listed company:
    1. The applicant company is the existing or newly established company being transferred business or assets due to a demerger of the TWSE (or TPEx) listed company.
    2. The applicant company is a subsidiary of the TWSE (or TPEx) listed company, and during the three-year period before the application for TWSE listing, the TWSE (or TPEx) listed company has cumulatively reduced its direct or indirect shareholding in the applicant company by 20 percent or more.
  12. Where the listing is considered by the TWSE as inappropriate due to its scope of business, nature or special circumstances.
    Subparagraph 2 of the immediately preceding paragraph shall not apply to companies applying for listing which are government-owned enterprises.
    The ending date of the applicable periods referred to in various subparagraphs of paragraph 1 of this Article shall be the day immediately before the date on which the Agreement for Listing takes effect.
Article 10     An application for initial listing of stock filed by an issuing company shall not be approved unless and until shares representing all of the number of shares held by each of the following persons of the issuing company specified in the application for listing (with the total number of such shares being not less than the ratio specified in paragraph 2 of this Article), less those offered for public sale, have been placed in central custody with a central securities depository enterprise incorporated with the approval of the Competent Authority; provided however, that if the number of shares represented by shares placed in central custody pursuant to the above is less than the ratio specifies in paragraph 2 of this Article, the shortage shall be made up by other shareholders:
  1. Where the application for listing is filed in accordance with the provisions of Article 4, 6, 16, or Article 20, paragraph 1, Article 20-1, or Article 20-2 of these Rules, its directors, and the shareholders holding 10 percent or greater of the total number of issued shares of the issuing company.
  2. Where the application for listing is filed in accordance with the provisions of Article 5 or Article 20, paragraph 3 of these Rules or where the applicant is an information software enterprise, its personnel who shall handle central custody of the stock are as listed in the items below. However, this restriction shall not apply where shareholding of a recommending securities firm during the period of registration as emerging stock exceeds 5 percent of the total issued shares of said issuing company as a result of subscription or trading of operating securities during the emerging stock trading period.
    1. Where the applicant is a creative enterprise or information software enterprise, its directors, shareholders holding 5 percent or greater of the total number of issued shares, and/or shareholders whose equity investment is made in the form of patent rights or technical know-how, and who are working for the issuing company and hold 0.5 percent or greater of the total number of shares or 100,000 or more shares as of the date on which the application for listing is filed.
    2. Where the applicant is a technology enterprise, its president, research and development supervisor, and personnel mentioned in the preceding item.
    The total number of shares with respect to the shares to be placed in central custody by the issuing company under the preceding paragraph refers to the aggregate sum of common shares that have already been publicly offered and issued, as stated on the listing application documents,; the total ratio of shares to be placed in central custody by the issuing company shall be calculated as set forth below:
  1. Where the total number of shares is 30 million or less, shares representing 25 percent thereof shall be placed in central custody.
  2. Where the total number of shares is more than 30 million but 100 million or less, shares representing 20 percent of the portion of shares in excess of 30 million shares shall be placed in central custody in addition to those required under the preceding item.
  3. Where the total number of shares is more than 100 million but 200 million or less, shares representing 10 percent of the portion of shares in excess of 100 million shall be placed in central custody in addition to those required under the preceding item.
  4. Where the total number of shares is more than 200 million, shares representing 5 percent of the portion of shares in excess of 200 million shall be placed in central custody in addition to those required under the preceding item.
    The remaining shares after deducting those required for the public offering, as referred to in paragraph 1, include the following:
  1. From the date of application for initial listing to the listing date, all new shares obtained through capital increase for which amendment registration has been completed with the Ministry of Economic Affairs, as well as any shares that have come to be held for any other reason; for any shares that have not yet been obtained by the listing date, an undertaking shall be made to place the shares in central custody after obtaining them.
  2. From among the old shares provided by directors and shareholders of the issuer for an overallotment (greenshoe) option for the securities underwriter, any shares that were not actually sold in exercise of the overallotment option and that have been returned by the securities underwriter.
    One-half of the shares placed in central custody by directors and shareholders pursuant to the provisions of paragraph 1 of this Article may be withdrawn only after the end of a 6-month period starting from the listing date thereof; all the shares may be withdrawn in full only after the end of a one-year period starting from the listing date thereof. However, a company applying for listing pursuant to Article 4, paragraphs 2 and 4, or a technology enterprise applying for listing pursuant to Article 5, and to Article 20, paragraph 3, may withdraw one-fourth of the shares only after the end of a 6-month period starting from the listing date thereof, and may further withdraw one-fourth of the shares every 6 months afterwards. All the shares in full only after the end of a two-year period starting from the listing date thereof.
    For an issuing company that applies for listing under the provisions of Article 4, where the total number of its shares required to be placed in central custody is assessed to exceed 50 percent of the issued shares of the issuing company, and the issuing company has paid-in capital of at least NT$30 billion, if the portion of the number of shares required to be placed in central custody exceeding the above-stated 50 percent of issued shares has been pledged to a financial institution by the director or shareholder of the issuing company who holds the shares for purposes of guaranteeing financing for the company or for him/herself, evidentiary documents furnished by the financial institution may be substituted for shares required to be placed in central custody; provided, if the pledge is released during the custody period, the director or major shareholder shall deposit the same amount of shares into central custody; or, if the subject of the pledge is disposed by the financial institution, the issuing company shall contact other directors or major shareholders to deposit the same amount of shares into central custody.
    Directors and shareholders shall not rescind the custodial agreement during the custody period. Shares and certificates in central custody shall not be transferred or pledged. The validity of central custody shall not be affected by a change of the identity of the holders of shares in central custody
    The provisions of paragraph 1 of this Article shall not apply to directors and shareholders of government authorities, government-owned enterprises, or which have obtained an approval from the authority in charge of the enterprise concerned for the sale of the shares held by them and have been determined to be inappropriate to place such shares in central custody.
    The total ratio of shares to be placed in central custody as specified in paragraph 2 of this Article shall not apply to government-owned enterprises.
Article 10-1     An application for initial listing of stock filed by an issuing company in accordance with Article 6-1 shall not be approved unless and until its directors, shareholders holding 3 percent or more of the total issued shares, and the shareholders whose equity investment is made in the form of technical know-how and who hold 0.5 percent or more of the total number of issued shares or 100,000 shares or more have placed all of their shares specified in the application for listing and in total not less than the ratio of shares as required in paragraph 2 of this Article, minus the shares required for public offering, with a central securities depository enterprise incorporated with the approval of the Competent Authority; provided however, that if the total number of shares held by directors is less than the total number of shares held by them at the time when they were elected as directors and supervisors, then the total number of shares at the time when they were elected shall be the basis for counting the number of shares under this Article. If the number of shares represented by shares placed in custody pursuant to the above is less than the total ratio of shares required under paragraph 2, the shortage shall be made up by other shareholders.
     The total of shares that the issuing company shall place in central custody with the central securities depository, as required under the preceding paragraph, shall mean the total ratio calculated by the method enumerated below based on the total number of issued common shares specified in the application for listing, and the shares placed in central custody shall be the offered and issued common shares only.
  1. If the total number of shares is one billion shares or less, 50 percent of the total number of shares shall be placed in custody.
  2. If the total number of shares exceeds one billion shares but not three billion shares, in addition to complying with the preceding subparagraph, 40 percent of the total number of shares shall be placed in custody for the portion exceeding one billion shares.
  3. If the total number of shares exceeds three billion shares but not five billion shares, in addition to complying with the preceding subparagraph, 30 percent of the total number of shares shall be placed in custody for the portion exceeding three billion shares.
  4. If the total number of shares exceeds five billion shares but not seven billion shares, in addition to complying with the preceding subparagraph, 20 percent of the total number of shares shall be placed in custody for the portion exceeding five billion shares.
  5. If the total number of shares exceeds seven billion shares, in addition to complying with the preceding subparagraph, 10 percent of the total number of shares shall be placed in custody for the portion exceeding seven billion shares.

    Among the shares placed in custody under paragraph 1, one-sixth of the portion thereof may be withdrawn only after the end of 3 full years from the listing date thereof; thereafter, one-sixth thereof may be withdrawn once every 6 months. If after the end of the said period, the project constructed by the company has not been fully completed and the operation has not commenced, the custody period may be extended until the project is fully completed and the operation commences; provided, however, that if partial operation has commenced before the project is fully completed, the custody period shall be extended until the company's annual financial report shows an net operating income and profit before tax. The custody agreement shall not be terminated during the custody period. Shares and certificates in custody shall not be transferred or pledged. The validity of custody shall not be affected by any change of the identity of the holders of shares in custody.
    At the time of applying for listing, the issuer shall undertake that, during the period of central custody of the stock, a shareholder that has already placed stock in central custody in accordance with paragraph 1 shall also carry out central custody placement for any shares of common stock that the shareholder may subsequently obtain through subscription or conversion of preferred shares or corporate bonds, according to the total ratio required to be placed in custody as calculated under paragraph 1 at the time of the listing application. The provisions of paragraph 3 shall apply mutatis mutandis to the time periods for custody and withdrawal thereof.    The provisions of paragraph 1 shall not apply where, during the period in which an issuing company applying for initial listing of its stock is registered as an emerging stock company, shareholding of its recommending securities firm exceeds 3 percent of the total issued shares of said issuing company as a result of subscription or trading of operating securities during the emerging stock trading period.
Article 11     Where an issuing company applies for initial listing of its common stock or any type(s) of preferred shares it shall allocate a percentage, as specified by the TWSE, of the total number of shares as stated in its listing application documents and after deducting the number of shares to be retained for subscription by employees as specified by laws and regulations in connection with the Company Act, retain a securities underwriter to offer the balance of such allocated shares in full for sale to the public before the shares are listed, by means of a cash capital increase through a new share issue in accordance with the provisions of Article 71, paragraph 1, of the Securities and Exchange Act concerning underwriting of securities on a firm commitment basis. Provided, that a state-owned enterprise or an applicant under Article 6 or Article 6-1 may carry out underwriting with stock already publicly offered and issued by the company.
    The total number of shares to be allocated by the issuing company for public sale under the preceding paragraph shall be calculated by the method specified in Article 10, paragraph 2, and shares added during the period from the listing application date until the listing date shall be included in the calculation; provided, shares allocated for public sale shall be confined to shares of publicly offered and issued common stock.
    The requirements of paragraph 1 regarding a percentage of shares to be allocated shall not apply to a company applying for TWSE listing if the company's shares are already listed for trading on the TPEx in accordance with Article 3 of the GreTai Securities Market Rules Governing Review of Securities Traded on the TPEx and the company, because of non-compliance with the share ownership dispersion standards in these Rules, must retain a securities underwriter to conduct a pre-listing public sale of shares to deal with the amount of the shortfall in share ownership dispersion. However, if the amount of the shortfall is less than 2 million shares or 1 percent of paid-in capital, the company may be exempted from the public sale requirement, as long as it achieves compliance with share ownership dispersion standards before its shares are listed on the central exchange for trading.
Article 18     Where an issuing company of a group enterprise, other than a government-owned enterprise, applies for the listing of its stock but does not meet the following requirements, the TWSE shall disagree to its listing, notwithstanding the fact that its application is otherwise in compliance with these Rules:
  1. The principal business or products of the applicant company are not in mutual competition with those of any other companies within the same group enterprise. However, this requirement shall not apply if the applicant company has independent operational decision-making ability.
  2. Where there are financial business dealings or transactions between the applicant company and other companies within the same group enterprise, written rules and regulations governing the financial and business affairs among them shall have been formulated and approved by the board of directors of each such company, and in addition, each company within a group enterprise shall execute an undertaking in writing to the effect that its financial and business affairs with other companies are free from any non-arms-length transaction. Where there is no business transaction between them, the applicant company shall execute an undertaking in writing to the effect that in case there is any business dealing in the future, it will be free from non-arms-length transaction.
  3. There shall be no material irregularities in its financial and business conditions or in its above-cited operational guidelines.
  4. The applicant company shall have the potential to develop independent marketing of the products that it sells to other companies within the same group enterprise.
  5. The purchase amount in the most recent period or most recent fiscal year from the time of the application for listing from a company within the same group enterprise does not exceed 70 percent, provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
  6. The operating revenue or operating profit derived from other companies within the same group enterprise, at the time of the application for listing, in the most recent period, and in the most recent fiscal year, does not exceed 50 percent, or the operating revenue derived from the use of a critical technology or asset provided by the companies mentioned above does not exceed 50 percent; provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes, which situation accounts for not more than 70 percent.
Article 19     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:
  1. 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.
  2. 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.
  3. 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.
  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 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.