Chapter I General Principles
|
| Article 1 | These Rules are adopted under Article 2 of the Listing Agreement for Securities and Article 43 of the Operating Rules of the Taiwan Stock Exchange Corporation (TWSE), to regulate the preparation, public announcement, and filing of financial reports, annual report to shareholders, certified public accountant (CPA) audit (review) reports, internal control systems, lending of funds and making of endorsements and guarantees, acquisition and disposal of assets, preparation and publication of financial forecasts, procedure for board of directors meetings, and continuing obligations of primary listed companies after listing on the TWSE, and to set forth the TWSE’s administrative measures for primary listed companies.
For the purposes of these Rules, the term "primary listed company" means a foreign issuer having successfully sought primary listing of its shares on the TWSE by submitting an application pursuant to Article 28-1 of the TWSE Rules Governing Review of Securities Listings. |
| Article 2 | Except as otherwise provided in applicable laws, regulations, or rules, matters related to regulating primary listed companies after listing on the TWSE shall be governed by these Rules. If there is an amendment to any regulatory provision based on which a provision of these Rules is made, the amended provision shall prevail. |
| Article 3 | All financial reports, annual reports to shareholders, and other materials submitted to the TWSE by a primary listed company shall be in Chinese, and may accompanied by English versions. |
Chapter II Compliance Matters for Primary Listed Companies
|
Section I Preparation, Public Announcement, and Filing of Financial Reports, Annual Reports, and Prospectuses, and Certified Public Accountant Audit (Review) Reports
|
| Article 4 | After listing on the TWSE, a primary listed company shall publish its financial reports on the information reporting website designated by the TWSE and additionally submit the hardcopy versions for meeting the regulatory filing requirement, and the financial reports thus published and filed shall conform to the following:
1. The financial reports shall be prepared in accordance with the generally accepted accounting principles in Taiwan or the United States or in accordance with the international accounting standards, using the New Taiwan Dollar (NTD) as the reporting currency. If the financial reports are prepared under Taiwan's accounting principles, the Regulations Governing the Preparation of Financial Reports by Securities Issuers shall be complied with, but Article 24 thereof need not be applied.
2. The financial reports shall be prepared using period-to-period comparison and shall comprise the four major financial statements (namely, the consolidated balance sheet, consolidated income statement, consolidated cash flow statement, and consolidated statement of changes in shareholders' equity) and the accompanying notes, except that in the case of a quarterly consolidated financial report the consolidated statement of changes in shareholders' equity is not required to be included. The accompanying notes included in financial reports shall include an indication of the specific accounting principles used, and, if the financial reports are not prepared under the financial reporting standards of Taiwan, a disclosure shall be made of any differences between the period-to-period balance sheet, income statement accounts, and the accompanying notes presented under such other financial reporting standards and those presented under Taiwan's financial reporting standards, specifying in particular any line-item that involves a difference and the amount affected. If the financial reports are prepared under Taiwan's accounting principles, the information on the items of loans to others and of endorsements or guarantees made to others presented in the accompanying notes shall be separately disclosed and may not be expressed as a net amount on a consolidated basis.
3. An annual financial report shall be published and filed within 4 months following the end of each business year, accompanied by an audit report issued by two domestic CPAs of an accounting firm approved by the competent authority to certify and attest to the financial reports of public companies; a semi-annual financial report shall be published and filed within 75 days following the end of each business half-year, accompanied also by an audit report issued by two domestic CPAs of an accounting firm approved by the competent authority to certify and attest to the financial reports of public companies; and a first or third quarter financial report, as the case may be, shall be published and filed within 45 days following the end of each first or third quarter of the business year, for which no CPA audit or review is required.
4. The financial reports published and filed pursuant to regulatory requirements shall all bear the signature or seal of the chairperson and managerial and accounting officers, who shall also issue a statement that the financial reports contain no misrepresentations or nondisclosures.
In the case of shares having no par value or a par value other than NT$10, where the calculation of 5 percent of paid-in capital is applicable under Article 6 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, 2.5 percent of shareholders’ equity shall be substituted; for the calculation of 20 percent of paid-in capital under Article 17 thereof, 10 percent of shareholders’ equity shall be substituted. |
| Article 5 | After listing on the TWSE, a primary listed company shall publish its annual report to shareholders on the TWSE-designated information reporting website and additionally submit the hardcopy version to meet regulatory filing requirements, and shall comply with the following requirements:
1. The annual report to shareholders shall contain the information prescribed in Article 21 of the Regulations Governing the Offering and Issuance of Securities by Foreign Issuers. The content of the annual report shall be in the Chinese language or a Chinese-English bilingual format. However, if a Chinese-English bilingual format is used and there is any discrepancy in the interpretation of the meaning of the respective texts, the Chinese version shall prevail.
2. Before the date on which a regular shareholders meeting is convened, the electronic file of the annual report to shareholders shall be transmitted to the TWSE-designated information reporting website and, within 30 days after each regular shareholders meeting, two hardcopies of the annual report to shareholders shall be submitted to the TWSE for review.
Prospectuses of a primary listed company shall be handled in compliance with Taiwan’s Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses, except as otherwise provided by the laws and regulations of the country where the primary listed company is registered.
In the case of shares having no par value or a par value other than NT$10, where the calculation of 10 percent of paid-in capital is applicable under Article 19, paragraph 1, subparagraph 1 of the Regulations referred to in the preceding paragraph, 5 percent of shareholders’ equity shall be substituted; for the calculation of 20 percent of paid-in capital under Article 25, paragraph 1, subparagraph 8, item 2 thereof, 10 percent of shareholders’ equity shall be substituted. |
| Article 6 | A CPA engaged to audit or review the financial report of a primary listed company shall in the audit or review report indicate the accounting principles used by the primary listed company and the differences between those principles and the generally accepted accounting principles in Taiwan, the amount thus affected, and, if applicable, an index to the accompanying notes on the relevant differences. The CAP shall also expressly state that the audit or review has been planned and conducted in accordance with Taiwan's Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and its generally accepted auditing standards.
When CPAs are engaged to review or audit the financial report of a primary listed company, a domestic CPA shall issue an audit or review report in which no reference is made to the audit work of any other CPA.
If any other audit work is performed by a foreign CPA firm, the foreign CPA firm shall be an international CPA firm. |
Section II Internal Control System, Lending of Funds and Making of Endorsements and Guarantees, Acquisition and Disposal of Assets, Preparation and Publication of Financial Forecasts, and Procedure for Board of Directors Meetings
|
| Article 7 | A primary listed company shall establish its internal control system under Taiwan’s Regulations Governing the Establishment of Internal Control Systems by Public Companies, except as otherwise provided by the laws and regulations of the country where it is registered.
The provisions of Article 11, paragraph 3, Article 17, and Article 42, paragraph 3 of the Regulations referred to in the preceding paragraph need not be applied to a primary listed company.
In the listing year and in the following 2 fiscal years, a primary listed company shall, when submitting the hardcopies of the annual report pursuant to Article 5, subparagraph 2 of these Rules, also publish the CPA special audit report of the previous year on the TWSE-designated information reporting website and file the hardcopy version.
The provisions of the preceding paragraph shall apply mutatis mutandis to a primary listed company if, after the expiration of the time period set out in the preceding paragraph, it voluntarily engages a CPA to conduct a special audit of its internal control system.
A CPA engaged to conduct a special audit of the internal control system of a primary listed company shall conduct the audit in compliance with the provisions of Chapter III, Section III of the Regulations Governing the Establishment of Internal Control Systems by Public Companies. |
| Article 8 | Where a primary listed company lends funds to others or makes endorsements or guarantees to others, it shall do so in compliance with Taiwan’s Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, except as otherwise provided by the laws and regulations of the country where it is registered.
The provisions of Article 12, paragraph 1, subparagraph 7 and Article 17, paragraph 4 of the Regulations referred to in the preceding paragraph need not be applied to a primary listed company.
In the case of shares having no par value or a par value other than NT$10, where the calculation of paid-in capital is applicable under Article 12, paragraph 1, subparagraph 11 of the Regulations referred to in paragraph 1, it refers to the sum of the share capital plus capital reserves minus the original issue premium. |
| Article 9 | Acquisition or disposal of assets by a primary listed company shall be handled in compliance with Taiwan’s Regulations Governing the Acquisition and Disposal of Assets by Public Companies, except as otherwise provided by the laws and regulations of the country where the primary listed company is registered.
The provisions of Article 4, paragraph 1, subparagraph 7 and Article 17, paragraph 1 of the Regulations referred to in the preceding paragraph need not be applied to a primary listed company.
In the case of shares having no par value or a par value other than NT$10, where the calculation of 20 percent of paid-in capital is applicable under Article 9, 10, 11, 30, or 33 of the Regulations referred to in paragraph 1, 10 percent of shareholders’ equity shall be substituted. |
| Article 10 | The preparation and publication of financial forecasts of a primary listed company shall be handled in compliance with the Regulations Governing the Publication of Financial Forecasts of Public Companies and the TWSE Standards for Determining the Requirement of Publication of Complete Financial Forecasts by Listed Companies.
The provisions of Article 26 of the Regulations referred to in the preceding paragraph need not be applied to a primary listed company. |
| Article 11 | The procedure for board of directors meetings of a primary listed company shall be handled in compliance with Taiwan’s Regulations Governing Procedure for Board of Directors Meetings of Public Companies, except as otherwise provided by the laws and regulations of the country where the primary listed company is registered. |
| Article 12 | If, because laws or regulations of the country where the primary listed company is registered provide otherwise, any provisions of Taiwan’s regulations are not applied to any of the internal control system, lending of funds and making of endorsements and guarantees, acquisition and disposal of assets, or procedure for board of directors meetings of a primary listed company, the TWSE may require the primary listed company to present the original text of the applicable laws or regulations of the country of registration and a Chinese translation thereof, and to engage the lawyer that issued the checklist of legal issues at the time of the TWSE listing review or other legal professionals to issue an expert opinion statement, and submit it by letter to the TWSE. |
Section III Continuing Obligations
|
| Article 13 | A primary listed company shall continuously engage a lead underwriter in the listing year and in the following 2 fiscal years to assist with ensuring compliance with Taiwan's securities laws and regulations, TWSE rules, regulations, and public announcements, and the Listing Agreement. After the end of the time period, the primary listed company may engage the same lead underwriter or any other securities firm qualified under Article 28-2 of the TWSE Rules Governing Review of Securities Listings or other qualified professional institution for fulfilling its continuing compliance obligations. |
| Article 14 | A primary listed company shall comply with Article 28-4 of the TWSE Rules Governing Review of Securities Listings regarding the continuous maintenance of independent directors and an audit committee or supervisors.
Article 4 of the TWSE Operating Guidelines Governing the Establishment of Independent Directors by Listed Companies shall apply mutatis mutandis with respect to primary listed companies. |
| Article 15 | The information reporting by a primary listed company shall be handled in accordance with the TWSE Rules Governing Information Reporting by Companies with Exchange-Listed Securities and Offshore Fund Institutions with Exchange-Listed Offshore Exchange-Traded Funds. |
| Article 16 | The disclosure of material information and holding of press conferences by a primary listed company shall be handled in accordance with the TWSE Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities and the TWSE Procedures for Press Conferences Concerning Material Information of Listed Companies. |
| Article 17 | A primary listed company after listing shall continuously comply with Taiwan's securities laws and regulations, TWSE rules, regulations, and public announcements, and the Listing Agreement. |
Chapter III Administrative Measures Governing Primary Listed Companies
|
| Article 18 | The TWSE may review the financial reports of primary listed companies by either formality review or substantive review.
If a formality review reveals that the documentation submitted by a primary listed company is incomplete, or that the CPA issues an audit report containing an opinion other than an unqualified opinion or issues a non-standard review report, and thus has a significant effect on the financial report of the primary listed company, the TWSE may require the primary listed company to give explanatory information on specified matters and submit a regulatory filing of the explanatory matters on the TWSE-designated information reporting website, and where necessary may require the primary listed company to hold an informational press conference. The results of formality reviews shall be reported to the competent authority within 3 working days following the deadline for the submission of financial reports.
For the substantive review of consolidated financial reports, the TWSE in principle selects by random at least 35 percent of primary listed companies for each of the annual and semi-annual period, and at least 15 percent of primary listed companies for each of the first-quarter and third-quarter period. A primary listed company must be selected for review at least once every 5 years.
If a substantive review of a primary listed company's financial report regarding major accounts or changes in financial ratios or of its material information published during the last year identifies any material irregularity in its financial information or material information, the TWSE may require the primary listed company or its CPA or lead underwriter, or agent for litigious and non-litigious matters in Taiwan, or independent director(s) to give explanatory information on specified matters and may, in consideration of the actual situation, require the primary listed company to submit a regulatory filing of the explanatory matters on the TWSE-designated information reporting website; where necessary, the TWSE may require the primary listed company to hold an informational press conference.
The results of substantive reviews shall be reported in consolidated form to the competent authority within 2 months following the due date for submission of financial reports by primary listed companies. If the complexity of a particular case requires an extension of the audit period, such shall be reported to the competent authority for approval and recordation. |
| Article 19 | In the review of the annual report to shareholders of a primary listed company, if the TWSE discovers that the annual report is not prepared in accordance with Article 5, subparagraph 1 of these Rules, it may require the primary listed company to make supplementation or correction and upload information relating to the supplementation or correction, in the form of an electronic file, to the TWSE-designated information reporting website, and it shall also treat the discrepancy as "any other event having a material impact on shareholders’ equity" under the TWSE Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities and bring this matter to the attention of investors. |
| Article 20 | For auditing of the implementation of audit plans by the internal auditors of a primary listed company, the TWSE in principle selects by random at least 35 percent of primary listed companies for each of the annual and semi-annual period, and at least 15 percent of primary listed companies for each of the first-quarter and third-quarter period.
The TWSE may use the CPA special audit report of the previous year presented by a primary listed company under Article 7 of these Rules instead of conducting the audit referred to in the preceding paragraph.
The TWSE shall prepare audit reports on the implementation of auditing work referred to in the preceding paragraph and report the audit findings to the competent authority. If the audit findings reveal non-compliance by a primary listed company in its implementation of its internal control system, the TWSE shall request the primary listed company to propose specific improvements or solution measures and report the same by letter to the TWSE for recordation. In the event of material non-compliance, the TWSE may issue a letter requesting the primary listed company to send personnel to participate in guidance courses held by a body designated by the competent authority, and send a copy of the letter to the competent authority. |
| Article 21 | If any of the following material events occurs to a primary listed company, the TWSE shall conduct verification and public disclosure operations following its Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities. The TWSE shall analyze and collect relevant information on the material event, and when necessary prepare an analysis report:
1. Finances
(1) The primary listed company's financial statements for the current period show serious loss, such that the company's net worth is lower than the share capital stated in the financial report.
In the case of shares having no par value or a par value other than NT$10, the “share capital” refers to the sum of the share capital plus capital reserves minus the original issue premium.
(2) The CPA issues an audit or review report expressing an opinion other than an unqualified opinion or a non-standard audit or review report, and the circumstances are serious.
(3) The primary listed company or its parent company or any of its subsidiaries has experienced a loss of creditworthiness.
(4) A principal debtor of the listed company has filed for bankruptcy or experienced any other similar event, or a principal debtor in favor of whom the company has made an endorsement or guarantee is unable to settle a debt or obligation when due.
(5) From financial information submitted by the primary listed company it is found that the company has provided any endorsement or guarantee for a company with which it does not do business, or that it has provided company assets as collateral for loan borrowings of another person.
(6) The assets (excluding all types of domestic stocks and open-end bond funds) acquired or disposed of by the primary listed company or its subsidiaries reach 20 percent or more of the share capital stated in the company's financial report, or NT$300 million or more.
In the case of shares having no par value or a par value other than NT$10, for the calculation of the aforesaid 20 percent of share capital, 10 percent of shareholders’ equity shall be substituted.
(7) The amount of open interest in derivatives held for trading purposes in the current month shows a month-on-month increase of 10 percent or more of the share capital stated in the financial report, or the combined amount of realized and unrealized losses shows a month-on-month increase of NT$100 million or more. In the case of shares having no par value or a par value other than NT$10, for the calculation of the aforesaid 10 percent of share capital, 5 percent of shareholders’ equity shall be substituted.
2. Business
(1) The financial statements of the primary listed company for the current period indicate a serious reduction in production, or a suspension of manufacturing operations in whole or in part, resulting in serious loss, and it is predicted that the circumstance cannot be improved within a short time.
(2) Any of the primary listed company's plants or major facilities has been rented out, or all or a substantial part of the company's major assets have been pledged, such that there is a likelihood of operational difficulties or suspension of operations.
(3) Any instance of major disaster, protest, strike, or environmental pollution occurs to the primary listed company and it is predicted that the business operations cannot be restored within a short time, or the predicted losses exceed 20 percent of the share capital stated on the financial report. In the case of shares having no par value or a par value other than NT$10, for the calculation of the aforesaid 20 percent of share capital, 10 percent of shareholders’ equity shall be substituted.
3. Other
(1) Any matter involving litigious or non-litigious proceedings, an administrative disposition, or contentious administrative proceedings, with a material effect on the primary listed company's financial or business operations.
(2) The primary listed company issues any material information, or the press/media report any event with a material effect on the company's operations.
(3) An independent director's office that the primary listed company establishes in accordance with regulatory requirement becomes vacant for any reason other than illness, death, or other force majeure event, resulting in an insufficient number of independent directors, or as a result the company has no independent director with a household registration in Taiwan.
(4) A circumstance arises in which the primary listed company has no agent for litigious and non-litigious matters in Taiwan.
(5) The competent authority or the TWSE otherwise deems necessary.
When any material event occurs to a primary listed company, the TWSE may require the primary listed company or its CPA or lead underwriter, or agent for litigious and non-litigious matters in Taiwan, or independent director(s) to give explanatory information on specified matters and may, in consideration of the actual situation, require the primary listed company to submit a regulatory filing of the explanatory matters on the TWSE-designated information reporting website or require the primary listed company to hold an informational press conference. |
| Article 22 | The review of financial forecasts of a primary listed company by the TWSE can be categorized into formality review and substantive review and applies to all primary listed companies. When reviewing financial forecasts, the TWSE shall, in addition to filling out the formality review checklist and the substantive review checklist, take note of whether there is the existence of any circumstance under Article 5, paragraph 2 or 3 of the TWSE Procedures for Review of Financial Reports of Listed Companies.
In the formality review of financial forecasts of a primary listed company, if the documents submitted are incomplete, the documents publicly released are incomplete, the date of public announcement and reporting or the date of preparation, restatement, correction, or update does not comply with the Regulations Governing the Publication of Financial Forecasts of Public Companies, or if the CPA issues a non-standard auditor's opinion, then the concrete handling methods or handling suggestions shall be summarized and reported to the competent authority.
In the substantive review of financial forecasts of a primary listed company, the TWSE may hire a CPA to provide opinions, when necessary. The conclusions of the review of financial forecasts shall, by the 10th day of the month that follows the day on which the primary listed company reports its financial forecasts, be summarized and reported to the competent authority. |
| Article 23 | With respect to the financial report review, annual report to shareholders, internal control system, lending of funds and making of endorsements and guarantees, acquisition or disposal of assets, procedure for board of directors meetings, analysis and audit of material events, or financial forecasts of a primary listed company, if the TWSE deems it necessary, the primary listed company shall conduct a special audit within or outside of Taiwan in full cooperation with the TWSE or its appointed lawyer, CPA or other professional individual or organization, and shall provide all such information as may be required by the TWSE or the aforementioned professional individual or organization; the costs for hiring the professional individual or organization and the fees and expenses incurred by the TWSE or the professional individual or organization shall be the responsibility of the primary listed company.
When the TWSE or its appointed professional individual or organization conducts an audit of a primary listed company under the preceding paragraph, the primary listed company may not refuse, impede, or evade the audit and shall produce account books, forms/statements, documents, or all other information as may be required within the specified time limit to the TWSE or the aforementioned professional individual or organization.
With respect to the implementation of the special audit referred to in paragraph 1, the TWSE-appointed professional individual or organization shall prepare special audit reports and submit them together with the relevant information and materials referred to in the preceding paragraph to the TWSE for summarizing and reporting to the competent authority after analysis. |
Chapter IV Penal Provisions and Supplementary Provisions |
| Article 24 | If a primary listed company violates any provision of these Rules, the TWSE may, in addition to handling the violation pursuant to these Rules, issue a letter requesting the primary listed company to take improvement action, and may further require the primary listed company or its CPA or lead underwriter to propose an improvement action plan in a response letter addressed to the TWSE. The TWSE may additionally impose a monetary penalty on the primary listed company commensurate with the circumstances of the particular case, and, if the violation is serious in nature, alter trading method or suspend trading of the company's listed securities pursuant to Article 49-1, paragraph 1, subparagraph 10, or Article 50-3, paragraph 1, subparagraph 9 of the TWSE Operating Rules.
Article 9 of the TWSE Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities shall apply mutatis mutandis to the imposition of monetary penalties under the preceding paragraph. |
| Article 25 | These Rules, and any amendments hereto, shall be enforced after approval and recordation by the competent authority. |