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Article 4-1
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After receiving an application by a foreign issuer for a primary stock listing, the case handler of the TWSE shall begin a document review of the application, its appendices, and other materials submitted by the foreign issuer, the underwriter, the CPA and the lawyer:
- Review guidelines:
- The foreign issuer's 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 items, then the financial report for the preceding year shall be reviewed with particular attention to the given accounting item. From the date that the applicant company submits its application documents until its listing, it shall, in compliance mutatis mutandis with the requirements of the competent authority regarding public announcement and filing of financial reports, submit all of its quarterly and annual financial reports to the TWSE, and upload the electronic versions of the aforesaid financial reports to the Internet information reporting system designated by the TWSE, to serve as a basis for review. If the review period crosses over the fiscal year of the application, the TWSE shall request the applicant company to additionally submit the unaudited four major financial statements of the fiscal year of the application to serve as reference for review.
- The CPA audit or review report:
- 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.
- None of the following circumstances may apply to the CPAs engaged by the applicant company:
- In the preceding three years, the CPAs have been subject to disciplinary action or disposition in the form of a warning or above, but this restriction does not apply if the disciplinary action or disposition is a warning or reprimand and the cause in fact for such disciplinary action or disposition occurred five or more years before the date of application for listing.
- The CPAs have been subject at least twice to a public announcement by the TWSE or TPEx in the most recent year under the TWSE Regulations Governing the Handling of Errors by Certified Public Accountants in Auditing of Initial Applications for TWSE Listing or the GreTai Securities Market Regulations for Handling Deficiencies in Certified Public Accountants' Reviews of GTSM Listing Applications that the financial reports of TWSE or TPEx listing applicants that have been attested by the CPAs are rejected for a certain period, but this restriction does not apply if unless a disposition of rejecting the CPA-attested financial reports of the listing applicant company for a certain period by TWSE or TPEx, and the cause in fact for such disposition public announcement occurred five or more years before the date of application for listing.
- The opinion section of the audit report or conclusion section of the review report shall explain the accounting principles adopted by the foreign issuer and the differences between those principles and the regulations issued by the competent authority to govern the preparation of financial reports for the relevant industry, 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.
- The CPA shall produce an audit report that states an unqualified opinion without reference to the audit work of other CPAs.
- If the quarterly financial reported reviewed by the CPA includes information on a major subsidiary, the financial report and related materials on that subsidiary shall also be reviewed by the CPA, and the CPA shall issue a conclusion on the major subsidiary without reference to any other accountant's review.
- Content of the financial reports:
- The financial reports shall be produced using the New Taiwan Dollar as monetary unit, and shall be in Chinese, but may also add English.
- The financial reports shall be produced using period-on-period comparison, and shall include balance sheets, statements of comprehensive income, statements of cash flows, statements of changes in equity, and the accompanying notes.
- The notes to financial reports shall state the accounting principles used by the foreign issuer. If the financial reports are prepared in accordance with the regulations issued by the competent authority to govern the preparation of financial reports for the relevant industry, then Article 7, paragraph 1 of those regulations governing the preparation of annual parent company only financial reports need not apply. If they are not prepared in accordance with the regulations issued by the competent authority to govern the preparation of financial reports for the relevant industry, then the differences, including material discrepancies and their dollar amounts, from the regulations governing preparation of financial reports adopted by the competent authority, as reflected in the period-to-period balance sheet and the statement of comprehensive income, shall be disclosed.
- Checklist of legal issues:
The case handler shall ascertain whether the lawyer filling out the checklist has compiled the working paper in accordance with the instructions on the preparation of the checklist and, if the contents of the comments section or results of review indicated in the checklist are not adequately confirmed by the lawyer’s working paper, shall request the lawyer to provide a supplementary explanation.
- Reviewers shall apprise themselves of whether the foreign issuer is in compliance with Articles 28-4, 28-5, and 28-6 of the TWSE 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 it controls.
- Review procedures:
- The TWSE may initiate the following review procedures as it deems necessary for a review:
- Requesting that the foreign issuer, the underwriter, the CPA and lawyers attach additional information and an explanation of the information.
- If a material irregularity is discovered and still cannot be reasonably explained following a request for the submission of additional written information by the relevant persons in accordance with the preceding paragraph, then, with the written approval of the TWSE president, an onsite audit may be conducted or the foreign issuer may be required to engage a CPA, attorney, or other institution designated by the TWSE to conduct an audit of the foreign issuer within a scope designated by the TWSE, and to submit the results of the audit to the TWSE.
- The recommendations for the internal control system issued by a CPA for the most recent 3 years shall be examined, and the foreign issuer shall be requested to engage a CPA to issue a special audit report on the internal control system.
- The TWSE shall gain an understanding of the applicant's production of financial forecast data, and as needed may require the applicant to provide financial forecast data for each quarter during the review period. The data shall be provided only for use as a reference in the review of the given case, and may not be made public or otherwise divulged.
- Whether the prospectus submitted by foreign issuers is compiled in accordance with the TWSE Regulations Governing the Particulars to be Recorded in Prospectuses for Initial Listing of Securities shall be examined. Whether the checklist of legal issues filled out by the lawyer adequately supports the conclusions of the legal opinion contained in the prospectus shall also be ascertained.
- The securities underwriter and CPA handling an application for a primary listing by a foreign issuer shall apply the TWSE Regulations Governing the Reporting of Basic Information on Advisory Client Companies by Securities Underwriters, Directions Governing the Particulars to be Recorded in the Securities Underwriter's Evaluation Report for Initial Listing of Securities, Assessment and Auditing Procedures for Securities Underwriters Handling Initial Applications for Market Listing, 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.
- The case handler 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.
- An application for a primary listing by a foreign issuer is subject to review by the management, before being submitted to the Review Committee for review. The application will be submitted to the Review Committee for review where said members pass a resolution approving the listing. Where a resolution disallowing the listing is passed, the TWSE Vice President will assemble the relevant personnel for a re-review and, if necessary, invite the applicant and securities underwriter to give an explanation. If the listing is still not approved under such circumstance, it will be forthwith rejected upon the approval of the President. The aforementioned internal review meeting shall have a quorum of two-thirds of the internal members.
- Applications for a primary listing by a foreign issuer shall be submitted for deliberation by the Securities Review Committee within six weeks after receipt of the application documents. Under exceptional circumstances, however, the Administration Department, 10 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 a month.
- When a foreign issuer applies for a primary listing (with the exception of a GTSM primary listed company applying for a TWSE primary listing, to which the provisions of Article 7-1, paragraph 1, subparagraph 1 of the TWSE Procedures for Review of Securities Listings regarding exemption from review by the review committee and relevant provisions of Article 7-2 of said procedures apply mutatis mutandis), the provisions of Article 4, paragraphs 2 and 3 of the TWSE 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 will apply mutatis mutandis. However, when any circumstance of the subparagraphs of Article 28-8, paragraph 1 applies to a foreign issuer or any company it controls, 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.
- The provisions of the TWSE 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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