Chapter 1 General Principles
|
| 1 | These Procedures are formulated in accordance with Article 2, Paragraph 3 of this Corporation's Criteria for the Review of Securities Listings. |
| 2 | Except where otherwise provided by rules and regulations, the Taiwan Stock Exchange Corporation ("this Corporation") shall follow these Procedures when reviewing applications for securities listing. Where provisions applying to review procedures have been amended, applications should be reviewed in accordance with the amended provisions. |
Chapter 2 Receipt of Applications and Delegation of Review Cases
|
| 3 | Public companies applying for listing of issued securities, with the exception of state-owned enterprises and publicly issued companies with Class II stocks traded on the OTC market, shall register as emerging stock companies and shall be listed for a full three months. Except where government enterprises and companies that have applied under Article 6, Paragraph 1 of this Corporation's Criteria for the Review of Securities Listing and that have been issued a positive opinion by the central Competent Authority governing that industry for having effectively established a soundly operating accounting system and internal control mechanisms may be exempted from securities listing guidance, public companies applying for listing of issued securities shall comply with the conditions set forth in each of the following provisions during the listing guidance period:
(1) Except where otherwise provided in subparagraphs (2) and (3), the lead securities underwriter for companies applying for listing shall, 12 months prior to the listing application date, file an application with this Corporation for the guidance contract and securities listing guidance plan and report on the progress and results of the guidance program on a monthly basis.
(2) Where the recommending securities firms have already provided a stock listing guidance plan and reported on the progress and results of the guidance program on a monthly basis for a full 12 months in accordance with ROC Over-the-Counter Securities Exchange ("the OTC") regulations, two of the original recommending securities firms shall act as the lead and the assisting underwriter, and complete the supplementary assessment comments relating to discrepancies as per this Corporation's Procedures for the Assessment and Verification of Initial Stock Listings Undertaken by Securities Underwriters before application for listing may proceed.
(3) For a company that has not yet applied to this Corporation for securities listing guidance, or that has applied for securities listing guidance but for a period of less than twelve full months, and which had previously voluntarily withdrawn its own application for listing on the OTC, then one of the securities firms which had originally submitted a written recommendation for that application for listing on the OTC shall act as the lead underwriter and submit a guidance contract and a stock listing guidance plan, and after reporting on the progress and results of the guidance program on a monthly basis for a full 6 months, the company may apply for listing. In cases where an application has been conclusively rejected by a resolution of the OTC, however, application shall be made for securities listing guidance in accordance with the provisions of subparagraph (1).
In cases conforming to the conditions under Paragraph 1, subparagraph 1 of this article, the lead underwriter shall submit an assessment report regarding the fitness of the company under guidance for market listing within three months after submission of the guidance contract and within six months after the beginning of the new year within the guidance period; in cases conforming to the conditions of subparagraph (2) of the same paragraph, the report on fitness for market listing need not be submitted; in cases conforming to the conditions of subparagraph (3) of the same paragraph, the lead underwriter shall submit an assessment report regarding the fitness of the company under guidance for market listing within one month after submission of the guidance contract and within three months after the beginning of the new year within the guidance period.
In the circumstances set forth in each of the subparagraphs of Paragraph 1 of this article, the initial draft of the underwriter's assessment report shall be submitted in full two months prior to the date of application, with monthly updating of report information up to the date of application. At the time of application for listing, the underwriter shall assess whether the company's internal control system has been effectively set up and is functioning soundly and shall issue a written recommendation. In filling out the market listing application form, a full set of the specified attachment shall be included, and after examination by the listing department to determine that all required documents are included, the application shall be submitted through the general receiving and dispatch office of this Corporation for signed acceptance, after which it will be assigned a serial number and issued to the appropriate units for the performance of their respective reviews pursuant to procedural order.
When a public company applying for listing guidance in accordance with Paragraph 1 of this article changes its lead underwriter, this Corporation's Guidelines for Changing Underwriters in Cases of Guidance and Application for Securities Listing shall apply.
Companies applying for securities listing pursuant to Article 5 of this Corporation's Criteria for the Review of Securities Listing shall file an application with this Corporation in conformity with the Guidelines for Contracted Provision by the Industrial Development Bureau of the Ministry of Economic Affairs of Assessment Opinions Regarding the Successful Development and Marketability of Products Under Application by Technology Enterprises. At the same time, the applicant company shall pay to this Corporation the NT$50,000 assessment fee payable to the Industrial Development Bureau and file a copy of the application and supporting documents with the Industrial Development Bureau. After receiving the documents, the responsible department shall submit a written request for an opinion to the Industrial Development Bureau. After this Corporation has obtained the Industrial Development Bureau's assessment opinion adopted by a resolution of the Bureau's assessment committee and has notified the applicant company of the opinion, the applicant company may file its application for securities listing. An applicant companies that has already obtained an assessment opinion from the Industrial Development Bureau as a result of an application filed by the Over-the-Counter Stock Exchange may file its application for securities listing based on the assessment opinion already obtained.
An applicant company shall file its application for securities listing within one year from the date of the assessment opinion granted by the Industrial Development Bureau of the Ministry of Economic Affairs. An applicant company that fails to file an application within this period must re-apply to this Corporation for an assessment opinion. |
| 4 | For initial stock listing applications, after receiving the application and supporting documents, the responsible department shall form a task force consisting of two or more persons (depending on the overall current status of the human resources of this Corporation) to assess each application with the approval of the Listing Department manager. For applications by already-listed companies for issuance of new shares for capital increase, or of corporate bonds, or other securities listings, the responsible department shall designate a person to handle such applications. After being delegated the case, the designated person shall acknowledge receipt by signing the responsible department's in-out log. In addition to keeping the application and supporting documents in safe custody, the designated person shall, for initial stock listing applications, also submit one copy each of the prospectus and underwriter assessment report to the Competent Authority and to the Public Relations Office of this Corporation for public display. |
Chapter 3 Review Process for Initial Stock Listing Applications
|
| 5 | For an application for an initial listing of a company's stock, this Corporation shall review the financial statements for the two most recent fiscal years audited by certified public accountants and approved by the company's board of directors and supervisor(s). If any irregular adjustments to accounting items are found, those items shall be reviewed in the financial report of the preceding year. In cases where the financial report approved by the annual shareholders meeting does not agree with that report, the financial report approved by the annual shareholders meeting shall also be submitted. An applicant whose review period spans April, July, or October shall be notified additionally to submit financial statements audited by certified public accountants for the first quarter, first half, and third quarter of the said fiscal year, for the reference of the reviewers. An applicant whose review period spans September shall be notified additionally to submit a financial forecast, audited by a certified public accountant, for the following year to serve as reference in the review. (Where the company's fiscal year is other than the calendar year, the above periods shall be adjusted commensurately to the applicant's fiscal year.) Where the assessment period spans the turn of the fiscal year, the applicant company shall, within two months of the end of the fiscal year, additionally submit the financial report for the current year audited by a certified public accountant, the certified public accountant's working papers, and the updated underwriter's assessment report, as a basis for review. If an applicant company fails to provide the required documents within the specified periods, this Corporation shall return its application.
For applications for initial listings by public enterprises, the financial reports for the most recent two fiscal years shall be reviewed. That for the most recent fiscal year shall be audited by a certified public accountant (and shall still be compiled in the form of a year-on-year comparison over two years). That for the second year, if it has not yet been published, may instead be accompanied by an audit report by an auditing institution; in all other respects, the provisions of the preceding subparagraph shall apply mutatis mutandis. |
| 6 | Review Guidelines
The Guidelines contained in this Article apply to all reviews of applications for initial listings. Personnel assigned to handle an application for securities listing shall, after receiving the application, review the application, the supporting documents, and all information provided by the applicant company, underwriter, or certified public accountants, and take the below-listed particulars into consideration:
(1) Certified Public Accountant's Audit Report:
(i) If there has been a change in certified public accountants in the most recent three fiscal years preceding the application date, the issuing company, the original certified public accountants, and the succeeding certified public accountants shall submit a written report explaining the change of accountants, and the responsible personnel shall ascertain the facts and reasons underlying the change.
(ii) For any audit reports issued by the certified public accountants other than unqualified opinions, the reviewers shall take note of the facts and reasons underlying such reports, and the extent to which such reports affect the financial report.
(iii)The accounting firm(s) that audited the financial reports for the most recent three years shall be an accounting partnership comprising licensed certified public accountants and approved by the Competent Authority.
(iv) The audit report shall state that the report is prepared in accordance with the Criteria for Compilation of Financial Reports by Securities Issuers or the Criteria for Compilation of Financial Reports by Securities Firms and with Generally Accepted Accounting Principles.
(v) When the applicant's financial report for the most recent accounting year or the most recent period in the year of application (including financial forecasts) reveals any of the following circumstances, its financial report must conform to the applicable regulations:
a. Fifty percent or more of the applicant's pre-tax income is from returns on investment in a single overseas reinvestment company.
b. After-tax losses at a single overseas reinvestment company for the current period reach fifty percent of its paid-in capital or 100 million New Taiwan Dollars or more.
c. Fifty percent or more of the applicant's operating revenues, gross profits, or total purchase amounts are from a single overseas reinvestment company.
d. The output value of a single overseas reinvestment company accounts for fifty percent or more of the applicant's gross output value (including internal production, external production, and outsourcing).
e. The original investment in a single overseas reinvestment company by the applicant company cumulatively totals twenty percent or more of the applicant's paid-in capital or 300 million New Taiwan Dollars or more.
The term "must conform to the applicable regulations" as used above means:
(1) When the applicant adopts the equity method for listing gains and losses on investment for the given overseas reinvestment company, the financial statement of that overseas reinvestment company shall be audited and certified by the applicant's CPA or an accountant at an international accounting firm that is affiliated with an ROC accounting firm, provided that the CPA shall submit an auditing report with an unqualified opinion without reference to any other accountant's audit.
In addition, when a company applying for market listing employs the same CPA for auditing and certification as the overseas reinvestment firm, and when, in the preceding three years, disciplinary action has been taken against that CPA by the competent authority or a disposition issued under Article 37, paragraph 2 of the Securities and Exchange Law, or when the CPA has accumulated two or more demerits within the preceding year in accordance with this Corporation's "Regulations Governing the Handling of Errors by Certified Public Accountants in Auditing of Initial Applications for Market Listing" and the ROC Over-the-Counter Stock Exchange's "Regulations Governing the Handling of Auditing Errors by Certified Public Accountants in Guidance for OTC Market Listing and Applications for OTC for Market Listing," another CPA shall be engaged to perform the auditing and certification.
(2) An applicant company that does not use the equity method for listing gains and losses on investment for an overseas reinvestment company need not apply the provisions of the preceding paragraph.
(2) Content of Financial Statements:
(i) Whether the kind, format, and content (including the notes and itemized statements) comply with the Criteria for Compilation of Financial Reports by Securities Issuers or the Criteria for Compilation of Financial Reports by Securities Firms and with Generally Accepted Accounting Principles and requirements of applicable laws and regulations.
(ii) Overall analysis of the report both on its own merit and by comparing it with those from other companies in the same industry, to ascertain emerging trends and possible irregularities in the applicant company's financial condition and its profitability.
(iii) If unusual accounting items are found in the financial report (such as dealings with competitors, dealings between shareholders, temporary transactions, start-up costs, unappropriated expenses) and a large sum of money is involved, the item in question shall be audited to ascertain its composition and categorization.
(iv) Status of adjustments or improvements required to be made to the financial statements as instructed in writing by the Competent Authority.
(v) If any one of the following special or irregular circumstances is found, the responsible personnel shall examine it in depth by reviewing the certified public accountant's working papers.
(a) Transactions between major interested parties: any irregular financial arrangements or profits changing hands in large transactions between related parties.
(b) Any improper or irregular transactions with respect to the categorization, transfer, or accounting treatment of long or short-term investments.
(c) The status of application of reserve funds to offset bad debt and the assessment of the auditing certified public accountant.
(d) Method of appraisal and basis of entering into the account books of inventory: where there are large surpluses or inventory losses, the reasons shall be investigated.
(e) Any irregular changes to fixed assets involving transactions among related parties.
(f) The accounting treatment of capitalization of interest.
(g) Leasing: The accounting treatment and categorization of business leasing or capital leasing.
(h) Deferred assets: Those that should be listed as expenses or losses for the current month, such as loss of profit due to suspension of work, extraordinary losses, start-up expenses, employee benefits, etc., shall not be listed as amortization of deferred assets.
(i) Monetary transactions: The interest rates, terms, and payment status on large interest-free and low interest loans obtained from affiliates, shareholders, or related parties, and high-interest loans to affiliates, shareholders or related parties.
(j) Retirement rules and pension fund withholding status.
(k) Accounting treatment of income tax and off-settings of assets and liabilities with respect to deferred income tax.
(l) Circumstances of disclosure of contingent liabilities and status of lines of credit obtained jointly from banks by the applicant company and its affiliates.
(m) Assets obtained on installment plans and accounting treatment of sales.
(n) Gross profit margin on sales of inventory, inventory turnover rate, and accounts receivable turnover rate for the most recent two fiscal years.
(o) Reasons for any extraordinary losses or gains, or large nonoperating income or expenditures, and the treatment and presentation of extraordinary losses and gains.
(p) Whether in the most recent fiscal year there have been any irregularities in the process of capital formation, or sources or use of funds.
(3) Content of financial forecasts:
(i) Responsible personnel shall examine whether the kind, format, and content comply with the Guidelines Governing Implementation of the System for Disclosure of Financial Forecast Information for Publicly Issued Companies, the Statements of Financial Accounting Standards No. 16, and the Guidelines Governing Preparation of Financial Forecasts and with other applicable laws and regulations.
(ii) With respect to companies affected by changes in the economic climate within their industry or whose performance record is changing rapidly (determined on the basis of whether gross profits or pre-tax gains or losses for each of the most recent three years show a degree of variation of twenty percent or more over any previous year, with further consideration of individual cases considered appropriate), the financial forecast for the year of application (with the financial forecast for the following year to be included when the period for review of the application extends beyond September) the reasonableness of the fundamental assumptions of the forecast and the possibility of their realization shall be taken as important elements to be considered in the review.
(4) Internal control mechanisms and declarations thereof, and project audit reports:
(i) Ascertain the status of the prescription and implementation of internal control systems.
(ii) Inspect whether the applicant company has performed a self-inspection of the effectiveness of the design and implementation of its internal control system and produced an Internal Control System Declaration in compliance with the Criteria Governing Establishment of Internal Control Systems by Public Companies, and obtained a certified public accountant's project audit report with unqualified opinion (1).
(iii) Self-inspection of internal control systems and performance of project audits by CPAs shall cover the following periods: For applications submitted from February through April, the period covered shall be 1 January through 31 December of the previous year; for applications submitted from May through July, the period covered for shall be from 1 April of the previous year until 31 March of the year of application; for applications submitted from August through October, the period covered shall be from 1 July of the previous year until 30 June of the year of application; for applications submitted from November through January of the following year, the period covered shall be from 1 October of the previous year until 30 September of the year of application. Two or more practicing CPAs of a joint accounting firm shall jointly perform the inspections or audits and issue a report. This Corporation shall separately adopt "Operating Procedures for Review of Internal Control Systems Inspection Reports Issued by CPAs."
(5) During the review process, the responsible personnel shall note whether the certified public accountant has complied with Generally Accepted Accounting Principles, the Criteria Governing Establishment of Internal Control Systems by Public Companies and all other applicable laws and regulations and shall, through scrutiny of the certified public accountant's working papers for the relevant fiscal year, fully ascertain the tests applied, scope, time frame, characteristics, whether there has been full factual disclosure, whether the accountant has omitted any procedural requirements (e.g. monitoring of remaining inventory, certification and reconciliation of bank account balances) and failed to adopt other substitute procedures. If it is determined that the auditing procedures executed by the certified public accountant are insufficient to reach the necessary conclusions, the responsible personnel shall request that the accountant provide supplementary explanations.
(6) The responsible personnel shall inspect the format and content of the underwriter's assessment report:
(i) Whether the report has been compiled in accordance with the requirements of Guidelines Governing the Particulars to be Recorded in the Underwriter's Assessment Report for Initial Listing of Securities and signed by the lead underwriter and sponsoring underwriter. The Guidelines Governing the Particulars to be Recorded in the Underwriter's Assessment Report for Initial Listing of Securities shall be separately promulgated by this Corporation.
(ii) Whether there have been consecutive monthly reports on the progress and results of the guidance and working papers have been prepared in accordance with applicable regulations of this Corporation.
(iii) Whether a Declaration has been produced testifying that the assessment report is free of any misrepresentations or nondisclosures.
(7) Prospectus:
The responsible personnel shall examine the format and content of the prospectus to ensure that it has been compiled in accordance with the Guidelines for the Particulars to be Recorded in Prospectuses for Initial Listing of Securities and other relevant regulations.
(8) The responsible personnel shall ascertain whether any of the negative criteria detailed in the subparagraphs of Paragraph 1 of Article 9, or any of the circumstances in Paragraph 3 of Article 18, of this Corporation's Criteria for the Review of Securities Listings applies to the applicant company, whether it has complied with instructions contained in official notifications by the Competent Authority, and whether there were significant changes in the applicant company's most recent capital increase plan or any failure to carry out those plans. Such information shall be provided in detail in the review report and working paper. If any nonconformance with regulations is found, the responsible personnel shall attach their opinions on treatment, and submit them for further review by higher levels.
(9) The responsible personnel shall visit the sites of the applicant company's offices and factories and ascertain the operational experience and philosophy of the applicant company's responsible person. If irregularities are found during the documentary review, the responsible personnel shall examine the working papers prepared by the certified public accountant or other documentation provided by the applicant company, the accountant, and the underwriters. If after due examination of the above, the responsible personnel are still unable to gain a complete picture of the applicant company's operations, an on-site inspection of the applicant company may be undertaken. If the applicant company is an investment holding company or a financial holding company, all above procedures shall be conducted for companies controlled by the applicant or for subsidiaries of such controlled companies. However, where the controlled companies or subsidiaries are located offshore, a documentary review shall suffice. |
| 7 | Review Process:
(1) After they have been delegated a securities listing case, the responsible personnel shall complete the following review procedures:
(i) Application Documents: Check all application documents received and complete a "Stock Listing Application Receipt Record." (Attachment 1).
(ii) Draft Prospectus: Examine each item detailed in the content of the prospectus according to the Guidelines for the Content of Prospectuses for the Initial Listing of Securities and other relevant regulations and re-examine the Draft Prospectus Review Chart for Initial Stock Listing (Attachment 2) completed by the securities underwriter.
(iii) Underwriter's Assessment Report: Review the underwriter's assessment report and its abstract and check whether each item is assessed in accordance with the rules and regulations of the Competent Authority and this Corporation and whether it draws clear and definitive conclusions. Consider relevant industry professional reports or consult experts in the field and include these opinions in the "Remarks" column in the "Abstract of the Underwriter's Assessment Report" (Attachment 3). Any matters relating to the requirements of this Corporation's Regulations for Handling Deficiencies in the Information on Guidance Progress and Results, the Assessment Report, or Other Relevant Information Submitted by the Underwriter shall be handled, after obtaining signed approval by this Corporation's president, pursuant to the provisions of Article 8 of said Regulations.
The above-mentioned Regulations for Handling Deficiencies in the Information on Guidance Progress and Efficacy, the Assessment Report or Other Relevant Information Submitted by the Underwriter shall be separately promulgated by this Corporation.
(iv) Internal Control Systems
(a) Examine whether the applicant company's written accounting system and its implementation are in compliance with the Criteria Governing the Preparation of Financial Reports by Securities Issuers or the Criteria Governing the Preparation of Financial Reports by Securities Firms.
(b) Gain an understanding of, and compile and collate, comprehensive opinions including the underwriter's assessment opinion, the results and attached assessment opinion from the certified public accountant's internal control system investigation, the certified public accountant's recommendations regarding internal control systems as stated in the recommendation report and the attached internal control system data in Item 2 of the Stock Listing Questionnaire (Attachment 4) in compiling the Record of the Internal Control System Documentary Review (Attachment 5).
(c) Cary out the review in accordance with this Corporation's Procedures for Reviewing Internal Control System Audit Reports Issued by Certified Public Accountants," and complete Attachment 2 of said Procedures, the "Opinion Chart for Review of the Internal Control System Audit Reports Issued by Certified Public Accountants."
(v) Comprehensive Analysis of Financial Information:
Review the content of the Stock Listing Questionnaire and the annexed survey report for related industries, explanations of major changes in accounting items published in the prospectus, analytical data from the certified public accountant's permanent records, and the underwriter's assessment report to ascertain and assess the financial condition and trends of the applicant company and excerpt important items or irregularities to compile the "Comprehensive Analysis of Financial Data" (Attachment 6).
(vi) Certified public accountant auditing procedures and financial report: Review the certified public accountant's permanent files, the working papers for the internal accounting control system for the most recent fiscal year and the audit working papers for the most recent three years preceding the date of application and re-examine the "Certified Public Accountant Auditing Procedure Checklist" (Attachment 7) completed by the certified public accountant to ensure compliance with the Audit Working Paper Standards published in the Audit Standards Gazette No. 3, Investigation and Assessment of Internal Accounting Control Systems as published in Audit Standards Gazette No. 5, the Rules Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and all other applicable regulations. Include excerpts or photocopies of important or irregular items in the report. Examine the content of the Stock Listing Questionnaire and supporting documentation, and the audit reports from a certified public accountant for the most recent three fiscal years and the notes and itemized breakdowns of each accounting item therein to ensure that the content of the applicant company's financial reports is in compliance with Criteria Governing the Preparation of Financial Reports by Securities Issuers, the Criteria Governing the Preparation of Financial Reports by Securities Firms, Generally Accepted Accounting Principles, and all other applicable regulations. [After completion of the above] the responsible personnel shall note their opinion in the opinion column of the Certified Public Accountant Auditing Procedure Checklist. If the applicant company is found in violation of any of the requirements of the Regulations for Handling Deficiencies in Certified Public Accountants' Reviews of Initial Securities Listing Applications, the responsible personnel shall refer the matter to the Review Committee and execute the resolution passed by the committee. The above-mentioned Regulations for Handling Deficiencies in Certified Public Accountants' Reviews of Initial Securities Listing Applications shall be separately promulgated by this Corporation.
(vii) Dispersion of Shareholding and Custodial Undertaking: Examine the following items and complete a "Shareholding Dispersion and Custodial Undertaking Chart" (Attachment 8):
(a) Whether the ratio of shares to be publicly offered is in compliance with the regulations of the Competent Authority.
(b) Whether shareholding dispersion after public offering is in compliance with the provisions of this Corporation's Criteria for the Review of Securities Listings.
(c) Whether the ratio of shares held by directors and supervisors is in compliance with the regulations of the Competent Authority.
(d) Whether the undertaking regarding the ratio of shares in centralized custody to total issued shares complies with regulations.
(viii) Examine whether the applicant company is in compliance with each of the items listed in Article 9, Paragraph 1 of this Corporation's Criteria for the Review of Securities Listings and complete the "Criteria for the Review of Securities Listings Article 9, Paragraph 1 Itemized Checklist" (Attachment 9).
(ix) The responsible personnel shall consolidate all the above review data and relevant documentation (Attachments 1 through 9) into a binder.
(x) To ascertain the actual status of the financial and business operations of the applicant company or gross irregularities left unresolved by the relevant review data, the responsible personnel may conduct the following procedures:
(a) Seek briefings to ascertain the following:
(a.1) The past business achievement and philosophy of the applicant company's responsible person.
(a.2) Changes in the shareholdings of directors, supervisors, and shareholders with a greater than 10 percent share of the company's total issued equity during the most recent three fiscal years and random checks of actual shareholdings when necessary.
(a.3) Management and operational objectives of the company.
(a.4) Financial structure and management policies.
(a.5) Production processes.
(a.6) Production status.
(a.7) Analysis of sales income and costs and the state of competition in the industry.
(a.8) The system for taking stock of and valuating inventory, and warehousing management.
(a.9) Dealings among affiliates.
(a.10) Salary and benefit regime.
(b) Inspect factories, paying particular attention to the operational status of machinery and equipment.
(c) Where on-site inspections are necessary to understand other significant irregularities discovered in the documentary review, the responsible personnel may draft an inspection plan and then conduct an on-site inspection of the irregularities.
(d) Findings of on-site inspections shall be recorded in detail in the "On-Site Inspection Record" (Attachment 10).
(xi) The responsible personnel may, subject to the signed approval of this Corporation's president, consult with experts in relevant fields to ascertain information with respect to the current status and future development prospects of the applicant company within the industry.
(2) Compilation of Working Papers: The responsible personnel shall consolidate and record in detail all review items and findings of the review, together with all relevant information and number them in order for cross-referencing. Upon completion of the review, the responsible personnel shall compile all review information (Attachments 1 through 10) and supporting documentation into a binder to serve as the working papers and file it together with other public issuance approval information and keep it in the custody of the Listing Department (for a minimum of five years) for future reference and case management.
(3) After completion of the working papers, the responsible personnel shall compile the key findings, the opinions of relevant experts, and other relevant information into a "Review Report" (Attachment 11) and annex it to the working papers for reference during the review and deliberation of the case.
(4) Review Period: Applications for initial stock listing submitted by the first day of the current month shall be submitted for deliberation by the Review Committee in the following month. Under extraordinary circumstances, however, the Listing Department may, based upon review requirements or at the request of the applicant company and no less than 10 days prior to the Review Committee meeting, extend the deadline for submission to the Review Committee, subject to the signed approval of the president of this Corporation. Extensions granted at the request of the applicant company shall be limited to a maximum period of one month and shall not extend into to the following year.
(5) Force of the Securities Listing Review: The findings of the review of an application for securities listing reflect the financial and business condition of the applicant company during a specified period of time only, and should not be taken as a reflection of the overall or future performance of the applicant company. The results also depend largely on whether the applicant company has made full disclosure of information relating to its financial and business condition. The review results do not provide a guarantee of the quality of the applicant company and shall not be taken as a substitute for the functions and status of [reports of] securities underwriters and certified public accountants. Therefore, responsible personnel reviewing applications filed by first-time applicants shall:
(i) Carry out the review work with a positive service attitude and full rely on all information and opinions provided by the applicant company, certified public accountants, and securities underwriters, unless any nondisclosure, fraud, falsehood, or error is discovered.
(ii) Where information or statements of opinion provided by the applicant company, securities underwriter, or certified public accountant is found to contain any nondisclosure, fraud, error, falsehood, or otherwise seriously violate applicable laws or the rules and regulations of this Corporation, those responsible shall be held fully liable under the law, and the matter shall be duly reported to the Competent Authority after handling by this Corporation pursuant to relevant regulations. This Corporation undertakes only the review and deliberation of applications. Responsible personnel shall, at the time of processing applications, act in accordance with the provisions of this Corporation's Disciplinary Standards for Securities Listing Review Personnel and Matters for Mutual Compliance by Securities Listing Review Committee Members, and remain detached, impartial, and objective to ensure compliance with all the procedural requirements of these Procedures and other applicable regulations. In the event of any violation or negligence, where verified through investigation, personnel shall be responsible for matters that fall within the scope of their duties.
(iii) Where any concerns arise during the review period, the responsible personnel shall contact the applicant company, securities underwriter, and certified public accountant and request that they take the initiative to collect relevant information in timely fashion and provide explanations. |
| 8 | When a company that has been delisted and applied for managed trading of its stock on the Over-the-Counter Stock Exchange then subsequently reapplies for listing, the responsible personnel shall review the applicant company for compliance with the provisions of Article 13 of this Corporation's Criteria for the Review of Securities Listings and review whether the application and supporting documents are complete. The company's application and supporting documents shall then be submitted to the this Corporation's Board of Directors for passage and, upon passage, reported to the Competent Authority for approval, whereupon, listing procedures shall be followed. However, the provisions hereinabove regarding listing guidance by the underwriter and on-site inspections, however, shall not apply. |
Chapter 4 Listing of Same-Class Capital-Increase Shares, Certificates of Entitlement to New Shares, Certificates of Payment for Stock, and Certificates of Entitlement to Shares from Redemption of Convertible Corporate Bonds, Issued by Listed Companies
|
| 9 | Where a listed company applies for listing of new shares issued for capital increase where the shares are of the same class already listed, the responsible personnel shall examine the submitted photocopy of the amended company registration documents, stock certificate specimen, and other documents for completeness, and publicly announce the listing in accordance with Article 139 of the Securities and Exchange Law. |
| 10 | When a listed company issues new shares for capital increase and applies to list certificates of entitlement to new shares, the application shall be made within 15 days of the date of the Competent Authority's approval or effective registration of the capital increase; where the company applies to list certificates of payment for stock, application shall be made within 15 days of the Competent Authority's approval of, and full receipt of payment for, the new shares. Following examination of the application and supporting documents for completeness, the responsible department shall publicly announce the listing, report the listing to this Corporation's board of directors, and report in writing to the Competent Authority. With respect to the listing of certificates of entitlement to shares from redemption of convertible corporate bonds, the responsible unit shall announce the listing according to the date stated on the "Application to List Global Depositary Receipts Representing Certificates of Entitlement to Stock Redeemed from Bonds" or "Declaration of Conversion of Domestic (Overseas) Securities" originally submitted by the applicant company and shall publish monthly public announcements of the conversion status.
Chapter 5 Listing Review of Shares of Different Classes From Those Already Listed (Including Various Preferred Shares With Different Rights and Obligations) Issued by Listed Companies for Capital Increase |
Chapter 5 Listing Review of Shares of Different Classes From Those Already Listed (Including Various Preferred Shares With Different Rights and Obligations) Issued by Listed Companies for Capital Increase
|
| 11 | After examining all documents duly submitted by the applicant company to ensure completeness, the responsible personnel shall first complete a "New Stock Listing Preliminary Review Chart." After examining whether Article 14, Paragraph 2 of this Corporation's Criteria for the Review of Securities Listings and Article 51 of this Corporation's Operating Rules are applicable to the applicant company and whether the number of shares that the applicant company undertakes to have underwritten is in compliance with the percentage requirements of the Competent Authority. (Applicants in compliance with the conditions in Article 11 of this Corporation's Criteria for the Review of Securities Listings may be exempted from further underwriting requirements.) After obtaining signed approval from their superiors, the responsible personnel shall report to the Competent Authority seeking approval and publicly announce the listing upon the approval of the Competent Authority.
Chapter 6 Review of Applications By Listed Companies for Listing of Unlisted Shares by Conversion into Shares of the Same Class as Already-Listed Shares |
Chapter 6 Review of Applications By Listed Companies for Listing of Unlisted Shares by Conversion into Shares of the Same Class as Already-Listed Shares
|
| 12 | The responsible personnel shall, after reviewing whether the applicant company meets the listing conditions set forth in Article 14, Paragraph 3 of this Corporation's Criteria for the Review of Securities Listings and examining documents submitted by the applicant company for completeness and whether the number of shares the applicant company undertakes to have underwritten or has already had underwritten conforms with the percentage requirements provided in applicable regulations, submit the applicant company's application and relevant documentation to the Competent Authority for approval, whereupon, listing procedures shall be carried out and a report filed with this Corporation's board of directors. |
Chapter 8 Review of Listing Applications for Corporate Bonds Issued by Domestic Listed Companies and Foreign Companies
|
| 13 | Where listed companies or foreign companies apply to list corporate bonds they have issued, the responsible personnel shall examine whether the documentation submitted by the applicant company is complete; if the foreign company has not previously issued Taiwan Depositary Receipts for trading on the Taiwan Stock Exchange, the responsible personnel shall assess compliance with the listing conditions set forth in Article 26, Paragraph 1 of this Corporation's Criteria For Review of Securities Listings based on the applicant company's listing application and supporting documentation. The responsible personnel shall submit the listing contract with the applicant company and other documentation to the Competent Authority for approval, and then publicly announce the listing and report to this Corporation's board of directors. |
Chapter 9 Review of Listing of Beneficiary Certificates
|
| 14 | When an application is filed to list beneficiary certificates already approved for issuance, the responsible personnel shall inspect the submitted application documents for completeness and compliance with the provisions of Article 23 of this Corporation's Criteria for the Review of Securities Listings. Following the certification and issuance of the beneficiary certificates in accordance with the regulations of the Competent Authority, the responsible personnel shall submit the beneficiary certificate listing contract and other application documents to the Competent Authority for approval, and then publicly announce the listing and report to this Corporation's board of directors. |
Chapter 10 Review of Listing of Other Securities
|
| 15 | The procedures hereinabove for the review of listing of various kinds of securities shall apply mutatis mutandis to reviews of listing of other kinds of securities already approved for issue, depending on the nature of the specific securities under review. |
Chapter 11 Review and Deliberation by the Securities Listing Review Committee
|
| 16 | Documentary Review
(1) The responsible personnel shall draft a formal review report and proposal (Attachment 11) with respect to the complete review findings and submit it to the Review Committee for consideration.
(2) Where the responsible department's inspection finds an applicant company to fall under any of the conditions set forth in Article 9, Paragraph 1 of this Corporation's Criteria for the Review of Securities Listings or to violate any other applicable provisions of the same Criteria, it shall give an explicit review opinion in the review report that either disagrees to listing or, except in cases where the applicant company falls under any of the conditions set forth in Article 9, Paragraph 1, Subparagraphs 10, 12, and 13 of the Criteria or is in violation of the provisions of Article 18 or Article 19 of the Criteria, may agree to listing after overall consideration of the totality of factors.
(3) The review findings report, proposal information, and applicant company's certified public accountant's audit report (including financial report) to be submitted for review by the Review Committee pursuant to Paragraph 1 shall be sealed by chop as confidential and submitted to each Review Committee member for evaluation no less than five days prior to the convening of the Review Committee. Each Review Committee member shall complete a review opinion chart listing their opinions regarding each item and specifying any questions they may have and submit the review opinion chart to the Listing Department two days before the Review Committee convenes. The Listing Department shall designate a person to be responsible for compiling the all materials and maintaining appropriate confidentiality, and the materials shall be reviewed when the Review Committee convenes. The meeting sequence and order in which cases submitted during a given month shall be reviewed shall in principle be based on the serial number assigned to each listing application in the order they are received.
(4) This Corporation shall, beginning three days prior to the convening of the Review Committee and at a specified location, make available for inspection by any member of the Review Committee the applicant company's relevant listing information, the responsible personnel's audit report working papers, the certified public accountant's audit report working papers, the underwriter's assessment working papers and guidance plan; data submitted monthly during the guidance period regarding the listing progress and performance of the guided stock, and data from the Listing Department's sample checks of the underwriter's guidance of the applicant company. Review committee members that so require shall appear in person to inspect the documents. |
| 17 | Convening of Review Committee Meetings
(1) When the Review Committee convenes, in addition to the presence of Review Committee members and representatives of the Competent Authority invited to provide direction, relevant review personnel from the Listing Department shall also attend.
(2) When the Review Committee convenes, this Corporation may request representatives of the applicant company, the lead securities underwriter, and the certifying certified public accountant to first submit reports and may request those same individuals to appear for questioning and supplementary explanation. When necessary, upon signed approval by this Corporation's president, experts in related fields may be asked to provide written consultation or appear for oral consultation.
(3) Rules relating to this Corporation's securities listings Review Committee shall be separately promulgated by this Corporation. |
| 18 | When the Review Committee convenes, reviews shall conducted for the following in accordance with this Corporation's Criteria for the Review of Securities Listings and other relevant laws, regulations, and materials:
(1) Initial stock listing applications free of any of the conditions provided in any of the Sub-paragraphs of Paragraph 1 of Article 9 of the Criteria for the Review of Securities Listings and violating no relevant provisions of the same Criteria shall require approval of a simple majority of the Review Committee members present.
(2) Initial stock listing applications meeting any one of the conditions provided in any of the sub-paragraphs of Article 9, Paragraph 1 or in Article 18, Paragraph 3 of this Corporation's Criteria for the Review of Securities Listings, or applications and reapplications in violation of applicable provisions of the same criteria shall require approval of a two-thirds majority (inclusive) of Review Committee members present; however, the committee shall specify their overall considerations and concrete reasons for granting listing approval.
(3) Where approval for listing has been granted by resolution of the Review Committee, the case shall be recorded and submitted to the Board of Directors. Where a decision is made to submit the application to the Board of Directors following submission of supplementary materials, the applicant company shall be notified in writing of a deadline by which the supplementation shall be completed, at which time the application shall be submitted to the Board of Directors. Where listing approval is denied by a resolution, signed approval of this Corporation's president shall be obtained and the application rejected and returned outright.
Applications submitted for reconsideration after rejection by the Board of Directors or the Competent Authority shall be handled in accordance with the preceding paragraph. |
| 19 | Where an applicant company is required to supplement application materials pursuant to the preceding Article, and the supplementation remains incomplete beyond the deadline and after due notice, the responsible personnel shall submit a written report for handling. |
Chapter 11 Ratification by the Board of Directors
|
| 20 | In cases where the Review Committee has resolved to approve applications or re-applications for initial stock listing, but there are dissenting opinions on the Board of Directors, the Review Committee shall carry out a re-review.
Where a resolution for listing approval is still adopted following the re-review, the case shall be submitted again to the Board of Directors for consideration. Where the Board of Directors then still resolves to deny listing, the written consent of this Corporation's president shall be obtained and the application rejected. |
| 21 | The responsible department shall make monthly status reports to the board of directors on the processing of listing application cases and, within ten days after board meetings, submit a written report of board meeting resolutions to the Competent Authority via mail for recordation. |
Chapter 12 Reporting to the Competent Authority
|
| 22 | For initial stock listing application cases in which the Board of Directors resolves to approve listing, upon completion of recording of the case, the responsible personnel shall first notify the applicant company via mail to supplement relevant materials, and shall closely examine the reasonableness of the applicant's responses to the securities listings Review Committee, after which it shall request the principal underwriter to supplement its assessment or request an opinion from a certified public accountant. Thereafter, the responsible personnel shall, pursuant to Article 141 of the Securities Exchange Law, submit the review report and the securities listing contract executed between this Corporation and the applicant company to the Competent Authority for examination and approval. |
| 23 | To streamline listing procedures for corporate bonds, beneficiary certificates, and other securities, the responsible personnel shall immediately submit the securities listing contract between this Corporation and the applicant company and other related application documents to the Competent Authority for examination and approval. |
| 24 | The responsible personnel shall examine the draft prospectus included in the application documents to ensure it has been supplemented as requested by this Corporation before submitting it to the Competent Authority for examination and approval. |
| 25 | Initial stock listing applications that have been sent back by the Competent Authority for reconsideration shall be given a second review by the Review Committee. Where the Review Committee still resolves to approve listing, the application shall be re-submitted to the board of directors for ratification of the approval and reporting to the Competent Authority. Where the Review Committee resolves to deny the listing, the written consent of this Corporation's president shall be obtained and the application rejected. |
Chapter 14 Rejection of Initial Stock Listing Applications and Reconsiderations
|
| 26 | Where an initial stock listing applications has been rejected by the Review Committee, or where the applicant company has failed to process or supplement relevant items within the time period specified in official notices from this Corporation or in the provisions of these Operating Rules, the applicant company shall, upon signed approval, be notified in writing and the listing application and all relevant documents returned. |
| 27 | The Reconsideration of Initial Stock Listing Applications
(1) In cases where the Review Committee has decided to reject the application, the applicant company may, within 20 days of the date of receipt of this Corporation's rejection notice, submit its reasons for requesting reconsideration and relevant materials to this Corporation for reconsideration.
(2) An applicant company's reasons for requesting reconsideration shall be limited to whether the grounds for the original rejection decision were erroneous.
(3) After the responsible department has rendered a specific opinion on the application for reconsideration, the application shall be resubmitted to the Review Committee for review. During the review, the responsible department shall compile the items discussed during the previous review's question and answer session for the reference of committee members. Following the Review Committee's review of the application for reconsideration, where there are determined to be no grounds for reconsideration or where according to relevant information the applicant is still unsuitable for listing, the signed consent of this Corporation's president shall be obtained and the application returned. Where there are determined to be grounds for reconsideration, the application shall be re-submitted to this Corporation's board of directors for ratification.
(4) Where the Review Committee has resolved that there are no grounds for reconsideration or that based upon the relevant materials the applicant is still unsuitable for listing, the applicant company may not make another application for reconsideration.
(5) Where an application for reconsideration is ratified by the board of directors, the company's stock shall be approved for listing.
(6) Where an applicant company withdraws its application for reconsideration during the reconsideration process, it shall be deemed not to have applied for reconsideration.
(7) The content to be reviewed in applications for reconsideration shall be strictly limited to whether the grounds for the original rejection decision were erroneous and whether any other conditions have subsequently arisen rendering the applicant unsuitable for listing. Apart from the provisions regarding solicitation of opinions in the listing review, the provisions of these Operating Procedures shall apply mutatis mutandis to the reconsideration process. The provisions of these Operating Procedures shall apply mutatis mutandis to the deadline for reconsideration except where no other conditions have subsequently arisen rendering the applicant unsuitable for listing and where the applicant for reconsideration has filed the application for reconsideration in a given month by the first of the given month and within the current review year. |
| 28 | Where the applicant company's initial stock listing application has been voluntarily withdrawn or has been rejected by resolution, the original lead securities underwriter shall make monthly reports on the progress and results of guidance work for six consecutive months beginning the month following the date of this Corporation's rejection notice or notification of acceptance of the withdrawal and shall submit a complete underwriter's assessment report two months prior to re-application for listing and shall continue to update it monthly until the date of application. The re-application for listing may be filed only after the applicant has applied for and obtained a confirmation letter from this Corporation (provided, where the applicant is exempt from guidance, the monthly progress and results report requirement shall not apply), and the financial report for the new fiscal year has been produced, audited and certified by a certified public accountant, passed by the board of directors, and recognized by the supervisors. |
Chapter 15 Listing of Stocks for Trading
|
| 29 | Following the Competent Authority's approval of the listing contract for an initial stock listing application, the responsible personnel shall notify the applicant company in writing to complete public offering of the stock and carry out centralized custody procedures (except where custody is not required) according to regulations and set a listing date with this Corporation. Only after these procedures are complete may the stocks be traded on the Taiwan Stock Exchange. |
Chapter 16 Supplementary Provisions |
| 30 | These Operating Procedures shall be implemented upon public announcement following approval by the Competent Authority; relevant appendices to these Operating Rules shall be implemented upon signed approval by the president of this Corporation. The same shall apply to amendments. |