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Title：

Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings  CH

Amended Date： 2024.03.11 (Articles 4, 28-1, 40 amended,English version coming soon)
Current English version amended on 2024.01.12 
Categories： Primary Market > Review
Article Content Chapter Content Search Article No. Search Legal Basis Subordinate Legislation Amended Article Attachment Legislative History Chinese

Title： Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings(2012.12.28)
Date： 
   Chapter I General Provisions
Article 1    These Rules are prescribed in accordance with Article 140 of the Securities and Exchange Act.
Article 2    For securities issued or supplementarily issued pursuant to the screening procedures of the Securities and Exchange Act, the issuer, applying with the Taiwan Stock Exchange Corporation (TWSE) for listing thereof in accordance with Article 139 of the Securities and Exchange Act, shall submit a relevant application for the listing of securities, specifying therein the particulars as required and attaching thereto the necessary supporting documents. The TWSE will examine the application in accordance with these Rules and the Procedures for Review of Securities Listings.
    In case the issuer and its securities underwriter have any of the following events, the TWSE will refuse to accept the due diligence report issued by the said underwriter, and will disagree to the listing of its securities:
  1. Where each of the issuer and its securities underwriter has issued a due diligence report in respect of the initial listing or trading on the over-the-counter market of each other's securities.
  2. Where there exists any of the events set forth in Article 26 of the Regulations Governing the Securities Firms.
  3. Where the issuer and its securities underwriter are enterprises within the same group.
    The application and the Procedures for Review of Securities Listings referred to in paragraph 1 hereof will be formulated by the TWSE, and will take effect after they have been approved by and recorded with the Competent Authority.
Article 2-1    Unless it is a state-owned enterprise, any issuer applying for listing of domestic securities shall first have applied for registration of its stock as emerging stock and have had it traded on the GTSM for not less than 6 months, and have completed relevant procedures for dematerialized registration of the issued securities, before the TWSE will accept its listing application for processing.
    The TWSE will accept for processing an initial application by a foreign issuer for a first-time listing of stock issued by the foreign issuer that is not listed on any overseas securities exchange or securities market ("a TWSE primary listing") only after that foreign issuer has first been under listing advisory guidance by the lead securities underwriter, or has applied for registration of its stock as emerging stock and had it traded on the GTSM, for not less than 6 months. Notwithstanding the foregoing, if there is any change of the lead securities underwriter during the period of listing advisory guidance, the period shall start to run again for a full 6 months, beginning with the date on which the new lead securities underwriter files for the listing advisory guidance.
    A foreign issuer whose stock or depositary receipts already are or have been listed on any major overseas securities exchange or securities market and that is applying for a TWSE primary listing of its issued stock may be exempted from the requirement in paragraph 2 that the foreign issuer shall first undergo listing advisory guidance by the lead securities underwriter or apply for registration of its stock as emerging stock and have it traded on the GTSM for not less than 6 months; provided that this paragraph shall not apply if the foreign issuer has been delisted from a major overseas securities exchange or securities market for over 6 months.
    A foreign issuer that has passed the review of stock or depositary receipt listing at any major overseas securities exchange or securities market and that, within the period of validity following the passing of such review, applies for a TWSE primary listing of its issued stock may apply on a case-by-case basis to the TAIFEX to reduce the time period specified in paragraph 2 for which the foreign issuer must first undergo listing advisory guidance by the lead securities underwriter or apply for registration of its stock as emerging stock and have it traded on the GTSM, provided that the time period may be not less than 2 months, and the lead securities underwriter or the lead recommending securities firm may not be changed within such period.
    When a foreign issuer applies to list its issued shares or depositary receipts, the shares or depositary receipts specified in the listing application shall be issued in uncertificated (dematerialized) form and registered with the central securities depository. This requirement does not apply, however, if the laws or regulations of its country of registration contain a provision to the contrary.
Article 2-2    An issuer applying for listing of securities shall engage a professional shareholder services agent to process shareholder services matters before the TWSE will accept its listing application for processing. A listed company that was listed at any time from 2 January 2013 onward shall engage a professional shareholder services agent to process shareholder services matters, and may not take those matters back into its own hands.
    The TWSE will accept for processing an application for a primary listing of shares, for a secondary listing of shares, or for sponsoring the issuance of Taiwan depositary receipts by a depositary institution, by a foreign issuer only after it has appointed a professional shareholder services agent within the Republic of China to handle shareholder services, and has also designated a litigious and non-litigious agent within the Republic of China.
    The professional shareholder services agent referred to in paragraph 2 shall have shareholder services personnel and equipment that comply with the provisions of the Regulations Governing Handling of Shareholder Services by Public Companies, and it shall not have any record in the past 3 fiscal years of having been given post-audit recommendations in writing by the Taiwan Depository and Clearing Corporation and failing to make improvements by the deadline.
Article 3    Where the listing of securities is approved, the TWSE shall enter into an Agreement for Listing with the entity which issues the securities and shall submit the Agreement for Listing to the Competent Authority for recordation, in accordance with Article 141 of the Securities and Exchange Act.
 
   Chapter II The Listing of Domestic Securities
      Section 1 The Listing of Stock
Article 4    Where an issuing company applying for the listing of its stock meets the criteria listed below, the TWSE will agree to list its stock:
  1. Duration of corporate existence: It shall have been incorporated and registered under the Company Act for at least 3 years at the time of the application for listing; provided, this restriction shall not apply to public (state-owned) enterprises or to privatized public enterprises.
  2. Amount of capital stock: The amount of its paid-in capital shall be NT$600 million or more at the time when it applies for listing.
  3. Profitability: The operating income and income before tax in its separate financial statements, or in its consolidated financial statements prepared in accordance with the Statement of Financial Accounting Standards No. 7, meet either of the following criteria, and it does not have any accumulated deficit in the final accounting for the most recent fiscal year. However, if it has prepared a consolidated financial statement, the following criteria are not applicable to the operating income stated in its separate financial statements:
    1. Each of the operating income and income before tax for the most recent 2 fiscal years represents 6 percent or greater of the share capital stated on the financial report for the annual final accounts, or the average operating income and income before tax for the most recent 2 fiscal years represent 6 percent or greater [of the amount of paid-in capital in its final accounts] and the profitability for the most recent fiscal year is greater than that for the immediately preceding fiscal year; or
    2. Each of the operating income and income before tax for the most recent 5 years represents 3 percent or greater of the share capital stated on the financial report for the annual final accounts.
  4. Dispersion of shareholdings: The number of registered shareholders shall be 1,000 or more. Excluding company insiders and any juristic persons in which such insiders hold more than 50 percent of the shares, the number of registered shareholders shall be at least 500, and the total number of shares they hold shall be 20 percent or greater of the total issued shares, or at least 10 million.
    For the profitability in the consolidated financial statements referred to in subparagraph 3 of the preceding paragraph, the influence of net profit (loss) of minority interest on it shall not be taken into account.    A state-owned enterprise applying for listing of its stock shall have its financial report for the most recent fiscal year audited and attested by a certified public accountant, and shall prepare it in the form of a 2-year comparative report. For other fiscal years if the stock was not yet publicly issued, the audit report issued by the auditing agency may be used instead.
Article 5    Where the central authority in charge of the enterprise concerned has issued an unequivocal opinion certifying that the issuing company applying for the listing of its stock is a technology-based enterprise and the said issuing company meets the criteria listed below, the TWSE will agree to list its stock:
  1. Its paid-in capital is NT$300 million or more at the time when it applies for listing.
  2. It has successfully developed a product or a technology with market potential, and the company has obtained an appraisal opinion from the central authority in charge of the enterprise concerned.
  3. It is recommended in writing by the securities underwriter.
  4. Its net worth in both its most recent financial report and in its financial report for the most recent fiscal year represents two-thirds or greater of the share capital stated on the financial report.
  5. The number of registered shareholders shall be 1,000 or more. Excluding company insiders and any juristic persons in which such insiders hold more than 50 percent of the shares, the number of registered shareholders shall be at least 500.
Article 6    Where the issuing company applying for the listing of its stock is an important enterprise involved in national economic reconstruction projects which has been recognized and certified in writing by the authority in charge of the enterprise concerned and meets the following requirements, the TWSE will agree to list its stock:
  1. It is incorporated under the encouragement of the government, and 50 percent or greater of the total number of its issued shares as of the date of its application is held jointly by the Central Government or by the local autonomy organization(s) at the level of province (or municipality under direct jurisdiction of Executive Yuan) designated by the Central Government and the juristic person(s) with 50 percent or greater of its capital fund is contributed by the Central Government or the local autonomy organization(s) designated by the Central Government.
  2. Its paid-in capital is NT$1 billion or more at the time when it applies for listing.
  3. The dispersion of shareholdings meets the criteria set forth in subparagraph 4, Article 4 of these Rules.
Article 6-1    Where the issuing company applying for the listing of its stock is a private enterprise participating in major national public construction projects under encouragement of the government, where it has acquired the concession agreement for investment, construction, and operation approved by the Central Government, municipality under direct jurisdiction of the Executive Yuan, and the local autonomy organization(s) or the juristic person(s) with 50 percent or greater of its capital fund contributed by the Central Government, municipality under direct jurisdiction of Executive Yuan, or the local autonomy organization(s) and the certification issued by the said agency(ies), and where it meets the following requirements, the TWSE will agree to list its stock:
  1. The company is newly established for procurement of the concession agreement and its business items have been approved by the central authority in charge of the enterprise concerned.
  2. Its paid in capital is NT$5 billion or more at the time when it applies for listing.
  3. The total cost expected to be injected in the construction project at the time when the concession agreement is procured is NT$20 billion or more.
  4. The remaining term of the concession agreement is 20 years or more at the time when it applies for listing.
  5. Its directors, supervisors, shareholders holding 5 percent or more of its total issued shares, or its shareholders or operators who make equity investment in the form of technical know-how and hold 0.5 percent or more of its total issued shares or 100,000 shares or more shall have the technical capability, financial means, and other necessary abilities as required for the completion of the concession agreement, and a certification issued by the agency approving the concession agreement has been obtained.
  6. The dispersion of shareholding meets the criteria set forth in subparagraph 4, Article 4 of these Rules.
Article 7    The fact that the applicant company meets the criteria set forth in Article 4, paragraph 1, subparagraph 3 and Article 5, subparagraph 4 of these Rules shall be substantiated by the financial statements which have been duly audited and certified or reviewed by two or more certified public accountants of an accounting firm; provided that for a stated-owned enterprise, the financial statements (in the form of a 2-year comparison table) for the most recent year shall be audited and certified by certified public accountants, and if in the other year, the securities have not been publicly issued, the financial statements audited by the auditing agency may be used instead.
    The amount of capital referred to in Article 4, paragraph 1, subparagraph 2, Article 5, subparagraph 1, Article 6, subparagraph 2, and Article 6-1, subparagraph 2, of these Rules shall be the amount shown on the certifying documents following registration (or amendment registration). However shares of privately placed securities that have not been publicly issued shall not be counted in the calculation of the aforesaid amount of capital.
Article 8    Where an issuing company merely applies with the TWSE for listing its common stock or any type(s) of preferred stock, the amount of paid-in capital required under Articles 4, 5 and 6 hereof shall be calculated on the basis of the total par value of all shares to be listed. In respect of the dispersion of shareholdings, the number of registered shareholders and the ratio between the number of shares held by them and the total number of issued shares shall be computed and determined in accordance with the respective types of the stock to be listed.
    Where an issuing company applies for listing its common stock along with any type(s) of preferred stock, the total amount of the par value of the common stock to be listed shall be NT$600 million or more, and that of any type of preferred stock to be listed shall be NT$300 million or more. Each type of the stock to be listed shall meet the criteria governing the dispersion of shareholding.
    With respect to the criteria governing the dispersion of shareholding for the listing of any type(s) of preferred stock under the preceding two paragraphs, the requirement of 500 or more registered shareholders shall be met, and the combined total number of shares held by all the registered shareholders, excluding company insiders and any juristic persons in which such insiders hold more than 50 percent of the shares, shall account for 20 percent or more of the total issued shares of each type of preferred stock or be at least 10 million shares.
Article 9    Notwithstanding the fact that an issuing company applying for the listing of its stock meets the listing criteria set forth in these Rules, the TWSE may disagree to its listing if the issuing company has any of the events listed below, except for any of those in subparagraphs 8, 9, or 10 under which the TWSE shall disagree to its listing, and is deemed by the TWSE to be inappropriate for listing:
  1. It has any of the events set forth in Article 156, paragraph 1, subparagraphs 1 and 2 of the Securities and Exchange Act, or has made misrepresentation or false statement or conducted unlawful activities that may affect the price of its securities after listing thereof, and will cause fear that the market order may be affected or the public interests may be harmed.
  2. Its financial or business affairs are not independent from other person(s).
  3. It has had any material labor dispute or environmental pollution sufficient to affect its normal financial and business operations, and has not made improvement.
  4. It has been discovered any material non-arms-length transaction and has not made improvement.
  5. After the capital increase through a new share issue which has been effected or is being effected in the year in which it applies for listing is included in the amount of paid-in capital in its final account for the respective year, it does not meet the listing criteria.
  6. It has failed to effectively implement its written accounting system, internal control system, or internal audit system, or has failed to prepare financial reports in accordance with relevant laws and regulations and generally accepted accounting principles, and the event of this failure is considered as material.
  7. There has been serious deterioration in its business operation.
  8. Where the applicant company conducted any activities in violation of the principle of good faith in the most recent 5 years, or where its directors, supervisors, general manager or de facto responsible person violated the same principle in the most recent 3 years.
  9. If an applicant company has less than five members on its board of directors, or less than two independent directors; or less than three supervisors; or if any of its board of directors or supervisors are unable to independently exercise their functions; or if it has not appointed the remuneration committee pursuant to Article 14-6 of the Securities and Exchange Act and related provisions. However, if pursuant to Article 14-4 of the Securities and Exchange Act an audit committee has been established in lieu of supervisors, the requirements of this subparagraph regarding supervisors shall not apply. Additionally, the elected independent directors must be persons that are not juristic persons or representatives thereof under Article 27 of the Company Act, and at least one of them must be a professional in accounting or finance.
  10. Where the applicant company has been registered for trading as an emerging stock on the GTSM in the fiscal year of the listing application and the most recent fiscal year thereto, and there has been, from the GTSM registration date onward, any trading of stock issued by the applicant company by any incumbent director, supervisor, or shareholder holding 10 percent or greater of its total issued shares other than on the emerging stock market; provided, this restriction shall not apply where such trading is for purposes of underwriting under Article 11 of these Rules or for other legitimate reason.
  11. Where the applicant company is the existing or newly established company accepting transfer of business or assets due to a demerger of a TWSE (or GTSM) listed company, and transfers of equity conducted by the TWSE (or GTSM) listed company in the most recent 3 years for purposes of reducing its shareholding ratio in the applicant company have damaged shareholders' equity.
  12. Where the listing is considered by the TWSE as inappropriate due to its scope of business, nature or special circumstances.
    Subparagraph 2 of the immediately preceding paragraph shall not apply to companies applying for listing which are government-owned enterprises.    The ending date of the applicable periods referred to in various subparagraphs of paragraph 1 of this Article shall be the day immediately before the date on which the Agreement for Listing takes effect.
Article 10    An application for initial listing of stock filed by an issuing company shall not be approved unless and until shares representing all of the number of shares held by each of the following persons of the issuing company specified in the application for listing (with the total number of such shares being not less than the ratio specified in paragraph 2 of this Article), less those offered for public sale, have been placed in central custody with a central securities depository enterprise incorporated with the approval of the Competent Authority; provided however, that if the number of shares represented by shares placed in central custody pursuant to the above is less than the ratio specifies in paragraph 2 of this Article, the shortage shall be made up by other shareholders:
  1. Where the application for listing is filed in accordance with the provisions of Article 4 or Article 6 of these Rules, its directors, supervisors and the shareholders holding 10 percent or greater of the total number of issued shares of the issuing company.
  2. Where the application for listing is filed in accordance with the provisions of Article 5 of these Rules or where the applicant is an information software enterprise, its directors, supervisors, shareholders holding 5 percent or greater of the total number of issued shares, and/or shareholders whose equity investment is made in the form of patent rights or technical know-how, and who are working for the issuing company and hold 0.5 percent or greater of the total number of shares or 100,000 or more shares as of the date on which the application for listing is filed. However, this restriction shall not apply where shareholding of a recommending securities firm during the period of registration as emerging stock exceeds 5 percent of the total issued shares of said issuing company as a result of subscription or trading of operating securities during the emerging stock trading period.
    The total number of shares with respect to the shares to be placed in central custody by the issuing company under the preceding paragraph refers to the aggregate sum of common shares that have already been publicly offered and issued, as stated on the listing application documents,; the total ratio of shares to be placed in central custody by the issuing company shall be calculated as set forth below:
  1. Where the total number of shares is 30 million or less, shares representing 25 percent thereof shall be placed in central custody.
  2. Where the total number of shares is more than 30 million but 100 million or less, shares representing 20 percent of the portion of shares in excess of 30 million shares shall be placed in central custody in addition to those required under the preceding item.
  3. Where the total number of shares is more than 100 million but 200 million or less, shares representing 10 percent of the portion of shares in excess of 100 million shall be placed in central custody in addition to those required under the preceding item.
  4. Where the total number of shares is more than 200 million, shares representing 5 percent of the portion of shares in excess of 200 million shall be placed in central custody in addition to those required under the preceding item.
    The remaining shares after deducting those required for the public offering, as referred to in paragraph 1, include the following:
  1. From the date of application for initial listing to the listing date, all new shares obtained through capital increase for which amendment registration has been completed with the Ministry of Economic Affairs, as well as any shares that have come to be held for any other reason; for any shares that have not yet been obtained by the listing date, an undertaking shall be made to place the shares in central custody after obtaining them.
  2. From among the old shares provided by directors and supervisors of the issuer for an overallotment (greenshoe) option for the securities underwriter, any shares that were not actually sold in exercise of the overallotment option and that have been returned by the securities underwriter.

    One half of the shares placed in central custody by directors, supervisors and shareholders pursuant to the provisions of paragraph 1 of this Article may be withdrawn only after the end of a 6-month period starting from the listing date thereof; the remaining shares may be withdrawn in full only after the end of a one-year period starting from the listing date thereof.
    For an issuing company that applies for listing under the provisions of Article 4, where the total number of its shares required to be placed in central custody is assessed to exceed 50 percent of the issued shares of the issuing company, and the issuing company has paid-in capital of at least NT$30 billion, if the portion of the number of shares required to be placed in central custody exceeding the above-stated 50 percent of issued shares has been pledged to a financial institution by the director, supervisor, or shareholder of the issuing company who holds the shares for purposes of guaranteeing financing for the company or for him/herself, evidentiary documents furnished by the financial institution may be substituted for shares required to be placed in central custody; provided, if the pledge is released during the custody period, the director, supervisor, or major shareholder shall deposit the same amount of shares into central custody; or, if the subject of the pledge is disposed by the financial institution, the issuing company shall contact other directors, supervisors, or major shareholders to deposit the same amount of shares into central custody.
    Directors, supervisors, and shareholders shall not rescind the custodial agreement during the custody period. Shares and certificates in central custody shall not be transferred or pledged. The validity of central custody shall not be affected by a change of the identity of the holders of shares in central custody
    The provisions of paragraph 1 of this Article shall not apply to directors, supervisors and shareholders of government authorities, government-owned enterprises, or which have obtained an approval from the authority in charge of the enterprise concerned for the sale of the shares held by them and have been determined to be inappropriate to place such shares in central custody.    The total ratio of shares to be placed in central custody as specified in paragraph 2 of this Article shall not apply to government-owned enterprises.
Article 10-1    An application for initial listing of stock filed by an issuing company in accordance with Article 6-1 shall not be approved unless and until its directors, supervisors, shareholders holding 3 percent or more of the total issued shares, and the shareholders whose equity investment is made in the form of technical know-how and who hold 0.5 percent or more of the total number of issued shares or 100,000 shares or more have placed all of their shares specified in the application for listing, less the shares required for public offering, and in total not less than the total ratio calculated by the method enumerated below, with a central securities depository enterprise incorporated with the approval of the Competent Authority; provided however, that if the total number of shares held by directors and supervisors is less than the total number of shares held by them at the time when they were elected as directors and supervisors, then the total number of shares at the time when they were elected shall be the basis for counting the number of shares under this Article. If the number of shares represented by shares placed in custody pursuant to the above is less than the total ratio of shares required to be placed in central custody, the shortage shall be made up by other shareholders:
  1. If the total number of shares intended for listing is one billion shares or less, 50 percent of the total number of shares shall be placed in custody.
  2. If the total number of shares intended for listing exceeds one billion shares but not three billion shares, in addition to complying with the preceding subparagraph, 40 percent of the total number of shares shall be placed in custody for the portion exceeding one billion shares.
  3. If the total number of shares intended for listing exceeds three billion shares but not five billion shares, in addition to complying with the preceding subparagraph, 30 percent of the total number of shares shall be placed in custody for the portion exceeding three billion shares.
  4. If the total number of shares intended for listing exceeds five billion shares but not seven billion shares, in addition to complying with the preceding subparagraph, 20 percent of the total number of shares shall be placed in custody for the portion exceeding five billion shares.
  5. If the total number of shares intended for listing exceeds seven billion shares, in addition to complying with the preceding subparagraph, 10 percent of the total number of shares shall be placed in custody for the portion exceeding seven billion shares.

    When calculating the percentage of the "total number of shares intended for listing" that shall be placed in central custody in accordance with the preceding paragraph, the total number of shares shall be counted on the basis of the total shares of common stock that have been issued by the issuing company; shares of preferred stock and shares subscribable or convertible through corporate bonds with warrants and convertible corporate bonds may be exempted from inclusion in the calculation; furthermore, the stocks placed in central custody shall be limited to publicly offered and issued common stock certificates.
    Among the shares placed in custody under paragraph 1, one-sixth of the portion thereof may be withdrawn only after the end of 3 full years from the listing date thereof; thereafter, one-sixth thereof may be withdrawn once every 6 months. If after the end of the said period, the project constructed by the company has not been fully completed and the operation has not commenced, the custody period may be extended until the project is fully completed and the operation commences; provided, however, that if partial operation has commenced before the project is fully completed, the custody period shall be extended until the company's annual financial report shows an operating income and income before tax. The custody agreement shall not be terminated during the custody period. Shares and certificates in custody shall not be transferred or pledged. The validity of custody shall not be affected by any change of the identity of the holders of shares in custody.
    At the time of applying for listing, the issuer shall undertake that, during the period of central custody of the stock, a shareholder that has already placed stock in central custody in accordance with paragraph 1 shall also carry out central custody placement for any shares of common stock that the shareholder may subsequently obtain through subscription or conversion of preferred shares or corporate bonds, according to the total ratio required to be placed in custody as calculated under paragraph 1 at the time of the listing application. The provisions of paragraph 3 shall apply mutatis mutandis to the time periods for custody and withdrawal thereof.    The provisions of paragraph 1 shall not apply where, during the period in which an issuing company applying for initial listing of its stock is registered as an emerging stock company, shareholding of its recommending securities firm exceeds 3 percent of the total issued shares of said issuing company as a result of subscription or trading of operating securities during the emerging stock trading period.
Article 10-2    Where a company is applying for listing and its stock is already listed and traded on the GreTai Securities Market in accordance with Article 3 of the GreTai Securities Market Rules Governing Review of Securities Traded on the GTSM, central custody of shares shall be made as set forth below, except that the provision of paragraph 2 of Article 10 in relation to the total ratio of shares does not apply:
  1. If the company makes the listing application before the end of the central custody period provided in Article 3 of the Provisions Relating to Article 3, paragraph 1, subparagraph 4 of the GreTai Securities Market Rules Governing Review of Securities Traded on the GTSM, personnel of the company that fall within the scope of Article 10 or Article 10-1 hereof at the time of the listing application shall place their shares in central custody in accordance with the provisions of those articles, except that those personnel who have placed their shares in central custody at the time when the company applied for GTSM listing shall keep their shares in central custody until the end of the original central custody period required for the GTSM listing.
  2. If the company makes the listing application after the end of the central custody period provided in Article 3 of the Provisions Relating to Article 3, paragraph 1, subparagraph 4 of the GreTai Securities Market Rules Governing Review of Securities Traded on the GTSM; unless the TWSE deems necessary, personnel that meet the requirements of Article 10 or Article 10-1 of these Rules at the time of its application for listing may be exempt from the requirement to place their shares in centralized custody.
    If the applicant company under the preceding paragraph is an investment holding company or a financial holding company, it shall comply with the TWSE's Rules for the Review of Stock Listing Applications by Investment Holding Companies or Rules for the Review of Stock Listing Applications by Financial Holding Companies, and, in addition, the provisions of the preceding paragraph shall apply mutatis mutandis with respect to the central custody of its stock.
Article 11    Where an issuing company applies for initial listing of its common stock or any type(s) of preferred stock it shall allocate a percentage, as specified by the TWSE, of the total number of shares as stated in its listing application documents and after deducting the number of shares to be retained for subscription by employees as specified by laws and regulations in connection with the Company Act, retain a securities underwriter to offer the balance of such allocated shares in full for sale to the public before the shares are listed, by means of a cash capital increase through a new share issue in accordance with the provisions of Article 71, paragraph 1, of the Securities and Exchange Act concerning underwriting of securities on a firm commitment basis. Provided, that a state-owned enterprise or an applicant under Article 6 or Article 6-1 may carry out underwriting with stock already publicly offered and issued by the company.
    The total number of shares to be allocated by the issuing company for public sale under the preceding paragraph shall be calculated by the method specified in Article 10, paragraph 2, and shares added during the period from the listing application date until the listing date shall be included in the calculation; provided, shares allocated for public sale shall be confined to shares of publicly offered and issued common stock.
    The requirements of paragraph 1 regarding a percentage of shares to be allocated shall not apply to a company applying for TWSE listing if the company's shares are already listed for trading on the GTSM in accordance with Article 3 of the GreTai Securities Market Rules Governing Review of Securities Traded on the GTSM and the company, because of non-compliance with the equity ownership dispersion standards in these Rules, must retain a securities underwriter to conduct a pre-listing public sale of shares to deal with the amount of the shortfall in equity ownership dispersion. However, if the amount of the shortfall is less than 2 million shares or 1 percent of paid-in capital, the company may be exempted from the public sale requirement, as long as it achieves compliance with equity ownership dispersion standards before its shares are listed on the central exchange for trading.
Article 12    An issuing company applying for the listing of its stock shall, after its Agreement for Listing has taken effect, offer its stock to the public in accordance with the provisions of the preceding article. In case the stock applied for listing have not been listed within 3 months after the date of the aforesaid notice given by the TWSE, the TWSE shall after cancel the said Agreement for Listing, and report to the Competent Authority for recordation. However, if an application for extension is filed by the issuing company with adequate cause, the said deadline may be extended for 3 additional months after such application has been approved by the TWSE, provided that such extension shall be limited to one only, and the extension shall be reported to the Competent Authority for Recordation.
Article 12-1    An issuing company 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 of the Securities and Exchange Act. If, once the period of restriction of transfer has elapsed, the company intends to apply for listed trading of the securities, it may file such application only after first completing public issuance examination and approval procedures with the Competent Authority.
    Securities that are privately placed by a 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 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, completing issuance examination and approval procedures with the Competent Authority. However, it may be exempted from the requirement of carrying out public offering prior to listing under Article 11.
    When applying to the TWSE for a letter of approval under the preceding paragraph, a listed company shall meet the standards in each of the following subparagraphs:
  1. The financial reports for the most recent period and the most recent fiscal year show an absence of accumulated deficit and a positive net worth.
  2. Each of the operating income and income before tax for the most recent 2 fiscal years represents 4 percent or greater of the amount of paid-in capital in its final accounts, or the average operating income and income before tax for the most recent 2 fiscal years represent 4 percent or greater [of the amount of paid-in capital in its final accounts] and the profitability for the most recent fiscal year is greater than that for the immediately preceding fiscal year. However, if the company has prepared a consolidated financial statement, the operating income stated in its separate financial statements may be exempted from this provision.
  3. A certified public accountant has audited the financial reports for the most recent 2 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.
  4. None of the events set out in Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, 8, or 12 is present.
  5. The total amount of registered shares held by the directors and supervisors as a whole is higher than the share ownership ratio prescribed by the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies.
  6. 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.
  7. For an applicant company that had net profit 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 operating income and income before tax respectively to year-end paid-in 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:
    1. 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 any non-insider(s) or non related party(ies) of the applicant company.
    2. There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Securities 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 any non-insider(s) or non related party(ies) of the applicant company.
  8. For an applicant company that had net profit 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 operating income and income before tax respectively to year-end paid-in 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:
    1. 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 any insider(s) or related party(ies) of the applicant company.
    2. The private placement did not introduce strategic investors.
    3. There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Securities 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 any insider(s) or related party(ies) of the applicant company.
    4. The conducting of the private placement of securities was not done in accordance with the Directions for Public Companies Conducting Private Placements of Securities ("the Directions for Private Placements"), where the circumstances were serious.
  9. 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 ratio of operating income and income before tax respectively to year-end paid-in capital for the most recent fiscal year shall be 6 percent or higher:
    1. 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.
    2. The private placement of securities is not carried out in accordance with the Directions for Private Placements, and the circumstances are serious.
  10. Others consistent with the provisions of the Competent Authority.

    Prior to the listing, all privately placed shares held by non-strategic investors, insiders, and related parties as referred to in subparagraph 8 or 9 of the preceding paragraph, 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 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.
Article 13    In case an issuing company whose stock has been de-listed and is traded on the over-the-counter market as a managed stock files an application again for the listing of its stock, it will be handled in accordance with the conditions for listing as set out in these Rules.
Article 14    Where a listed company issues new shares that are of the same type of stocks as those which has already been listed and applies for listing the new shares, such new shares may be listed in accordance with the provisions of Article 139, paragraph 2 of the Securities and Exchange Act, and any certificates carrying right to convert bonds into stock issued by the listed company may also be listed on the TWSE in accordance with the said provisions of the Securities and Exchange Act.
    Where a 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 only if the total par value of the shares under application for listing is NT$300 million or more and the company offers the shares for sale to the public before listing in accordance with Article 11, paragraph 1 and complies with the shareholding dispersion standards in Article 8, paragraph 3 of these Rules. Provided, the TWSE may disagree to the listing in any of the following events:
  1. Its income before tax for the most recent 2 years is in a negative figure.
  2. At the time of approving the issuance of new shares, the Competent Authority deemed it inappropriate to offer the new shares to the public at market price, and the causes therefor have not been extinguished.
  3. The most recent application for public offering and issuance of securities was returned or disapproved by the Competent Authority, and the causes therefor were material and have not been improved.
  4. The securities previously issued by the company were restricted from listing for causes under Article 156, paragraph 1 of the Securities and Exchange Act, and such causes have not be extinguished, or any event under Article 156, paragraph 1 of the Securities and Exchange Act has occurred.
  5. There exists other events that are deemed by the TWSE as inappropriate for listing.

    A 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 the preceding paragraph; however, the shareholding dispersion standards in Article 8, paragraph 3 of these Rules shall not apply.    A listed company shall promptly report to the TWSE, by submitting a Listed Securities Report Form, any common shares created through the exercise of conversion rights or subscription rights under any preferred shares with warrants, convertible preferred shares, corporate bonds with warrants, convertible corporate bonds, and detached company warrants offered and issued by it, and may be exempted from the requirement of public offering under Article 11. Provided, if such offered and issued preferred shares are prohibited from listing under the proviso to paragraph 2 of this Article, common shares created through the exercise of conversion rights or subscription rights thereunder shall also be prohibited from listing.
 
      Section 2 The Listing of Special Business Enterprises or Companies Having Special Type of Organization
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.
Article 16    Where an issuing company other than a government-owned enterprise applies for the listing of its stock and, in any of the most recent 2 fiscal years, its operating income derived from construction business represents 20 percent or greater of its total operating income, or its gross profit derived from construction business represents 20 percent or greater of its gross profit, or its operating income or gross profit derived from construction business is more than the operating income 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 net worth before distribution of earnings shown in the most recent financial report and for the most recent fiscal year shall exceed one-third of the total value of its assets.
  4. The combined value of house units and land to be sold and leasing assets (minus net worth of accumulated depreciation) shown in the most recent financial report and for the most recent fiscal year shall not exceed 70 percent of its net worth. However, if the company has obtained the use license for less than one year, or the company has reclassified under leasing assets 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 leasing assets reaches 50 percent or higher, such portion need not be included in the calculation.
  5. Its operating income and income 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 all income accounts are accounted based on the percentage completion method, the full completion method shall be adopted; where a portion of income accounts are accounted based on the percentage completion method, the full completion method and the percentage completion method, as the case may be, shall be adopted. In case the full completion method is used in declaring the income accounts, the profit and loss statements for the most recent 3 fiscal years shall have been prepared based on the percentage completion method and shall have been reviewed by certified public accountants and evaluated by the securities underwriter by comparing with the original profit and loss statements; and both of the auditor's report and the underwriter's evaluation report confirm that its profitability meets the listing criteria.
  7. 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 certified public accountants:
    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.
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 certified by two certified public accountants 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 3 hereof.
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 may disagree to its listing if the listing of its stock is deemed to be inappropriate by the TWSE, 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 income derived from selling products to other companies within the same group enterprise in the fiscal year in which the application for listing is filed 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 income 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 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 may disagree to the listing if the listing of its stock is deemed to be inappropriate by the TWSE, 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 certified public accountant 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 shareholders' equity shall be NT$1 billion or more in the most recent fiscal year and the operating income and income before tax shall each represent 3 percent or greater of the total amount of shareholders' equity in each of the most recent 2 fiscal years; provided, if the applicant company is applying for listing pursuant to Article 5, Article 6, or Article 6-1, or if the amount of its purchase/sale transactions with its parent company in the fiscal 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 its parent company, affiliated companies and its directors, supervisors, representatives and shareholders who hold 10 percent or greater of the total number of its shares and its related parties 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 the applicant company meets the requirements of both of the following subparagraphs:
    1. It has established an audit committee or has independent directors numbering more than one-half of the total number of directors.
    2. 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.
  4. The applicant company shall have at least three independent directors.
  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 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.
Article 20    Guidelines for examination of applications for listing by investment and holding companies, financial holding companies, or any other company of any specific type of organization not covered in this Section will be separately prescribed by the TWSE.
 
      Section 3 The Listing of Other Securities
Article 21    Stock warrant certificates and certificates of entitlement to new shares issued by a listed company may be listed on the TWSE only after a listing application with the TWSE is submitted within 15 days after the filing for effective registration of a capital increase with the Competent Authority; its certificates of payment for shares may be listed on the TWSE only after a listing application for such certificates is submitted to the TWSE within 15 days after the filing for effective registration of the capital increase with the Competent Authority and the share subscription proceeds are collected in full.
    In the case where a 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 shareholding 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 Article 14, paragraph 2 or that otherwise fall under the circumstance specified in the proviso of the same paragraph of the same article, the detached company warrants may not be listed:
  1. 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.
  2. 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.
Article 22    The TWSE will, upon receiving a letter of notification from the Competent Authority, publicly announce the listing of bonds issued by government. Where an issuer applies for listing financial bonds that have been approved for issuance and for listing corporate bonds issued by a listed company, the TWSE may agree to its listing.
Article 23    Where a securities investment trust enterprise applies for the listing of a domestic closed-end mutual fund raised by the securities investment trust enterprise which complies with the following requirements and has been approved for public offering, the TWSE may agree to the listing of its beneficiary certificates:
  1. The total issuing amount of the mutual fund is NT$2 billion or more.
  2. The number of holders of such mutual fund holding beneficial units of NT$1 million or less shall not be less than 1,000, and the total amount of all beneficial units held by such holders shall not be less than NT$400 million.

    Where a domestic securities investment trust enterprise applies for the listing of an exchange traded fund (ETF) raised by it which has been publicly offered and established by it with the approval from the Competent Authority, and which has a minimum net asset value of NT$200 million, the TWSE may agree to the listing of its beneficiary certificates, unless otherwise provided by the TWSE.    With respect to the ETF that the domestic SITE referred to in the preceding paragraph plans to issue, unless the index that the ETF tracks, simulates, or replicates is an index compiled by the TWSE or by the TWSE in cooperation with a foreign index compilation company or the ETF is a linked ETF as set forth in Article 37, paragraph 4 of the Regulations Governing Securities Investment Trust Funds, before applying to the Competent Authority for approval to publicly issue the ETF, the SITE shall complete an application and apply to the TWSE for a letter of approval of eligibility to issue an ETF. Directions governing applications for such approval letters shall be prescribed by the TWSE.
Article 23-1    Where a trustee institution or special purpose company applies for the listing of beneficiary securities or asset-backed securities offered by it that have been approved for public issuance and meet all of the below-listed conditions, the TWSE may agree to the listing of such securities:
  1. The total issue amount of the beneficiary securities or asset-backed securities under application for listing is NT$500 million or more.
  2. The date of maturity of the securities is at least one year from the date of listing for trading.
  3. The number of beneficiaries or holders is not less than five persons, and the total amount of any individual holdings of such beneficiary securities or asset-backed securities shall not exceed 20 percent of the total issue amount. Provided, this 20 percent holding restriction shall not apply where the holder is an independent institutional investor.
  4. The limit on par value is NT$10,000.
    The term “independent institutional investor”in the preceding paragraph means a juristic person or institution under Article 13, paragraph 1, subparagraph 1 of the Real Estate Securitization Act or a fund under Article 13, paragraph 1, subparagraph 2 of the same Act; and does not mean an originator as referred to in the Financial Asset Securitization Act, or an interested party thereof, or an affiliated enterprise as referred to in the Company Act, or a related party or substantially related party as defined in Statement of Financial Accounting Standards No. 6.
Article 23-2    Where approved real estate investment trust beneficiary securities offered and issued by a domestic closed-end real estate investment trust fund established by a trustee institution meet all the below-listed conditions, and the offering trustee institution applies for listing, the TWSE may agree to the listing thereof:
  1. The total issue amount is NT$3 billion or more.
  2. The duration of the contract must be one year or more from the date of listing for trading.
  3. The number of beneficiaries holding a total amount of NT$1 million or less of the beneficial units shall not be less than 500, and the total amount of all beneficial units held by such beneficiaries shall not be less than NT$200 million.
  4. The total price amount of the beneficial units held by any five beneficiaries shall not exceed 50 percent of the total issue amount of the beneficiary securities. Provided, this restriction shall not apply where the holder is an independent institutional investor.
  5. Each beneficiary security shall represent 1,000 beneficial units, and have a par value limited to NT$10,000.
  6. The owner of the real estate or rights owner of rights related to the real estate invested in by the fund, in accordance with Article 6, paragraph 1, subparagraph 5 of the Regulations Governing the Offering or Private Placement of Real Estate Investment Trust or Real Estate Asset Trust Beneficiary Securities by Trustee Institutions, shall place in full the beneficiary securities it holds from the assignment of the real estate or real estate related rights in central custody, and shall undertake that it shall neither release the beneficiary securities from custody, nor transfer or pledge the beneficiary securities or certificates under custody, before one year has elapsed from the time it comes to hold them, and only after one year has elapsed may it retrieve them in full.
    Where approved real estate asset trust beneficiary securities offered and issued by a trustee institution meet all the below-listed conditions, and the offering trustee institution applies for listing, the TWSE may agree to the listing thereof:
  1. The total issue amount of the real estate asset trust beneficiary securities under application for listing is NT$500 million or more.
  2. The date of maturity is at least one year from the date of listing for trading.
  3. The number of beneficiaries shall be no less than five, and furthermore the total amount of the first-payment-priority beneficiary securities held by any five beneficiaries shall not exceed 50 percent of the total issue amount of the beneficiary securities. Provided, this 50 percent holding restriction shall not apply where the holder is an independent institutional investor.
  4. The par value shall be limited to NT$100,000.
  5. Beneficiary securities under application for listing shall be rated by a credit rating institution.
    The term “independent institutional investor”in this Article means a juristic person or institution under Article 13, paragraph 1, subparagraph 1 of the Real Estate Securitization Act or a fund under Article 13, paragraph 1, subparagraph 2 of the same Act; and does not mean a promoter of a real estate investment trust or a settler of a real estate asset trust, or an interested party thereof, or an affiliated enterprise as referred to in the Company Act, or a related party or substantially related party as defined in Statement of Financial Accounting Standards No. 6.
Article 24    Guidelines governing examination of the listing of other securities that are not stipulated in these Rules shall be separately stipulated by the TWSE.
 
   Chapter III The Listing of Foreign Securities
Article 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.
Article 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.
Article 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:
  1. 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.
  2. 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.
  3. Shareholders' equity: At the time of application for listing, the shareholders' equity stated on the financial report audited and certified by a Certified Public Accountant for the most recent period shall not be less than the equivalent of NT$600 million.
  4. Profitability: It does not have accumulated deficit in the most recent one (1) fiscal year and meets one of the following criteria:
    1. The ratio of income before tax to shareholder's equity in the final accounting for the most recent 1 year is 6 percent or higher.
    2. The ratio of income before tax to shareholder's equity in the final accounting for each of the past 2 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.
    3. The income before tax for each of the most recent 2 years shall be NT$250 million or more.
  5. Dispersion of shareholdings: 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.
  6. There shall be no restriction on transfer of stock, or securities representing such stock, represented by Taiwan depositary receipts.
  7. 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.
  8. 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.
  9. 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 certified public accountant 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.
    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.
Article 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:
  1. 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.
  2. 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.
  3. Shareholders' equity: At the time of application for listing, the shareholders' equity stated on the financial report audited and certified by a Certified Public Accountant for the most recent period shall be the equivalent of NT$600 million or more.
  4. Profitability: It does not have accumulative loss for the most recent one (1) fiscal year and meets one of the following criteria:
    1. The income before tax for the most recent one year represents not less than 6 percent of the shareholders' equity as shown in its final accounts; or
    2. The ratio of income before tax to shareholder's equity in the final accounting for each of the past 2 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.
    3. The income before tax for the most recent 2 years shall be NT$250 million or more.
  5. Dispersion of shareholdings: 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.
  6. 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.
  7. 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, paragraph 2 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.
Article 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:
  1. 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.
  2. The securities underwriter has provided a written recommendation.
  3. 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.
  4. At the time of application for listing, the shareholders' equity stated on the financial report audited and certified by a Certified Public Accountant 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 capital stock and capital reserve; 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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 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.
Article 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:
  1. 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.
  2. 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 3 years.
  3. 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 3 years, and the circumstances are serious.
  4. There has been serious deterioration in its business operation.
  5. The TWSE deems listing inappropriate on any other grounds.
Article 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.
Article 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:
  1. Compliance with Article 26, paragraph 1, subparagraph 4 and Article 27, paragraph 1, subparagraph 4.
  2. No violation of TWSE rules and regulations relating to material information within the most recent year, where the violation is serious in nature.
  3. No abnormal fluctuation in the trading price within 1 month before the date of application.
  4. 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.
  5. 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 file 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 supporting documents attached to the application 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 receiving the documents, 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:
  1. The foreign issuer meets the conditions in all the subparagraphs of paragraph 1.
  2. The number of units for which listing is applied is not less than 10 million.
  3. 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. .
  4. 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.
Article 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:
  1. 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.
  2. At the time it applies for listing, the applicant company or any of its controlled companies shall have an operational track record of 3 years or longer.
  3. The company scale meets one of the following criteria:
    1. At the time of application for listing, paid-in capital or shareholders' equity is NT$600 million or higher.
    2. At the time of listing, market capitalization is NT$1.6 billion or higher.
  4. Its cumulative net income before tax for the most recent 3 fiscal years is NT$250 million or higher, and its net income before tax for the most recent fiscal year is NT$120 million or higher, and it does not have any accumulated deficit.
  5. 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.
  6. The number of shares planned to be listed and traded shall exceed 50 percent of the total number of its issued shares.
  7. 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 whose successfully developed products or technology contribute 50 percent of its overall operating revenue, there has been issued an unequivocal opinion by the Industrial Development Bureau, Ministry of Economic Affairs, or a TWSE-designated professional institution, indicating that the company is a technology enterprise and has successfully developed products or technology and those products or technology are moreover marketable, if the foreign issuer meets the requirements of the following subparagraphs, the TWSE may issue evidentiary documentation indicating its approval of the listing:
  1. 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.
  2. 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.
  3. At the time of the listing application, the paid-in capital or shareholders' equity reaches NT$300 million or more, or the market capitalization reaches NT$800 million or more.
  4. At the time of the listing application, the net worth on the most current financial report audited and attested by a certified public accountant 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.
  5. 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.
  6. The number of shares planned to be listed and traded shall exceed 50 percent of the total number of its issued shares.
  7. 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 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 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 2 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 paid-in capital requirement of Article 16, paragraph 1, subparagraph 2 shall be calculated on the basis of shareholders's equity. However, the foreign issuer may be exempt from the requirements of Article 17, subparagraphs 1 to 3 herein if the construction company and the foreign issuer are not related parties, and the foreign issuer has established adequate internal control systems and tender procedures for contracting projects out, and the payment terms comply with usages of trade. "Controlled company" in paragraphs 1 and 2 means any of the following circumstances:
  1. 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.
  2. 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.
  3. 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.
    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 holding company or companies, 70 percent or more of that foreign issuer's operating income in its consolidated financial statement shall be derived from a controlled company or companies.    The effect of minority interest in the net income (loss) shall be deducted from the calculation of the net income before tax on the consolidated financial statement under paragraph 1, subparagraph 4.
Article 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 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 primary listing pursuant to paragraph 2 of the preceding article, the continuous engagement period shall not be less than 3 fiscal years.
Article 28-3    The standard basis for the paid-in capital of Article 28-1, paragraph 1, subparagraph 3, item 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 "shareholders' equity" specified by Article 28-1, paragraph 1, subparagraph 3, item 1 and the "income before tax" specified by subparagraph 4 shall be the CPA audited and attested consolidated financial report for the most recent fiscal year.
    The "consolidated financial report" referred to in the preceding paragraph shall be prepared in accordance with the financial accounting standards of the Republic of China, the generally accepted accounting principles of the United States, or international accounting 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 financial accounting standards of the Republic of China 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.
Article 28-4    A foreign issuer that applies for a TWSE primary listing of its stock may not have less than five directors on its board, and shall appoint no less than two independent directors, at least one of whom shall be domiciled in the Republic of China.
    A foreign issuer shall install either an audit committee or supervisors. That audit committee shall comprise all the independent directors; it may not have less than three members, one of whom shall be the convener. The minimum number of supervisors is three.
    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.
Article 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:
  1. 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.
  2. 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.
  3. If the applicant company and a company in the same consortium have a business relationship, 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.
  4. There shall be no material irregularities in its financial or business condition or in its above-cited operational guidelines in comparison with other companies in the same industry.
  5. The amount of its purchases and operating revenue from companies in the consortium in the fiscal year in which it applies for listing, and in the most recent 2 fiscal years, does not exceed 50 percent, provided that this restriction shall not apply to the amount of purchases and operating revenues from the parent company or a subsidiary.
    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.
Article 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, and the TWSE deems it inappropriate for listing, the TWSE shall not approve its stock listing:
  1. It shall submit the consolidated financial statement of the parent company and all of its subsidiaries prepared in accordance with Republic of China, United States, or international accounting standards. If that statement is not prepared in accordance with ROC financial accounting standards, 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.
  2. As calculated based on the consolidated financial statement submitted pursuant to the preceding subparagraph, total shareholders' equity in the most recent fiscal year shall be NT$1 billion or higher, and each of operating income and income before tax in each of the most recent 2 fiscal years shall be 3 percent or more of total shareholders' equity, provided that the aforesaid profitability percentages need not apply if the amount of purchases/sales transactions between the foreign issuer and its parent company in the fiscal year in which it applies for listing and the most recent fiscal year do not constitute 10 percent of the foreign issuer's total purchases/sales.
  3. The total holdings of its shares by the parent company and its affiliated companies, and their corporate directors, supervisors, and representatives; shareholders holding over 10 percent of the total number of shares; and by their related parties 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, if the applicant company meets the following criteria:
    1. Where it has an audit committee, or has independent directors constituting more than one half of the total number of directors.
    2. 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, have the equivalent of NT$6 billion or more in shareholders' equity.
  4. It shall have at least three independent directors.
  5. In the fiscal year in which it applies for listing and the most recent fiscal year, it does not derive more than 50 percent of its operating revenue, or more than 70 percent of its principal raw materials, principal products, or the amount of its total purchases, from the parent company, provided that these restrictions shall not apply if due to special industry characteristics, conditions of supply and demand in the market, or another legitimate reason.
  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 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.
Article 28-7    A foreign issuer that applies for a TWSE primary listing of its stock shall in writing undertake as follows:
  1. 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.
  2. 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 2 subsequent fiscal years to assist it in complying with ROC securities laws and regulations, and the listing contract. However, if the foreign issuer applies for TWSE primary listing pursuant to Article 28-1, paragraph 2, the subsequent period in which the lead securities underwriter is continuously engaged for assistance may not be less than three fiscal years.
  3. Shall add important matters concerning the protection of shareholders' equity in its company bylaws or organizational documents.
  4. The shares under the listing application shall be delivered by the book-entry method.
  5. 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.
Article 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:
  1. Any circumstance having a serious impact on the company's financial or businesscondition, 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.
  2. Its finances or operations cannot be independently and clearly distinguished from those of another person.
  3. Any material non arms-length transaction has occurred and has not been corrected.
  4. 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 3 years.
  5. There has been serious deterioration in the applicant company's business operation.
  6. Any of the applicant company's board of directors or supervisors are unable to independently exercise their functions.
  7. The TWSE deems listing inappropriate for any other reason related to the scope or nature of the enterprise or any other special circumstance.
Article 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.
  1. If the foreign issuer applies for TWSE primary listing pursuant to Article 28-1, paragraph 1, its directors, supervisors, and shareholders holding more than 10 percent of the total number of shares.
  2. If the foreign issuer applies for TWSE primary listing pursuant to Article 28-1, paragraph 2, its directors, supervisors, 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.
    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.
Article 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.
Article 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.
Article 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.
     If a primary listed company has issued common shares in response to the exercise of conversion rights or subscription rights under corporate bonds with warrants, convertible corporate bonds, or detached company warrants issued by the company, the company shall promptly file a report to the TWSE, submitting the relevant listing documents, and may be exempted from the requirement of public sale under Article 28-10.
 
   Chapter IV Miscellaneous Provisions
Article 29    Supplementary provisions to these Rules may be separately stipulated by the TWSE.
    These Rules and other supplementary provisions stipulated pursuant to these Rules shall take effect after having been submitted to and approved by the Competent Authority and publicly announced. Attachments to these Rules shall be implemented after having been submitted in writing to and signed by the president of the TWSE. Subsequent amendments thereto shall be effected in the same manner.