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Article 2
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Where any common stock has been listed for more than six (6) months and the net worth per share is not less than the par value, the stock exchange may publicly announce that margin purchase and short sale may be permitted for such stock and shall make a collective report to the Financial Supervisory Commission ("FSC") of the Executive Yuan on a monthly basis.
Where a common stock is not OTC-managed, a second board (TIGER board) stock, or an emerging stock, and it has been OTC-listed for six months, and its net worth is not less than the par value, upon fulfilling the following requirements, the OTC exchange may publicly announce that such stock may be traded on margin purchase and short sale, and report to the FSC at each month.
1.It has been incorporated and registered for at least five years;
2. Its paid in capital is NT$300 million or more;
3.There are no accumulated loss in the most recent fiscal year, and the ratios of business profits and pre-tax profit to year-end paid-in capital are no less than 3 percent.
If the stocks referred to in the preceding two paragraphs have any of the following conditions, it may not be approved for margin purchase and short sale:
1.Where the stock price fluctuation is too drastic;
2. Where the ownership of shares is over-centralized; or
3.Where the trading volume is excessively abnormal.
The concrete determination standards and operational procedures of the provisions referred to in the Items of the preceding three Paragraphs shall be prescribed by the stock exchange and OTC exchange and approved by the FSC.
After a company changes the OTC stocks eligible for trading on margin purchase and short sale to become listed, unless the shares are overly concentrated, they shall be eligible for trading on margin purchase and short sale, and the regulation in Paragraph 1 regarding the 6 month listing requirement and the regulations in Items 1 and 3 of Paragraph 3 are not applicable; the said procedure shall be prescribed by the stock exchange and reported to the FSC for approval.
The regulations in the preceding Paragraph shall also be applicable for shares that have already been changed to become listed before this amendment went into effect but for less than 6 months.
When a listed (or OTC-listed) company is converted into a financial holding company in accordance with the Financial Holding Company Act, if the shares of the financial institution anticipated to be converted into the financial holding company are eligible for trading on margin purchase and short sale, the shares of the financial holding company after conversion, if it is a listed company, shall be eligible for margin purchase and short sale, unless the shares are overly concentrated; the six-month listing provision of Paragraph 1 and the provisions of Paragraph 3, Subparagraphs 1 and 3 shall not apply.
When a listed (or OTC-listed) company is converted into a financial holding company in accordance with the Financial Holding Company Act, if the shares of the financial institution anticipated to be converted into the financial holding company are eligible for trading on margin purchase and short sale, the shares of the financial holding company after conversion, if it is an OTC-listed company, shall be eligible for margin purchase and short sale, unless the shares are overly concentrated; the six-month OTC listing provision, and Subparagraphs 1 and 3, of Paragraph 2, and the provisions of Subparagraphs 1 and 3 of Paragraph 3, shall not apply.
When a listed (or OTC-listed) company is converted into an investment holding company by a 100 percent share conversion in accordance with the Business Mergers and Acquisitions Act, if the company shares anticipated to be converted into the investment holding company are eligible for trading on margin purchase and short sale, the shares of the investment holding company after conversion, if it is a listed company, shall be eligible for trading on margin purchase and short sale, unless the shares are overly concentrated; the six-month listing provision of Paragraph 1, and Subparagraphs 1 and 3 of Paragraph 3, shall not apply.
When a listed (or OTC-listed) company is converted into an investment holding company by a 100 percent share conversion in accordance with the Business Mergers and Acquisitions Act, if the company shares anticipated to be converted into the investment holding company are eligible for trading on margin purchase and short sale, the shares of the investment holding company after conversion, if it is an OTC-listed company, shall be eligible for trading on margin purchase and short sale, unless the shares are overly concentrated; the six-month OTC listing provision, and Subparagraphs 1 and 3, of Paragraph 2, and the provisions of Subparagraphs 1 and 3 of Paragraph 3, shall not apply
The procedures for operations under the proceeding four paragraphs shall be drafted respectively by the Stock Exchange and the OTC Securities Exchange and reported to the FSC for ratification.
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Article 5
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Where any beneficiary certificate allowed for margin purchase and short sale transactions has any of the following conditions, the stock exchange may make public announcement of suspension of the margin purchase and short sale transactions of such beneficiary certificate, or adjust the margin purchase ratio or the percentage of margin for short sale within the scope prescribed by FSC and report same to FSC for recordation:
1.Where listing of the beneficiary certificate has been terminated;
2.Where the issuer has failed to punctually file and make public announcement of financial reports;
3. Where the securities investment trust enterprise managing the securities investment trust fund has any of the conditions under Article 96, paragraph 1 of the Securities Investment Trust Enterprises Act;
4.Where the price fluctuation is too drastic;
5.Where the ownership of beneficiary interests is over-centralized;
6.Where the trading volume is excessively abnormal; or
7.Where there is any other event for which continued margin purchase or short sale transaction is improper.
Where margin purchase or short sale transaction is suspended or margin purchase ratio or percentage of margin of short sale is adjusted in accordance with the provisions in the preceding Paragraph, if the reason for suspension or adjustment no longer exists, the stock exchange shall make public announcement of the reinstatement and report to the FSC for recordation.
The concrete determination standards and operational procedures of the provisions referred to in the Items of the preceding two Paragraphs shall be prescribed by the stock exchange and approved by the FSC.
The provisions of subparagraphs 4 to 6 of paragraph 1 do not apply to exchange-traded fund beneficiary certificates.
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