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Title:

Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings  CH

Amended Date: 2020.03.30 (Articles 8, 14, 21, 28-3, 28-12 amended,English version coming soon)
Current English version amended on 2018.07.09 
Categories: Primary Market > Review
   Chapter II The Listing of Domestic Securities
      Section 2 The Listing of Special Business Enterprises or Companies Having Special Type of Orga
Article 15    In addition to complying with the relevant provisions of these Rules, securities, financial and insurance enterprises, and enterprises exclusively engaged in futures commission merchant business, that apply for listing of their stock shall first obtain a letter of consent from the authority in charge of the enterprises concerned, before the TWSE will accept their applications. Provided, that if a financial enterprise or insurance enterprise applying for listing of its stock has previously obtained and provided such a letter before its stock began to be traded on the GTSM in accordance with Article 3 of the GreTai Securities Market Rules Governing Review of Securities Traded on the GTSM, it does not need to provide such letter again.
    Aside from complying with the relevant provisions of these Rules, a securities company applying for listing its stock shall have contemporaneously engaged in securities underwriting, buying and selling for its own account and such activities as commission agent or intermediary for at least 5 full fiscal years.
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Article 16    Where an issuing company other than a government-owned enterprise applies for the listing of its stock and, in the financial reports for the most recent 2 fiscal years, its operating revenue derived from construction business represents 20 percent or greater of its total operating revenue, or its gross profit derived from construction business represents 20 percent or greater of its gross profit, or its operating revenue or gross profit derived from construction business is more than the operating revenue or gross profit derived from other items of its business activities, it shall in addition to complying with the relevant provisions of these Rules, meet the following conditions:
  1. There shall have been 8 full fiscal years since its incorporation.
  2. The amount of its paid-in capital shall be NT$600 million or more at the time when it applies for listing.
  3. The total equity shown in the most recent financial report and in the financial report for the most recent fiscal year shall reach 30 percent or more of the total value of its assets.
  4. The combined net value of houses and land held for sale and investment property shown in the most recent financial report and for the most recent fiscal year shall not exceed 70 percent of its total equity. However, if the company has obtained the use license for less than one year, or the company has reclassified under investment property any construction project that it launched with respect to superficies it had obtained under an agreement stipulating that it may only be leased and not sold, or the lease-out rate of the investment property reaches 50 percent or higher, such portion need not be included in the calculation.
  5. Its profit before tax for each of the most recent 3 fiscal years shall be in positive figures, and it does not have accumulated deficit in the most recent 3 fiscal years.

  6. Where its profitability remains in compliance with the criteria for listing of its stock after the profit derived from each project as prescribed below is deducted according to the calculation of CPAs:
    1. Purchase or sale of completed or uncompleted construction projects by others (referring to those for which invested construction cost has reached 40 percent or more of total construction cost).
    2. Purchase or sale of bare-land or house units already built.
    3. Acquisition and subsequent sale of either land or house originally held by the opposite party/parties as co-contractor.
    4. Sale of house or land to related party.
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Article 17    Where an issuing company referred to in the immediately preceding article other than a government-owned enterprise, in the past 2 fiscal years, contracted with any construction company with an annual contract sum in excess of NT$200 million, or the contract sum did not exceed NT$200 million but the construction company is a related party of the issuing company, then in each of the said 2 fiscal years the following provisions shall have been complied with:
  1. The construction company must be a Class A construction firm; its financial statements and gross profit gained from each individual project in the most recent 2 fiscal years shall each have been jointly audited and attested by two CPAs of an accounting firm.
  2. The gross profit for each individual project undertaken by the issuing company and construction company in the most recent 2 fiscal years does not show abnormal circumstances.
  3. The contracting process, formation of the contract price, and payment terms have been evaluated by a professional institution as reasonable.
  4. The construction company did not in the most recent 2 years materially violate any relevant building and construction laws and regulations, nor did the construction company materially breach any construction contract with a development company in the most recent 2 years.
  5. There has been no unusual or abnormal fund transmission between the issuing company and the construction company.
  6. There does not exist between the issuing company and the construction company any of the events set forth in Article 9, paragraph 1, subparagraph 2 hereof.

     If the issuing company and the construction company are not related parties, and a complete internal control system has been established, and the bidding procedures and payment method for contracting meet trade practices, the application of the provisions in subparagraphs 1 to 3 of the preceding paragraph may be excluded.
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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 business 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 transaction in the future, it will be free from non-arms-length transaction.
  3. Its financial and business conditions and its rules and regulations above-mentioned shall not be materially abnormal as compared with those of other enterprises in the same industry.
  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 cost for procurement of products from or the operating revenue derived from selling products to 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 2 fiscal years, is less than 50 percent of its total cost for procurement of products or operating income; provided that this provision shall not apply to the procurement amount or operating revenue derived from the parent company or subsidiary or in cases of company demerger pursuant to the Company Act or Business Mergers and Acquisitions Act.
    Application of the provisions of subparagraph 5 of paragraph 1 may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
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.
  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 2 fiscal years. If, however, the applicant company is applying for listing pursuant to paragraph 2 or 4 of Article 4, Article 5, Article 6, or Article 6-1, or if the amount of its purchase/sale transactions with its parent company in the year of the application for listing and in the most recent fiscal year is less than 10 percent of its total amount of purchases/sales, it will not be subject to the above-stated profitability ratio.
  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.
  4. (deleted)
  5. The applicant company's operating revenue derived from its parent company in the fiscal year of the application for listing and in the most recent fiscal year shall not exceed 50 percent of its operating revenue; its principal raw materials or principal products or total amount of purchases [obtained from its parent company] during such periods shall not exceed 70 percent of its purchases. However, this restriction shall not apply where the cause is characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
  6. If the stock of the parent company is already traded on the TWSE (or the GTSM), 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 2 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.
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Article 20     An investment holding company applying for listing of its stock may apply only as a professional investment company and only with the purpose of controlling the business operations of other companies, and shall be approved for the listing of its stock if it meets the requirements of the following subparagraphs:
  1. Years of incorporation: Three full years have elapsed following registration of incorporation, or the years of actual operation of any of its held companies exceed three years.
  2. Equity: The net worth for the most recent fiscal year reaches NT$1 billion or more.
  3. Profitability: The ratio of profit before tax to net worth as stated on the financial report for each of the most recent 2 fiscal years reaches 3 percent or higher.
  4. Dispersion of share ownership: The standard of Article 4, subparagraph 4 is met.
  5. The company does not engage in any business other than investment.
  6. The company shall have two or more held companies, and the held companies may not be professional investment companies and may not hold shares of the applicant company.
  7. At least 70 percent of the net operating income in the financial reports shall come from the held companies.
  8. The sum total of the book value of its investment in the held companies shall equal 50 percent or more of each of its investments accounted for using equity method and net worth, as stated in the parent company only financial report.
  9. The company has not engaged in any borrowing or lending of funds with a non-financial institution.
  10. The ratio of total equity to total assets in the financial report for the most recent fiscal year shall reach one-third or more.
  11. In the event of an issuer listed in the food industry or whose income from catering business occupies at least 50% of its total operating revenue in the last fiscal year, at least one of the held companies that it holds shall comply with Article 4, paragraph 1, subparagraph 5.
     A held company shall mean any of the following:
  1. An invested company of which an investment holding company directly holds more than 50 percent of the issued voting shares or has made a capital contribution of more than 50 percent.
  2. An invested company of which an investment holding company through its subsidiaries indirectly holds more than 50 percent of the issued voting shares or has made a capital contribution of more than 50 percent.
  3. An invested company of which an investment holding company directly, and indirectly through its subsidiaries, holds more than 50 percent of the issued voting shares or has made a capital contribution of more than 50 percent.
  4. A company of which an investment holding company directly or indirectly elects or appoints more than half of the directors for the board of directors.
     If an investment holding company applying for listing of its stock has a net worth for the most recent fiscal year reaching NT$800 million or more, and its held company or companies contribute 50 percent of its total operating revenues, and the central competent authority for the relevant industry has provided an unequivocal opinion stating that such company or companies are technology enterprises or cultural and creative enterprises with market potential, it may be exempted from the application of paragraph 1, subparagraphs 1 and 3.
     If the held company is required to be a professional investment company because the investment holding company has invested via a third location, it may be exempted from application of the provision of paragraph 1, subparagraph 6 that a held company may not be a professional investment company.
     Notwithstanding that an investment holding company applying for the listing of its stock meets the listing criteria set forth in these Rules, the TWSE shall disagree to its listing if the circumstance in Article 9, paragraph 1, subparagraph 8 applies to any of its held companies, and the TWSE may disagree to its listing if any of the circumstances in Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, or 12 applies to any of its held companies and the TWSE deems the listing inappropriate.
     A held company more than 70 percent of whose shares are held by an investment holding company that is already domestically listed on the TWSE (or GTSM) may not apply for domestic TWSE listing.
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Article 20-1     A financial holding company applying for listing of its stock, shall be approved for the listing of its stock if it meets the requirements of the following subparagraphs:
  1. It has obtained a letter of approval for the TWSE listing application from the competent authority for the relevant industry.
  2. Years of Incorporation: Three full years have elapsed since registration of incorporation, or the years of actual operation of any of its subsidiaries exceed three years.
  3. Profitability: The ratio of profit before tax to net worth as stated on the financial report for most recent two fiscal years reaches 3 percent or higher.
  4. Dispersion of share ownership: The standard of Article 4, subparagraph 4 is met.
     Notwithstanding that a financial holding company applying for the listing of its stock meets the listing criteria set forth in these Rules, the TWSE shall disagree to its listing if the circumstance of Article 9, paragraph 1, subparagraph 8 applies to any of its subsidiaries, and the TWSE may disagree to its listing if any of the circumstances of Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, or 12 applies to any of its subsidiaries and the TWSE deems the listing inappropriate.
     A subsidiary more than 70 percent of whose shares are held by a financial holding company that is already domestically listed on the TWSE (or GTSM) may not apply for domestic TWSE listing.
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Article 20-2     An application by a venture capital company for the listing of its stock will be granted if said companymeets the conditions set forth in Article 4 and below:
  1. Its articles of incorporation states the company’s intent of sustainable operations.
  2. Capital: At the time it applies for listing, its paid-in capital is NT$2 billion or more and the number of shares of its publicly offered and issued common stock is 100 million or more.
  3. It does not engage in any business other than as stipulated by the Rules Governing Guidance to Venture Capital Enterprises.
  4. At the time it applies for listing, the number of shares it holds in any public company does not exceed 30 percent of the total issued voting shares of said company.
  5. At the time it applies for listing, the total investment it holds in any invested company does not exceed 20 percent of the total assets shown in the applicant’s current financial reports.
  6. Both at the time it applies for listing and as at the date of financial reports in the last two fiscal years, its total investment reaches 60 percent or more of itstotal assets.
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