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Article 2
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Where shares of any common stock have been listed on an exchange for six months and the net worth per share is not less than par value, the securities exchange shall publicly announce them as shares eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis.
For shares in a common stock that is not OTC-managed or an emerging stock, if the shares have been OTC-listed for six months, and the net worth per share is not less than par value, and the requirements listed below are met, the OTC market shall publicly announce the shares as eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis.
1. The issuer has been incorporated and registered for at least three years. If the issuer is a transferee company of a demerger from a listed company or an OTC company, the time of incorporation may be calculated from the date of establishment of the demerged division as shown in the financial data of the demerged company;
2. Its paid in capital is NT$300 million or more;
3. There was no accumulated loss in the most recent fiscal year, and the ratios of operating income and income before tax to year-end paid-in capital, as reported in the individual financial statements and the consolidated financial statements compiled in accordance with the Statement of Financial Accounting Standards No.7, are no less than 3 percent. However, if the issuer has prepared a consolidated financial statement, the provisions under this subparagraph are not applicable to the operating income stated in the issuer's individual financial statements.
For Taiwan depositary receipts that have been listed on an exchange for six months, if the foreign issuer did not post an accumulated deficit in either the CPA-audited and certified consolidated financial report for the most recent fiscal year or the CPA-audited and certified half-year consolidated financial report (either report shall have been prepared in compliance with the laws and regulations of the issuer's home country), and if the number of units listed on the exchange is 60 million units or more, the securities exchange shall publicly announce the units as eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis.
If any of the following conditions obtain with respect to the shares or Taiwan depositary receipts referred to in the preceding three paragraphs, they may not be approved for margin purchase and short sale:
1. Share price is too volatile.
2. Equity ownership is overly concentrated.
3. Trading volume is excessively abnormal.
The specific standards and procedures required in the preceding four paragraphs shall be prescribed separately by securities exchanges and OTC markets and reported to the competent authority for approval.
Where the issuer of OTC-listed shares that are eligible for margin purchase and short sale applies to switch to an exchange listing, unless equity ownership is overly concentrated, the shares shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 1 regarding the six-month exchange listing requirement will not be applicable, nor will the provisions of paragraph 4, subparagraphs 1 and 3. The aforementioned procedures shall be drafted by the securities exchanges and reported to the competent authority for approval.
The provisions of the preceding paragraph also apply to shares that are switched to an exchange listing less than six months before this amendment enters into force.
When a company with an exchange (or OTC) listing is to be converted into a financial holding company in accordance with the Financial Holding Company Act, if the shares of a financial institution to be converted into the financial holding company are eligible for margin purchase and short sale, where the financial holding company thus created is an exchange-listed company, unless equity ownership is overly concentrated, its shares shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 1 regarding the six-month exchange listing requirement will not be applicable, nor will the provisions of subparagraphs 1 and 3 of paragraph 4.
When a company with an exchange (or OTC) listing is to be converted into a financial holding company in accordance with the Financial Holding Company Act, if the shares of a financial institution to be converted into the financial holding company are eligible for margin purchase and short sale, where the financial holding company thus created is an OTC-listed company, unless equity ownership is overly concentrated, its shares shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 2 regarding the six-month OTC listing requirement will not be applicable, nor will the provisions of subparagraphs 1 and 3, or paragraph 4, subparagraphs 1 and 3.
When a company with an exchange (or OTC) listing is to be converted into an investment holding company through a 100 percent share conversion in accordance with the Business Mergers and Acquisitions Act, if the shares of the company to be converted into the investment holding company are eligible for margin purchase and short sale, where the investment holding company thus created is an exchange-listed company, unless equity ownership is overly concentrated, its shares shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 1 regarding the six-month exchange listing requirement will not be applicable, nor will the provisions of paragraph 4, subparagraphs 1 and 3.
When a company with an exchange (or OTC) listing is to be converted into an investment holding company through a 100 percent share conversion in accordance with the Business Mergers and Acquisitions Act, if the shares of the company to be converted into the investment holding company are eligible for margin purchase and short sale, where the investment holding company thus created is an OTC-listed company, unless equity ownership is overly concentrated, its shares shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 2 regarding the six-month OTC listing requirement will not be applicable, nor will the provisions of subparagraphs 1 and 3, or paragraph 4, subparagraphs 1 and 3.
The procedures required in the preceding four paragraphs shall be prescribed separately by securities exchanges and OTC markets and reported to the competent authority for approval.
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