Chapter III The Listing of Foreign Securities |
| 25 | The TWSE shall publicly announce the listing of government bonds issued by foreign governments and bonds issued by international organizations, upon being notified by the Competent Authority.
Where foreign issuers apply for the listing of bonds and the underlying pricing of which is computed in New Taiwan Dollars or foreign currency, the TWSE may issue documentation evidencing approval of the listing thereof if they meet the criteria as set out by the Competent Authority.
Where the issuer has obtained a certificate from the TWSE approving its application for listing bonds under the preceding paragraph, the TWSE will, after a filing for effective registration of the issuance of such bonds has been made with the Competent Authority and the issuance is completed, publicly announce the listing thereof, and report the Agreement for Listing Foreign Bonds to the Competent Authority for recordation.
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| 25-1 | If an offshore ETF is approved by the Competent Authority, the net asset value of its onshore offering and sales in the ROC is NT$200 million or higher, and its application for TWSE listing is submitted by the master agent appointed by the offshore fund management institution or its designated institution, then except where the TWSE provides otherwise, the TWSE may approve the listing of its beneficial interest certificates, fund shares, and investment units.
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| 26 | Approval will be granted for the application submitted by a foreign issuer or its depositary institution for listing of Taiwan depositary receipts proposed to be issued if the application meets the following requirements:
- Units of Taiwan depositary receipts to be listed: 20 million units or more or market value of NT$300 million or more; provided that the listed units may not exceed 50 percent of the total number of shares issued by the foreign issuer.
- The stock, or the securities representing the stock, issued by the foreign issuer in accordance with the laws of its country of registration are already listed and traded on the main board of one of the overseas securities markets approved by the Competent Authority before the listing of the Taiwan depositary receipts under the listing application.
- Net worth: At the time of application for listing, the net worth stated on the financial report audited and attested by a CPA for the most recent period shall not be less than the equivalent of NT$600 million.
- Profitability: It does not have accumulated deficit in the most recent fiscal year and meets one of the following criteria:
- The ratio of profit before tax to net worth in the final accounting for the most recent year is 6 percent or higher.
- The ratio of profit before tax to net worth in the final accounting for each of the past two fiscal years is 3 percent or higher, or the average is 3 percent or higher, and the profitability in the most recent fiscal year is better year-on-year than in the preceding year.
- The profit before tax for each of the most recent two years shall be NT$250 million or more.
- Dispersion of share ownership: At the time of proposed listing, the number of holders of the Taiwan depositary receipts in the Republic of China is not less than 1,000 persons, and the total number of units held by holders other than insiders of the foreign issuer and juristic persons of which such insiders own over 50 percent of the shareholding is not less than 20 percent of the total units issued or is 10 million units or more.
- There shall be no restriction on transfer of stock, or securities representing such stock, represented by Taiwan depositary receipts.
- The rights and obligations of the holders of stock, or securities representing such stock, represented by Taiwan depositary receipts shall be identical with those of other stock, or securities representing such stock, of the same class issued at the same time.
- There is no abnormal fluctuation in the price of the stock represented by the Taiwan depositary receipts during the 3 months before the listing agreement for Taiwan depositary receipts takes effect.
- The depositary institution has not, within the past year, been sanctioned by the TWSE for any error in information reporting, where the circumstances were serious.
The financial information referred to in subparagraphs 3 and 4 of the preceding paragraph will be examined [by the TWSE] based on the consolidated report or the consolidated financial statement prepared by the said foreign issuer in accordance with the laws and regulations of its country of registration or the country of listing and the 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 country of registration or the country of listing of the said foreign issuer and the impact of such differences on such financial reports.
The net worth and profit before tax as referred to in paragraph 1, subparagraphs 3 and 4 shall mean, for consolidated financial reports, the amount attributable to owners of the parent.
Unless otherwise prescribed by the Competent Authority, after the listing agreement with respect to the application for listing of Taiwan Depositary Receipts has taken effect, the foreign issuer shall conduct a public sale pursuant to regulations from the date of the TWSE's written notification. If the Taiwan Depositary Receipts for which the foreign issuer applied for listing are not listed for trading within 3 months from the date of the TWSE's written notification, the TWSE shall void the listing agreement, and report to the Competent Authority for recordation. Notwithstanding, if the foreign issuer, with legitimate reason, applies for an extension, then after the TWSE approves such extension, the foreign issuer may be granted a one-time only 3-month extension, which shall be reported to the Competent Authority for recordation. The foreign issuer shall undertake in writing that, after listing, it will establish a reporting system with the TWSE for automatic synchronous reporting of material information.
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| 27 | Approval will be granted for an application by a foreign issuer for a secondary listing of stock issued by that foreign issuer ("a TWSE secondary listing") if the requirements listed below are met:
- Number of shares to be listed: 20 million shares or more, or the market price of the shares to be listed is NT$300 million or more; provided that the number of shares may not exceed 50 percent of the total number of shares issued by the foreign issuer.
- The registered shares issued by the foreign issuer in accordance with the laws of its country of registration are already listed and traded on the main board of one of the overseas securities markets approved by the Competent Authority before the listing of the stocks under the listing application.
- Net worth: At the time of application for listing, the net worth stated on the financial report audited and attested by a CPA for the most recent period shall be the equivalent of NT$600 million or more.
- Profitability: It does not have accumulated deficit for the most recent fiscal year and meets one of the following criteria:
- The profit before tax for the most recent year represents not less than 6 percent of the net worth as shown in its final accounts; or
- The ratio of profit before tax to net worth in the final accounting for each of the past two fiscal years is 3 percent or higher, or the average is 3 percent or higher, and the profitability in the most recent fiscal year is better year-on-year than in the preceding year.
- The profit before tax for the most recent two years shall be NT$250 million or more.
- Dispersion of share ownership: At the time of the proposed listing, the number of registered shareholders in the Republic of China is not less than 1,000 persons, and the total number of shares held by shareholders other than insiders of the foreign issuer and juristic persons of which such insiders own over 50 percent of the shareholding is 20 percent or more of the total number of issued shares or is 10 million shares or more.
- The stock under the application for listing shall be the same class of stock listed and traded on the overseas securities market, and the rights and obligations of the holders of stock shall be identical with those of the same class of stock listed and traded on the other securities market, and local holders of the stock shall not be restricted from selling the stock in which they have invested on the overseas securities market.
- During the 3 months before the listing agreement for the foreign stock takes effect, there is no abnormal fluctuation in the price of the stock that is already listed and traded on the overseas securities market.
The provisions of Article 26, paragraphs 2 and 3 shall apply mutatis mutandis to the financial reports referred to in subparagraphs 3 and 4 of the immediately preceding paragraph.
After the listing agreement with respect to the foreign issuer's application for listing of shares has taken effect, the foreign issuer shall conduct a public sale pursuant to regulations as from the date of the TWSE's written notification. If the stock for which the foreign issuer applied for listing is not listed for trading within 3 months from the date of the TWSE's written notification, the TWSE shall void the listing agreement, and report to the Competent Authority for recordation. Notwithstanding, if the foreign issuer, with legitimate reason, applies for an extension, then after the TWSE approves such extension, the foreign issuer may be granted a one-time-only 3-month extension, which shall be reported to the Competent Authority for recordation.
The foreign issuer shall undertake in writing that, after listing, it will establish a reporting system with the TWSE for automatic synchronous reporting of material information.
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| 27-1 | Approval will be granted for listing of the stock or Taiwan depositary receipts of a foreign issuer that applies for a TWSE secondary listing or that sponsors issuance of Taiwan Depositary Receipts by a depositary institution if the Industrial Development Bureau of the Ministry of Economic Affairs or a professional institution engaged by the TWSE issues an unequivocal opinion it is a technology enterprise, has successfully developed marketable goods or technology, and meets each of the following criteria:
- Number of shares to be listed or units of Taiwan depositary receipts to be listed: 20 million shares or more, or shares with a market price of NT$300 million or more; or 20 million units or more, or units with a market price of NT$300 million or more; provided that it may not exceed 50 percent of the total number of shares issued by the foreign issuer.
- The securities underwriter has provided a written recommendation.
- The stock, or the securities representing such stock, issued by the foreign issuer in accordance with the laws of its country of registration is already listed and traded on the main board of one of the overseas securities markets approved by the Competent Authority before the listing of the stocks or Taiwan depositary receipts under the listing application.
- At the time of application for listing, the net worth stated on the financial report audited and attested by a CPA for the most recent period shall be the equivalent of NT$300 million or more and not less than two-thirds of the sum of share capital and capital surplus; evidence shall also be required supporting that there is a sufficient amount of working capital covering the period of 12 months after the listing and half or more of such working capital is derived from the principal operating activities.
- At the time of the proposed listing, the number of registered shareholders or holders of the Taiwan depositary receipts in the Republic of China is not less than 1,000 persons, and the total number of shares held by the shareholders or holders of the Taiwan depositary receipts other than insiders of the foreign issuer and juristic persons of which such insiders own over 50 percent of the shareholding is 20 percent or more of the total number of issued shares or is 10 million shares or more.
- The stock to be listed shall be the same class of stock listed on other stock exchanges or securities markets. The rights and obligations of the holders of stock shall be identical with those of the same class of stock listed on other stock exchanges or securities markets. Local holders of the stock shall not be restricted from selling the stock on foreign stock exchanges or securities markets.
- There is no abnormal fluctuation in the price of the stock, or securities representing the stock, issued by the foreign issuer under the law of the country of registration, during the 3 months before the agreement takes effect for listing of shares or Taiwan depositary receipts with respect to which the listing application is submitted.
- The depositary institution has not, within the past year, been sanctioned by the TWSE for any error in information reporting, where the circumstances were serious.
The provisions of Article 26, paragraphs 2 and 3 shall apply mutatis mutandis to the financial reports referred to in subparagraph 4 of the preceding paragraph.
The foreign issuer shall undertake in writing that, after listing, it will establish a reporting system with the TWSE for automatic sychronous reporting of material information.
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| 27-2 | If a foreign issuer that applies for a TWSE secondary stock listing, or to sponsor issuance of Taiwan Depositary Receipts by a depositary institution, complies with all listing requirements specified in these Rules, but any of the circumstances listed in the subparagraphs below exists, and the TWSE deems the listing inappropriate, the TWSE need not approve the listing:
- Any circumstance having a serious impact on the company's financial or business condition, or sufficient to cause its dissolution or changes to its organization or capital, or the company acts deceptively or illegally such that the post-listing price of its securities is affected, with a likelihood of affecting market order or harming the public interest.
- The applicant company, or any incumbent director, supervisor, general manager or de facto responsible person of the company, has acted in violation of the principle of good faith in the most recent three years.
- The applicant company, or any incumbent director, supervisor, general manager or de facto responsible person of the company, has had a sanction or disposition imposed by a competent securities authority or securities exchange of the country of listing in the most recent three years, and the circumstances are serious.
- There has been serious deterioration in its business operation.
- The TWSE deems listing inappropriate on any other grounds.
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| 27-3 | A foreign issuer that applies for a TWSE secondary stock listing, or to sponsor issuance of Taiwan Depositary Receipts by a depositary institution, shall continuously engage a lead securities underwriter from the date of listing to the end of the 2 subsequent fiscal years to assist it in compliance matters regarding Republic of China securities laws and regulations, the bylaws, rules, and public announcements of the TWSE, and the listing contract. However, if the foreign issuer applies for TWSE secondary listing pursuant to Article 27-1, the continuous engagement period shall not be less than 3 full fiscal years.
During the engagement period referred to in the preceding paragraph, the lead underwriter shall make the issuer's financial and business information available on its website on a quarterly basis.
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| 28 | Where a foreign issuer and its agent or depositary institution apply for the listing of stock or Taiwan depositary receipts issued as a result of capital increase by cash and having rights and obligations identical with those of the stock or depositary receipts already listed; or where a foreign issuer, using its previously issued shares, sponsors issuance of Taiwan depositary receipts with the same rights and obligations as Taiwan depositary receipts that are already listed, the TWSE may, after examining and verifying the completeness of the submitted supporting documents and finding that the foreign issuer meets all of the requirements listed below, issue documents evidencing approval of the listing and, after the foreign issuer has filed for and obtained effective registration with the Competent Authority and the issue has been completed, publicly announce the listing:
- Compliance with Article 26, paragraph 1, subparagraph 4 and Article 27, paragraph 1, subparagraph 4.
- No violation of TWSE rules and regulations relating to material information within the most recent year, where the violation is serious in nature.
- No abnormal fluctuation in the trading price within 1 month before the date of application.
- No violation of the laws and regulations of the country of registration or the country of listing within the most recent year, where the individual violation is serious in nature.
- The number of additional shares planned to be issued in the current issue of new shares or Taiwan depositary receipts plus the number of the already listed shares or Taiwan depositary receipts does not exceed 50 percent of the total number of issued shares.
Where a foreign issuer and its depositary institution apply to sponsor issuance, by means of shelf registration, of Taiwan depositary receipts with the same rights and obligations as Taiwan depositary receipts that are already listed, they shall, in addition to meeting the requirements in all the subparagraphs of the preceding paragraph, meet all of the conditions in the subparagraphs of paragraph 1, Article 39 of the Regulations Governing the Offering and Issuance of Securities by Foreign Issuers, before the TWSE will issue a document evidencing its approval of the listing of the Taiwan depositary receipts and, after the issuer has filed and obtained effective registration with the Competent Authority and completed the issue, publicly announce the listing thereof.
Where a foreign issuer and its agent or depositary institution files for the listing of additional stock due to the allocation to existing shareholders of preemptive subscription rights or bonus shares resulting from a cash capital increase with a new share issue, or due to requests for conversion or subscription of already-issued convertible corporate bonds, corporate bonds with warrants, or any other type of securities that can be converted to equity, and the rights and obligations of the holders of stock or Taiwan depositary receipts to be newly issued are identical with those of the stock or depositary receipts already listed, the TWSE will, after having verified that the related documents reported and uploaded are complete, publicly announce the listing thereof.
Where a foreign issuer and its depositary institution re-issue, within the amount that has been redeemed, or re-issue, within the scheduled issuance period and permitted number of units for issue under a shelf registration, Taiwan depositary receipts with the same rights and obligations as Taiwan depositary receipts that are already listed, the TWSE shall, after having verified the related documents reported and uploaded are complete, proceed directly to publicly announce the listing thereof. When a foreign issuer sponsors issuance of Taiwan depositary receipts and the depositary receipts have been listed, if shareholders of the foreign issuer, using shares that are already issued and held by such shareholders, engage a depositary institution to apply to domestically issue Taiwan depositary receipts for listing, if all of the conditions listed below are met, the TWSE, upon examining and verifying the completeness of the submitted documents, may issue documents evidencing its agreement to the listing of the depositary receipts, and after the filing and effective registration with the Competent Authority, publicly announce the listing thereof:
- The foreign issuer meets the conditions in all the subparagraphs of paragraph 1.
- The number of units for which listing is applied is not less than 10 million.
- The engaged depositary institution and custodian institution shall be the same depositary institution and custodian institution engaged by the foreign issuer for its sponsored issuance of Taiwan depositary receipts. .
- The rights and obligations of the stock represented by the Taiwan depositary receipts shall be the same as the rights and obligations of the stock represented by the Taiwan depositary receipts of which the foreign issuer sponsored issuance.
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| 28-1 | The TWSE may issue documentation evidencing listing approval of the application by a foreign issuer for a TWSE primary listing if that issuer meets all of the requirements listed below:
- It complies with regulations in connection with the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area. However, if individuals, juristic persons, groups, or other institutions from the Mainland Area have direct or indirect shareholding or capital contribution exceeding 30 percent in, or effective control over, the foreign issuer, special-case permission shall be obtained from the competent authority.
- At the time it applies for listing, the applicant company or any of its controlled companies shall have an operational track record of three years or longer.
- The company scale meets one of the following criteria:
- At the time of application for listing, paid-in capital or net worth is NT$600 million or higher.
- At the time of listing, market capitalization is NT$1.6 billion or higher.
- Its cumulative profit before tax for the most recent three fiscal years is NT$250 million or higher, and its profit before tax for the most recent fiscal year is NT$120 million or higher, and it does not have any accumulated deficit.
- Its number of shareholders of record is 1,000 or more, and the number of shareholders other than insiders of the foreign issuer and juristic persons of which such insiders own over 50 percent of the shareholding is no less than 500 and their total shareholdings constitute 20 percent or more of the total issued shares or not less than 10 million shares.
- 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:
- Establish a laboratory to engage in self-inspection.
- 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.
- Request a reasonable opinion from an independent specialist on its food safety monitoring plan, inspection cycle, items for inspection etc.
- The number of shares planned to be listed and traded shall exceed 50 percent of the total number of its issued shares.
- It is recommended, in writing, by two or more securities underwriters.
Where a foreign issuer applies for a TWSE primary listing of stock, if, for the foreign issuer or a company controlled by it contributing 50 percent of its overall operating revenue, there has been issued an unequivocal opinion by an R.O.C. competent authority of a target business in accordance with the business attributes of foreign issuer, or a TWSE-designated professional institution, indicating that the company is a technology enterprise or a cultural and creative enterprise with market potential, if the foreign issuer meets the requirements of the following subparagraphs, the TWSE may issue evidentiary documentation indicating its approval of the listing:
- It complies with the relevant provisions of the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area. However, if individuals, juristic persons, groups, or other institutions from the Mainland Area have direct or indirect shareholding or capital contribution exceeding 30 percent in, or effective control over, the foreign issuer, special-case permission shall be obtained from the competent authority.
- At the time of the listing application, the applying company or the controlled company that is a technology enterprise shall have a business record of one full fiscal year or more.
- At the time of the listing application, the paid-in capital or net worth reaches NT$300 million or more, or the market capitalization reaches NT$800 million or more.
- At the time of the listing application, the net worth on the most current financial report audited and attested by a CPA is not lower than two-thirds of the capital stock, with proof that the company has operating capital sufficient for 12 months of operation following the listing. In the case of a foreign issuer whose shares have no par value or a par value other than NT$10, the issuer's net worth shall be not less than two-thirds of the sum of the share capital plus capital reserves minus original issue premium.
- Its number of shareholders of record is 500 or more, and the total shareholdings of the shareholders of record other than insiders of the foreign issuer and juristic persons of which such insiders own over 50 percent of the shareholding constitute 20 percent or more of the total issued shares or not less than five million shares.
- The number of shares planned to be listed and traded shall exceed 50 percent of the total number of its issued shares.
- It is recommended by two or more securities underwriters.
When a foreign issuer applies for a TWSE primary listing of stock, if its operating revenue derived from construction business as stated in the financial reports represents 20 percent or greater of its total operating revenue, or its gross profit from operations derived from construction business represents 20 percent or greater of its total gross profit, or its operating revenue or gross profit derived from construction business is more than that derived from other business items, during the most recent two fiscal years, it shall meet all of the requirements provided in Articles 16 and 17 herein, in which case, the TWSE may issue evidentiary documentation indicating its approval of the listing thereof; in the case of a foreign issuer whose shares have no par value or a par value other than NT$10, the requirement of Article 16, paragraph 1, subparagraph 2 shall be calculated on the basis of the net worth reaching NT$600 million or more.
"Controlled company" in paragraphs 1 and 2 means any of the following circumstances:
- Any controlled company in which the foreign issuer directly holds more than 50 percent of the issued voting shares or has contributed more than 50 percent of the capital.
- Any controlled company in which the foreign issuer, indirectly through a subsidiary company, holds more than 50 percent of the issued voting shares or has contributed more than 50 percent of the capital.
- Any controlled company in which the foreign issuer directly, or indirectly through a subsidiary, holds more than 50 percent of the issued voting shares or has contributed more than 50 percent of the capital.
- A company of which a foreign issuer directly or indirectly elects or appoints more than half of the directors for the board of directors.
Where a foreign issuer applying for the primary 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:
- The issuer meets the conditions set forth in subparagraphs 1 and 2, item 1 of subparagraph 3 and subparagraphs 5 to 8 of the first paragraph.
- Its operating revenue in the most recent fiscal year exceeds NT$5 billion and is better than the previous fiscal year.
- Its cash flow from operating activities in the most recent fiscal year is positive.
- The net worth on the financial reports for the most recent quarter is not lower than two-thirds of the share capital identified in the financial report.
Where a foreign issuer applying for the primary 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:
- The issuer meets the conditions set forth in subparagraphs 1 and 2, item 1 of subparagraph 3 and subparagraphs 5 to 8 of the first paragraph.
- Its operating revenue in the most recent fiscal year exceeds NT$3 billion and is better than the previous fiscal year.
- The net worth on the financial reports for the most recent quarter is not lower than two-thirds of the share capital identified in the financial report.
The TWSE will agree to list the stock of a foreign issuer applying for the primary listing of its stock who shall meet the conditions in paragraph 1, subparagraph 3, item 2, or whose application is filed in accordance with the fifth 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.
If a foreign issuer is a professional investor and its purpose is to directly, or indirectly through a subsidiary company, control the operations of a held company or companies, 70 percent or more of that foreign issuer's net operating income in its consolidated financial statement shall be derived from a controlled company or companies.
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| 28-2 | The securities underwriter referred to in the preceding article shall be registered as a member of the Taiwan Securities Association and establish a place of business within the Republic of China.
A lead securities underwriter must undertake, in writing, that it has performed due diligence procedures, that the evaluation report, other documentation, and attachments it issues all are true, and that it has not concealed or omitted any material financial or operating information regarding the foreign issuer.
The foreign issuer and its directors shall assist the securities underwriter to conduct due diligence procedures, and provide any required information.
A foreign issuer shall continuously engage a lead securities underwriter from the date of listing to the end of the 3 subsequent fiscal years to assist it in compliance matters regarding Republic of China securities laws and regulations, the bylaws, rules, and public announcements of the TWSE, and the listing contract.
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| 28-3 | The standard basis for the paid-in capital of Article 28-1 is the amount of paid-in capital recorded in the evidentiary documents of the foreign issuer's registration or amendment registration translated into New Taiwan Dollars based on the average of the daily foreign exchange rates at market close, as announced by the designated foreign exchange bank in the Republic of China, for the 1-month period before the foreign issuer applied for listing.
The standard basis for the "net worth" and "profit before tax" specified by Articles 28-1, 28-6, and 28-13 shall be the CPA audited and attested consolidated financial report, and shall refer to the amount attributable to owners of the parent.
The financial report referred to in Article 28-1 and Article 28-13 shall be prepared in accordance with the applicable regulations governing the preparation of financial reports adopted by the competent authority for the relevant industry, the generally accepted accounting principles of the United States, or the International Financial Reporting Standards, with an audit report issued by two ROC-licensed CPAs of a joint accounting firm approved by the Competent Authority to attest to the financial reports of public companies, or audited by an international CPA firm that has a cooperative relationship with the aforementioned accounting firm accompanied by an audit report issued by an ROC-licensed CPA.
A consolidated financial report of the preceding paragraph that is not prepared in accordance with the applicable regulations governing the preparation of financial reports adopted by the competent authority for the relevant industry shall disclose any items with material discrepancies and the amount of any monetary impact of those discrepancies, and provide an opinion by an ROC-licensed CPA regarding those items.
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| 28-4 | A foreign issuer that applies for a TWSE primary listing of its stock may not have less than five directors or same-sex directors on its board, among them a majority of directors shall be domiciled in the Republic of China; where a corporate shareholder is elected as shareholder, the above requirement shall apply to its beneficial owner; and shall also appoint independent directors numbering not less than two persons and not less than one-third of the number of directors, and at least one of the independent directors shall be domiciled in the Republic of China.
A foreign issuer shall install an audit committee. That audit committee shall comprise all the independent directors; it may not have less than three members, one of whom shall be the convener.
ROC laws and regulations regarding securities shall apply mutatis mutandis to the professional qualifications, restrictions on shareholding and the holding of concurrent posts, and the determination of independence, of the independent directors of the two preceding paragraphs.
A foreign issuer shall appoint a remuneration committee. ROC securities laws and regulations shall apply mutatis mutandis to the professional qualifications of and the exercise of powers by the committee members and related matters.
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| 28-5 | If a foreign issuer that applies for a TWSE primary listing of its stock is part of a consortium and complies with the provisions of this chapter, but does not meet all of the conditions below such that the TWSE deems the listing inappropriate, the TWSE shall not approve its stock listing:
- There is no mutual competition between the primary businesses or primary products of the applicant company and the companies in the same consortium However, this requirement shall not apply if the applicant company has independent operational decision-making ability.
- The products that the applicant company sells to other companies within the same group enterprise shall have the potential for the development of independent marketing.
- If the applicant company and a company in the same group enterprise have financial business dealings or transactions, they shall each adopt concrete, written systems of operational guidelines for their mutual finances and business, and after having those guidelines approved by the board of directors, shall declare or undertake in writing that there are no non-arms-length transactions. If they do not have a business relationship, the applicant company shall undertake in writing that in the event of any subsequent business relationship, there will be no non-arms-length transactions.
- There shall be no material irregularities in its financial or business condition or in its above-cited operational guidelines.
- The purchase amount in the most recent period or most recent fiscal year from the time of the application for listing from companies 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.
- The amount of its operating revenue or operating profit derived from companies within the same group enterprise in the most recent period and most recent fiscal year from the time of its application for listing 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.
Subparagraph 5 of the preceding paragraph need not be applied if circumstances under that subparagraph are due to special industry characteristics, conditions of supply and demand in the market, or another legitimate reason.
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| 28-6 | 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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| 28-7 | A foreign issuer that applies for a TWSE primary listing of its stock shall in writing undertake as follows:
- When the TWSE deems it necessary to audit the foreign issuer's financial operations or money flow, the foreign issuer is willing to fully cooperate with the investigations of the TWSE and any attorney, CPA, or professional institution designated by the TWSE, to provide any and all information required by the TWSE, and agrees to be responsible for payment of investigation expenses.
- The foreign issuer will appoint a professional shareholder services agent in the Republic of China to handle shareholder services, and will continuously engage a lead securities underwriter from the date of listing to the end of the 3 subsequent fiscal years to assist it in complying with ROC securities laws and regulations, and the listing contract.
- The foreign issuer will add important matters concerning the protection of shareholders' equity in its articles of incorporation or organizational documents. If they are added to the organizational documents, the issuer shall state in its articles of incorporation that those matters will be separately handled in accordance with the organizational documents, and the procedures for additions to and amendments of the organizational documents shall be the same as those for the articles of incorporation. If, however, there is a conflict with mandatory provisions in the laws and regulations of the issuer's country of registration, such that the foreign issuer is unable to add these matters to its articles of incorporation or the organizational documents, the foreign issuer shall enhance disclosure of these matters by including any material discrepancies regarding protection of shareholder equity in the section of its prospectus for matters of special note.
- The shares under the listing application shall be delivered by the book-entry method.
- After listing, it will continue to comply with ROC securities laws and regulations, the listing contract, and the bylaws, rules, and public announcements of the TWSE.
If the laws and regulations of a foreign issuer's country of registration contain mandatory provisions conflicting with provisions requiring mutatis mutandis application of the ROC Securities and Exchange Act, the mutatis mutandis application of the Securities and Exchange Act may only be eliminated when the foreign issuer is included in the scope of a prior public announcement of the competent authority allowing exemption from the application of specific provisions of the Securities and Exchange Act.
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| 28-8 | If a foreign issuer that applies for a TWSE primary stock listing complies with all listing requirements specified in Article 28-1, but any of the circumstances listed below exists at that foreign issuer or any controlled company thereof, and the TWSE deems the listing inappropriate, the TWSE need not approve its stock listing:
- Any circumstance having a serious impact on the company's financial or business condition, or sufficient to cause its dissolution or changes to its organization or capital, or it acts deceptively or illegally such that the post-listing price of its securities is affected, with a likelihood of affecting market order or harming the public interest.
- Its finances or operations cannot be independently and clearly distinguished from those of another person.
- Any material non arms-length transaction has occurred and has not been corrected.
- The applicant company or any controlled company thereof, or any incumbent director, supervisor, general manager or de facto responsible person of any of those companies, has acted in violation of the principle of good faith in the most recent three years.
- There has been serious deterioration in the applicant company's business operation.
- Any of the applicant company's board of directors are unable to independently exercise their functions.
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- The TWSE deems listing inappropriate for any other reason related to the scope or nature of the enterprise or any other special circumstance.
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| 28-9 | The TWSE will approve the application for primary listing of a foreign issuer's stock only after the following persons place in centralized custody in a central securities depository established with the approval of the Competent Authority the stocks comprising their respective individual shareholdings in full as recorded in the listing application documentation and whose sum total is not lower than the percentage specified by the TWSE minus the number of shares provided for public sale upon listing, provided that if the number of shares submitted is insufficient to meet the required percentage, the foreign issuer shall coordinate other shareholders to make up the shortfall.
- If the foreign issuer applies for TWSE primary listing pursuant to Article 28-1, paragraph 1, 5 or 6, its directors, and shareholders holding more than 10 percent of the total number of shares.
- If the foreign issuer applies for TWSE primary listing pursuant to Article 28-1, paragraph 2, its persons required to deposit their shares into central custody are described as the following items, provided that this requirement shall not apply to a recommending securities firm that holds 5 percent or more of the issuer's total issued shares as a result of subscription or trading, during the emerging stock registration period, of securities held for operations:
- in case of a cultural and creative enterprise, its directors, shareholders holding more than 5 percent of the total number of shares, and shareholders providing patent rights or technical know-how as capital contribution and holding a position in the company and also holding 0.5 percent or more, or at least 100,000 shares, of the total issued shares of the company at the time of the listing application, provided that this requirement shall not apply to a recommending securities firm holds 5 percent or more of the issuer's total issued shares as a result of subscription or trading, during the emerging stock registration period, of securities held for operations.
- in case of a technology-based enterprise, its president, research and development supervisor, and all such persons described in the above item.
The provisions of Article 10, paragraphs 2, 3, 4, and 6 shall apply mutatis mutandis to the allocation percentage, centralized custody period, withdrawal method, disposal of stocks in centralized custody, and the effect of custody, provided the centralized custody period of a technology enterprise applying for primary listing pursuant to Article 28-1, paragraph 2 and of an issuer applying for primary listing pursuant to Article 28-1, paragraph 5 or 6 is governed by the proviso of Article 10, paragraph 4 mutatis mutandis.
A TPEx primary listed company applying for TWSE primary listing shall carry out centralized custody of stocks by mutatis mutandis application of Article 10-2.
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| 28-10 | A foreign issuer applying for TWSE primary listing of its stock shall first allocate at least 10 percent of the total number of shares that are to be listed to a cash capital increase through a new share issue after deducting the number of shares retained for employee purchases as provided in the articles of incorporation, then engage a securities underwriter to conduct a pre-listing public sale of those shares under mutatis mutandis application of the provisions of the Securities and Exchange Act, Article 71, paragraph 1 regarding securities underwriting on a firm commitment basis, provided that where this would require the allocation of 20 million shares or more for underwriting, the company may allocate a minimum of 20 million shares for public sale.
The total number of shares retained for employee purchase referred in the preceding paragraph may not exceed 15 percent of the total number of new shares issued.
The requirements of paragraph 1 regarding a percentage of shares to be allocated shall not apply to a TPEx primary listed company that is applying for TWSE primary listing if the company, because of non-compliance with the share ownership dispersion standards in Article 28-1, paragraph 1, subparagraph 5 of 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.
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| 28-11 | A foreign issuer applying for TWSE primary listing of its stock shall, after the listing contract has taken effect, proceed to conduct the public sale pursuant to the preceding Article. If the stock for which the foreign issuer applied for listing has not been listed for trading within 3 months from the date on which the issuer was notified in writing, the TWSE shall void the listing contract, and report to the Competent Authority for approval. If the foreign issuer applies for an extension with a legitimate reason, it may be granted a 3-month extension, one time only, subject to the approval of the TWSE and review and recordation by the Competent Authority.
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| 28-12 | If a primary listed company issues new shares of a stock that is the same type as a stock already listed and applies for listing of the new shares, the new shares will be listed in accordance with the provisions of Article 139, paragraph 2, applied mutatis mutandis under Article 165-1, of the Securities and Exchange Act.
Where a primary listed company issues new shares that are not of the same type of stocks as those which have already been listed and applies for listing of the new shares, the TWSE may agree to list the new shares if the following conditions are met:
- the total issue amount of the shares under application for listing is NT$300 million or more, with 30 million or more shares issued.
- the company offers the shares for sale to the public before listing in accordance with Article 28-10, paragraph 1.
- the share ownership dispersion standards in Article 8, paragraph 3 are met.
A primary listed company applying for listing of shares issued by it that are not of the same type of stock as those already listed and that are redeemable for cash upon maturity shall comply with the provisions of paragraph 2; however, the share ownership dispersion standards in subparagraph 3 shall not apply.
In the case where a primary listed company issues securities with detachable warrants, it shall, upon effective registration with the Competent Authority, apply to the TWSE for listing of the detached company warrants, and such warrants may be listed and traded on the TWSE market only when the total number of warrants specified in the application for listing and trading is five million units or more and they are offered for sale to the public, and also upon satisfaction of either of the following share ownership dispersion standards, provided that in the case of preferred shares with detachable warrants that fail to meet the listing conditions for preferred shares as specified in paragraph 2, the detached company warrants may not be listed:
- If the total number of stock subscription options is less than 20 million units, the number of holders of the warrants shall be 50 persons or more.
- If the total number of stock subscription options is 20 million units or more, the number of holders of the warrants shall be 100 persons or more.
If a primary listed company has issued common shares in response to the exercise of conversion rights or subscription rights under preferred shares with warrants, convertible preferred shares, corporate bonds with warrants, convertible corporate bonds, or detached company warrants issued by the company, the company shall promptly file a report on the Internet information reporting system designated by the TWSE, and may be exempted from the requirement of public sale under Article 28-10.
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| 28-13 | A foreign issuer that privately places securities may not apply for initial listing of such privately placed securities during the period of restriction of transfer as set forth in Article 43-8, applied mutatis mutandis under Article 165-1, of the Securities and Exchange Act. If, once the period of restriction of transfer has elapsed, the issuer intends to apply for listed trading of the securities, it may file such application only after first supplementarily completing public issuance examination and approval procedures with the Competent Authority.
Securities that are privately placed by a primary listed company and securities subsequently distributed, converted, or subscribed may not be listed during the period of restriction of transfer as set forth in Article 43-8, applied mutatis mutandis under Article 165-1, of the Securities and Exchange Act. Once the period of restriction of transfer has elapsed, the company may file a listing application only after first applying to the TWSE for a letter of approval and, on the basis of that letter, supplementarily completing issuance examination and approval procedures with the Competent Authority. However, the company may be exempted from the requirement of carrying out public sale prior to listing under Article 28-10.
When applying to the TWSE for a letter of approval under the preceding paragraph, a primary listed company shall meet the standards in each of the following subparagraphs:
- The financial reports for the most recent period and the most recent fiscal year show an absence of accumulated deficit.
- Its cumulative profit before tax for the most recent three fiscal years is NT$160 million or higher, and its profit before tax for the most recent fiscal year is NT$80 million or higher.
- A CPA has audited the consolidated financial reports for the most recent two fiscal years and has signed and issued an audit report containing an unqualified opinion. If an audit report containing other than an unqualified opinion is issued, it does not affect the fairness of presentation of the financial reports.
- None of the events set out in Article 28-8, subparagraphs 1, 3, 4, or 8 is present.
- The fund utilization plan has been completely executed for the funds obtained from the private placement of securities, and has yielded reasonable benefits; provided, this restriction shall not apply if there is legitimate reason.
- For an applicant company that had net income after tax and no accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the ratio of profit before tax to year-end share capital for the most recent fiscal year shall be better than that for the fiscal year before the shareholders meeting resolved on the private placement of securities, provided such restriction on profitability does not apply where the average of the three fiscal years prior to the application is, due to a change in the business cycle of the industry concerned, better than that of the fiscal year or three fiscal years before the shareholders meeting resolved on the private placement of securities and reaches 4 percent or above:
- The private placement solely introduced strategic investors, and at the time the company applies for the letter of approval, the privately placed shares have not been transferred, or have been transferred to the holding of non-insider(s) or non related party(ies) of the applicant company.
- There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Foreign Issuers, but the applicant company for a legitimate reason is unable to reasonably correct the situation and unable to conduct the public offering, and is urgently in need of capital, and is granted permission for the private placement by the TWSE, and at the time the company applies for the letter of approval for listing of the privately placed securities, the securities have not been transferred, or have been transferred to the holding of non-insider(s) or non related party(ies) of the applicant company.
- For an applicant company that had net income after tax and no accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the ratio of profit before tax to year-end share capital for the most recent fiscal year may not be lower than 200 percent of that for the fiscal year before the shareholders meeting resolved on private placement of securities, provided such restriction on profitability does not apply where the average of the three fiscal years prior to the application is, due to a change in the business cycle of the industry concerned, not lower than 200 percent of that of the fiscal year or three fiscal years before the shareholders meeting resolved on the private placement of securities and reaches 4 percent or above:
- The private placement solely introduced strategic investors, and at the time the company applies for the letter of approval, part or all of the privately placed shares have been transferred to the holding of insider(s) or related party(ies) of the applicant company.
- The private placement did not introduce strategic investors.
- There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Foreign Issuers, but the applicant company for a legitimate reason is unable to reasonably correct the situation and unable to conduct the public offering, and is urgently in need of capital, and is granted permission for the private placement by the TWSE, and at the time the company applies for the letter of approval for listing of the privately placed securities, part or all of the securities have been transferred to the holding of insider(s) or related party(ies) of the applicant company.
- The conducting of the private placement of securities was not done in accordance with the Directions for Private Placements, where the circumstances were serious.
- For an applicant company that had net loss or accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the profit before tax for the most recent fiscal year shall be NT$120 million or higher:
- Any insider or related party of the company participates in the private placement, and the subscription price does not comply with the percentage requirements set out by the Competent Authority.
- The private placement of securities is not carried out in accordance with the Directions for Private Placements, and the circumstances are serious.
- Others consistent with the provisions of the Competent Authority.
A company applying for primary listing in accordance with Article 28-1, paragraph 2, 5 or 6 may waive the application of subparagraph 2 of the preceding paragraph if the company, which has never obtained a letter of approval from the TWSE in accordance with the preceding paragraph, applies for said letter in accordance with paragraph 2 upon the adoption of a special resolution in a shareholders’ meeting on the registration of the retroactive handling of public issuance procedures of privately placed securities, subject to compliance with the following subparagraphs:
- No assignment is conducted within six years from the date of delivery of the privately placed securities, except transfers taking effect in accordance with the law.
- The price of the privately placed securities is not lower than 80 percent of the reference price or theoretical price.
- No placee of the privately placed securities is an insider or related party of the company.
- In the last three years, the sum of the number of privately placed securities in respect of which an application for a letter of approval is made in accordance with this paragraph and the number of securities with equity characteristics that may exercise or be converted into common shares has not exceeded 20 percent of the total number of listed shares at the time of the application, except where, in the event of excess shares, the holder has undertaken through coordination that such shares would all be placed in central custody before listing. The withdrawal period and withdrawn number of shares placed in central custody are governed by the proviso in paragraph 4 of Article 10 mutatis mutandis.
- No material change in the scope of business as in Article 50-3, paragraph 1, subparagraph 11 of the Operating Rules of the TWSE has occurred since the listing date, except as caused by the special characteristics of the industry or other reasonable causes.
In the provisions regarding the ratio of profit before tax to year-end share capital in paragraph 3, subparagraphs 6 and 7, if the stock of a primary listed company has no par value or a par value per share other than NT$10, the calculation shall be of the ratio of profit before tax to the sum of the share capital plus capital surplus, additional paid-in capital.
Prior to the listing, all privately placed shares held by non-strategic investors, insiders, and related parties as referred to in paragraph 3, subparagraph 7 or 8, shall be placed in central custody with a central securities depository enterprise incorporated with the approval of the Competent Authority. One half of the shares placed in central custody may be withdrawn only after the end of a 6-month period starting from the date of commencement of listed trading; the remaining shares may be withdrawn in full only after the end of a 1-year period starting from the date of commencement of listed trading. The custodial agreement may not be rescinded during the custody period, and the shares in central custody may 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.
Where the Competent Authority has restricted the listed trading of securities issued by a primary listed company, privately placed securities of the company may not be listed until such restriction has been lifted, even if the period of restriction of transfer of the privately placed shares has elapsed.
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