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4-1
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After receiving an application by a foreign issuer for a primary stock listing, the undertaking personnel of this Corporation shall begin a document review of the application, its attachments, and other materials submitted by the foreign issuer, the underwriter, or the CPA:
1. Review guidelines:
1.1 The foreign issuer's consolidated financial reports for the most recent two years, audited and attested by a certified public accountant, shall be reviewed, and if there are irregular changes in any accounting titles, then the financial report for the preceding year shall be reviewed with particular attention to the given accounting title. If the review period extends beyond the fourth, seventh, or tenth month of the fiscal year adopted by the foreign issuer, then the foreign issuer shall be requested to additionally submit a consolidated financial report for the first quarter, the half-year, or the third quarter; the half-year financial report shall have been reviewed by a CPA. When the review period extends beyond the end of the fiscal year adopted by the foreign issuer, then within two months after the conclusion of that fiscal year, the foreign issuer shall additionally submit a CPA audited and attested financial report for that year as a basis for the review. At the time of submission of documents by the foreign issuer, its financial forecast information for the following quarter shall also be obtained for reference, and the foreign issuer shall be contacted during each subsequent quarter and requested to submit, prior to the end of the second month of the given quarter, financial forecast information for the following quarter until such time as the application is submitted to the Committee for Review of Stock Exchange Securities Listings. If the issuer is unable to provide the documents by the aforementioned deadlines, its application shall be returned.
1.2 The CPA audit or review report:
(1) The certifying CPAs for the most recent three years shall be two practicing Taiwan CPAs at a joint accounting firm approved by the competent authority for attestation of the financial reports of public companies.
(2) Another CPA shall be engaged to perform auditing and attestation when disciplinary action has been taken against the original CPA by the competent authority in the preceding three years, or a disposition against the CPA has been issued under Article 37, paragraph 3 of the Securities and Exchange Act, provided that this will not apply when the disciplinary action or disposition was a warning or a reprimand, and the cause of the warning or reprimand occurred five or more years prior to the date of application; another CPA shall also be engaged when the CPA has accumulated two or more demerits within the preceding year in accordance with this Company's Regulations Governing the Handling of Errors by Certified Public Accountants in Auditing of Initial Applications for Market Listing and the GreTai Securities Market’s Regulations for Handling Deficiencies in Certified Public Accountants' Reviews of OTC Stock Listing Applications.
(3) The section on the scope of the audit or review report shall explain the accounting principles adopted by the foreign issuer and the differences between those principles and the generally accepted accounting principles used in the ROC, and include an index to the notes; it shall also contain respective statements that the report has been reviewed in accordance with Taiwan's Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and generally accepted auditing standards, or has been reviewed in accordance with Taiwan's Statement of Auditing Standards No. 36, "Review of Financial Statements."
(4) The CPA shall produce an audit report that states an unqualified opinion without reference to the audit work of other CPAs.
(5) If the consolidated half-year financial reported reviewed by the CPA includes information on an important subsidiary, the financial report and related materials on that subsidiary shall also be reviewed by the CPA.
1.3 Content of the consolidated financial reports:
(1) The consolidated financial reports shall be produced using the New Taiwan Dollar as monetary unit, and shall be in Chinese, but may also add English.
(2) The consolidated financial reports shall be produced using period-on-period comparison, and shall include consolidated balance sheets, consolidated income statements, consolidated cash flow statements, consolidated statements of changes in shareholders' equity, and related notes. Statements of changes in shareholders' equity, however, need not be included in quarterly consolidated financial reports.
(3) The notes to consolidated financial reports shall state which accounting principles are employed; if they are not prepared according to Taiwan accounting standards, then the differences in those standards and the Taiwan standards as applied in their balance sheet and income statement titles shall be disclosed, including material discrepancies and their dollar amounts. The provisions of Article 15 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers shall not apply to those consolidated financial reports prepared in accordance with Taiwan accounting standards.
1.4 When the advisory period for market listing is less than six months, the issuer shall also attach the "Evaluation of Appropriateness of the Market Listing Advisory Schedule" for reference during the review.
1.5 Reviewers shall apprise themselves of whether the foreign issuer is in compliance with Articles 28-4, 28-5, and 28-6 of this Company's Rules Governing Review of Securities Listings, and whether any circumstance under any subparagraph of Article 28-8, paragraph 1 of the same Rules that would make market listing inappropriate apply to the foreign issuer or any company subject to its control.
2. Review procedures:
2.1 This Company may initiate the following review procedures as it deems necessary for a review:
(1) Requesting that the foreign issuer, the underwriter, or the CPA attach additional information and an explanation of the information.
(2) Requesting that the foreign issuer engage a CPA, attorney, or other institution designated by this Company to undertake an audit of the foreign issuer within a scope designated by this Company, and to submit the results of the audit to this Company.
2.2 The recommendations for the internal control system issued by a CPA for the most recent three years shall be examined for indications of material irregularities, and as needed, the foreign issuer shall be requested to engage a CPA to issue a special audit report on the internal control system.
2.3 The provisions of this Company's Regulations Governing the Reporting of Basic Information on Advisory Client Companies by Securities Underwriters and the Assessment and Auditing Procedures for Securities Underwriters Handling Initial Applications for Market Listing apply mutatis mutandis to foreign issuers applying for a primary listing.
2.4 The securities underwriter and CPA handling an application for a primary listing by a foreign issuer shall apply this Company's Regulations for Handling Deficiencies in the Evaluation Report or Other Relevant Information Submitted by a Securities Underwriter and Regulations Governing the Handling of Errors by Certified Public Accountants in Auditing of Initial Applications for Market Listing.
2.5 The undertaking personnel shall provide the key points of the audit results, requesting relevant expert opinion and consulting relevant information as needed to produce written proposals for the purpose of reference during the review process.
2.6 Applications for a primary listing by a foreign issuer shall be submitted for deliberation by the Securities Review Committee within six months after receipt of the application documents. Under exceptional circumstances, however, the Administration Department, ten days prior to the Review Committee meeting, may extend the deadline for submission to the Review Committee based upon review requirements or at the request of the applicant company, subject to the signed approval of the president of the GTSM. Extensions granted at the request of the applicant company are be limited to a maximum period of one month and may not extend into the following fiscal year.
3. The provisions of Article 4, paragraphs 2 and 3 of this Company's Procedures for Review of Securities Listings in regard to retaining an outside reviewer to give a consulting opinion, and the provisions regarding review by the Committee for Review of Stock Exchange Securities Listings apply mutatis mutandis to applications for primary listing by a foreign issuer, provided that when any circumstance of the subparagraphs of Article 28-8, paragraph 1 apply or in the case of re-reviews, the approval of two-thirds or more of the Review Committee members present is required, and the Review Committee must submit the concrete reasons for their overall consideration that approval of the listing be granted.
4. The provisions of this Company's Procedures for Review of Securities Listings in regard to consideration by the board of directors, return of applications and re-reviews, forwarding to the competent authority, and listing and trading of stocks shall apply mutatis mutandis to applications for primary listing by a foreign issuer.
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