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Article 1
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These Standards are prescribed in accordance with Article 61 of the Securities and Exchange Act.
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Article 2
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With respect to a common stock that has been listed on the stock exchange for a full 6 months, if the stock has a par value of NT$10 per share and the net worth per share of the stock is not less than par value, or if the stock has no par value or a par value other than NT$10 per share and the issuer has no accumulated deficit in the most recent fiscal year, the securities exchange shall publicly announce it as a stock eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis.
With respect to a common stock, other than an OTC managed stock or an emerging stock, that has been listed on the OTC market for a full 6 months, if the stock has a par value of NT$10 per share and the net worth per share of the stock is not less than par value, or if the stock has no par value or a par value other than NT$10 per share and the issuer has no accumulated deficit in the most recent fiscal year, and the issuer meets the following requirements, the OTC market shall publicly announce it as a stock eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis:
1. The issuer has been incorporated and registered for at least 3 years. If the issuer is a transferee company of a demerger from a listed company or an OTC company, the time of incorporation may be calculated from the date of establishment of the demerged division as shown in the financial data of the demerged company. If the issuer is an investment holding company or financial holding company, the time of incorporation may be calculated from the time of incorporation of the operating entity.
2. The issuer's paid in capital is NT$300 million or more. However, in the case of stock with no par value or a par value other than NT$10 per share, the issuer's shareholders equity shall be NT$600 million or more.
3. Profitability:
A. For stock with a par value of NT$10 per share, there shall be no accumulated deficit in the most recent fiscal year, and the issuer's operating income and income before tax, as reported in the individual or consolidated financial statements, shall account for 3 percent or more of the year-end paid-in capital. However, a company with paid-in capital of NT$600 million or more may be exempted from the above requirement regarding operating income and net income before tax.
B. In the case of a stock with no par value or a par value other than NT$10 per share, the issuer's operating income and income before tax, as reported in its individual or consolidated financial statements, shall account for 3 percent or more of the year-end shareholders equity.
For Taiwan depositary receipts that have been listed on an exchange for 6 months, if the foreign issuer did not post an accumulated deficit in either the CPA-audited and certified consolidated financial report for the most recent fiscal year or the CPA-reviewed half-year consolidated financial report (either report shall have been prepared in compliance with the laws and regulations of the issuer's home country), and if the number of units listed on the exchange is 60 million units or more, the securities exchange shall publicly announce the units as eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis.
If any of the following conditions exist with respect to the stock or Taiwan depositary receipts referred to in the preceding three paragraphs, approval may be denied for margin purchase and short sale thereof:
1. Share price is too volatile.
2. Equity ownership is overly concentrated.
3. Trading volume is excessively abnormal.
The specific standards and procedures required in the preceding four paragraphs shall be prescribed separately by securities exchanges and OTC markets and reported to the competent authority for approval.
Where the issuer of Taiwan Innovation Board listed stock that is eligible for margin purchase and short sale applies for reclassification?as an exchange listing or the issuer of OTC-listed stock that is eligible for margin purchase and short sale applies to switch to an exchange listing, unless equity ownership is overly concentrated, the stock shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 1 regarding the 6-month exchange listing requirement will not be applicable, nor will the provisions of paragraph 4, subparagraphs 1 and 3. The aforementioned procedures shall be drafted by the securities exchanges and reported to the competent authority for approval.
The provisions of the preceding paragraph also apply to stock that is switched to an exchange listing less than 6 months before this amendment enters into force.
When a company with an exchange (or OTC) listing is to be converted into a financial holding company in accordance with the Financial Holding Company Act, if the stock of a financial institution to be converted into the financial holding company are eligible for margin purchase and short sale, where the financial holding company thus created is an exchange-listed company, unless equity ownership is overly concentrated, its stock shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 1 regarding the 6-month exchange listing requirement will not be applicable, nor will the provisions of subparagraphs 1 and 3 of paragraph 4.
When a company with an exchange (or OTC) listing is to be converted into a financial holding company in accordance with the Financial Holding Company Act, if the stock of a financial institution to be converted into the financial holding company is eligible for margin purchase and short sale, where the financial holding company thus created is an OTC-listed company, unless equity ownership is overly concentrated, its stock shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 2 regarding the 6-month OTC listing requirement will not be applicable, nor will the provisions of subparagraphs 1 and 3, or paragraph 4, subparagraphs 1 and 3.
When a company with an exchange (or OTC) listing is to be converted into an investment holding company through a 100 percent share conversion in accordance with the Business Mergers and Acquisitions Act, if the stock of the company to be converted into the investment holding company is eligible for margin purchase and short sale, where the investment holding company thus created is an exchange-listed company, unless equity ownership is overly concentrated, its stock shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 1 regarding the 6-month exchange listing requirement will not be applicable, nor will the provisions of paragraph 4, subparagraphs 1 and 3.
When a company with an exchange (or OTC) listing is to be converted into an investment holding company through a 100 percent share conversion in accordance with the Business Mergers and Acquisitions Act, if the stock of the company to be converted into the investment holding company is eligible for margin purchase and short sale, where the investment holding company thus created is an OTC-listed company, unless equity ownership is overly concentrated, its stock shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 2 regarding the 6-month OTC listing requirement will not be applicable, nor will the provisions of subparagraphs 1 and 3, or paragraph 4, subparagraphs 1 and 3.
The procedures required in the preceding four paragraphs shall be prescribed separately by securities exchanges and OTC markets and reported to the competent authority for approval.
In the case of stock issued by an OTC listed company with no par value or a par value other than NT$10 per share, the shareholders equity computed in accordance with this article shall refer to equity attributable to owners of the parent as stated in the balance sheet.
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Article 3
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Where beneficial certificates have been exchange-listed (or OTC-listed) for a full 6 months, the securities exchange or OTC market shall publicly announce the certificates as eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis; provided, passive exchange-traded securities investment trust fund beneficial certificates ("passive ETF beneficial certificates") and active exchange-traded securities investment trust fund beneficial certificates ("active ETF beneficial certificates") issued by a securities investment trust enterprise (SITE), exchange-traded futures trust fund beneficial certificates ("futures ETF beneficial certificates") issued by a futures trust enterprise, and the beneficial certificates, shares, or investment units of offshore passive exchange-traded funds offered and sold in Taiwan pursuant to the Regulations Governing Offshore Funds by an offshore fund manager or its designated institution ("offshore passive ETF beneficial certificates") may be exempted from the 6-month exchange (or OTC) listing requirement.
With the exception of passive ETF beneficial certificates, active ETF beneficial certificates, futures ETF beneficial certificates, and offshore passive ETF beneficial certificates, the provisions in paragraphs 4 and 5 of the preceding article shall apply mutatis mutandis to beneficial certificates.
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Article 4
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If any of the following conditions exist with respect to stock or Taiwan depositary receipts eligible for margin purchase and short sale, a securities exchange or OTC market may publicly announce suspension of margin purchase and short sale transactions in such stock, or adjust the margin purchase leverage limit or short sale margin requirement within the scope prescribed by the competent authority and report same to the competent authority for recordation:
1. The trading method for the stock or Taiwan depositary receipts has been changed to require full delivery (in the case of those listed on either an exchange or OTC market), or to require pre-paid settlement (in the case of those listed on an OTC market).
2. Trading has been suspended (in the case of exchange-listed stock and Taiwan depositary receipts, and OTC-listed stock).
3. Delisting has taken place (in the case of exchange-listed stock and Taiwan depositary receipts, and OTC-listed stock).
4. A stock listed on the exchange or OTC market has a par value of NT$10 per share and the net worth per share is below par value, or has no par value or a par value other than NT$10 per share and the issuer has an accumulated deficit.
5. In either the CPA-audited and certified consolidated financial report for the most recent fiscal year or the CPA-reviewed half-year consolidated financial report (either report shall have been prepared in compliance with the laws and regulations of the issuer's home country), the issuer of foreign securities evidenced by Taiwan depositary receipts has posted an accumulated deficit.
6. Taiwan depositary receipts number less than 60 million exchange-listed units following a redemption.
7. There has been a major default on the exchange-listed stock or Taiwan depositary receipts, or OTC-listed stock, and the balance of margin purchases or short sales meets or exceeds a prescribed ratio.
8. The stock price is too volatile.
9. Equity ownership is overly concentrated.
10. Trading volume is excessively abnormal.
11. There is another situation that makes it unadvisable to continue margin purchase and short sale transactions.
Where margin purchase and short sale transactions are suspended or the margin purchase leverage limit or short sale margin requirement is adjusted in accordance with the provisions of the preceding paragraph, if the reason for suspension or adjustment no longer exists, the stock exchange or OTC market shall publicly announce reinstatement and report same to the competent authority for recordation.
The specific standards and procedures required in the preceding two paragraphs shall be prescribed separately by securities exchanges and OTC markets and reported to the competent authority for approval.
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Article 5
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If any of the following conditions exist with respect to beneficial certificates eligible for margin purchase and short sale, a securities exchange or OTC market may publicly announce suspension of margin purchase and short sale transactions in such certificates, or adjust the margin purchase leverage limit or short sale margin requirement within the scope prescribed by the competent authority, and report same to the competent authority for recordation:
1. Delisting has taken place.
2. Financial reports have not been punctually filed and publicly announced in accordance with requirements.
3. A situation set out in Article 96, paragraph 1 of the Securities Investment Trust and Consulting Act exists with respect to the securities investment trust enterprise managing the securities investment trust fund, or a situation set out in Article 38, paragraph 1 of the Regulations Governing Futures Trust Enterprises exists with respect to the futures trust enterprise managing the futures ETF.
4. The price is too volatile.
5. Beneficial ownership is overly concentrated.
6. Trading volume is excessively abnormal.
7. There is another situation that makes it unadvisable to continue margin purchase and short sale transactions.
Where margin purchase and short sale transactions are suspended or the margin purchase leverage limit or short sale margin requirement is adjusted in accordance with the provisions of the preceding paragraph, if the reason for suspension or adjustment no longer exists, the stock exchange or OTC market shall publicly announce reinstatement and report same to the competent authority for recordation.
The specific standards and procedures required in the preceding two paragraphs shall be prescribed separately by securities exchanges and OTC markets and reported to the competent authority for approval.
The provisions of subparagraphs 4 to 6 of paragraph 1 do not apply to passive ETF beneficial certificates, active ETF beneficial certificates, and futures ETF beneficial certificates. The provisions of subparagraphs 3 to 6 of paragraph 1 do not apply to offshore passive ETF beneficial certificates.
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Article 6
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When the balance of margin purchases or short sales in a given stock that is eligible for margin purchase and short sale transactions reaches a certain percentage limit of the total exchange-listed or OTC-listed shares of that stock as set forth by the competent authority, margin purchases and short sales shall be suspended. Margin purchases and short sales shall be reinstated when the balance falls back below the percentage as set forth by the competent authority.
In order to implement the provisions set out in the preceding paragraph, securities exchanges and OTC markets may conduct allocation and report same to the competent authority for recordation. When a securities finance enterprise or a securities firm handling margin purchases and short sales of securities conducts a margin purchase or short sale, the volume of the transaction may not exceed the volume of securities allocated by the securities exchange or OTC market for margin purchase and short sale.
The provisions of the preceding two paragraphs apply mutatis mutandis to beneficial certificates; provided, the calculation of the number of beneficial units shall be done on the basis of the total number of issued beneficial units as of the preceding business day for passive ETF beneficial certificates, active ETF beneficial certificates, and futures ETF beneficial certificates, and on the basis of the total number of beneficial units offered and sold in Taiwan as of the preceding business day for offshore passive ETF beneficial certificates.
The provisions of paragraphs 1 and 2 apply mutatis mutandis to Taiwan depositary receipts; provided, the calculation of the number of listed units of Taiwan depositary receipts shall be done on the basis of the total number of units as of the preceding business day after redemption.
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Article 7
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Securities finance enterprises, and securities firms that handle margin purchases and short sales of securities, shall submit data each afternoon on the daily balances of margin purchases and short sales in each type of securities to stock exchanges and OTC markets. The stock exchanges and OTC markets shall compile such information, publicly announce it before the opening of market on the next business day, and notify securities brokers to post the same at their places of business.
When margin purchase and short sale transactions are suspended or reinstated by a stock exchange or OTC market pursuant to Article 6 herein, the suspension or reinstatement shall be implemented on the day of public announcement placed by the method referred to in the preceding paragraph.
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Article 8
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These Standards shall enter into force from the date of issuance.
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