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Amendments

Title:

Operating Rules of the Taiwan Stock Exchange Corporation  CH

Amended Date: 2024.03.11 (Articles 43 amended,English version coming soon)
Current English version amended on 2022.04.28 
Categories: Basic Laws and Regulations

Title: Operating Rules of the Taiwan Stock Exchange Corporation(2006.05.03)
Date:
Article 51 Upon the merger between two listed companies or between a listed company and an OTC company, the surviving company shall remain a listed company, and the terminated company shall publicly announce the de-listing of its securities. If by reason of the merger, the surviving company issues new shares or certificates of entitlement to new shares of the same class of stocks that are already listed, listing of the shares may commence from the record date of the merger; provided, trading of the originally listed securities shall be suspended eight trading days before the record date of the merger (and non-inclusive of that date), and an application shall be completed and filed with this Corporation, annexing the relevant documents, at least 15 trading days before the record date of the merger (and non-inclusive of that date).
Where a listed company merges with an unlisted or non-OTC company by using as consideration an additional issue (whether by public offering and issuance or private placement) of shares or securities that may be converted into or may be used to subscribe shares, and the surviving company after the merger remains a listed company, except in the case of a securities, financial, or insurance company with special approval from the authority in charge of the industry concerned, all the following conditions shall be met:
1. The financial data of the unlisted company or non-OTC company that was merged and the consolidated financial data of the two merged companies satisfy the profitability requirements of listed companies enumerated in Article 4 of the Criteria for Review of Securities Listings; provided, the said provision shall not apply where the net worth per share of the surviving company, both in the most recent financial year and on the most recent pro-forma financial report, is higher than the net worth per share of the original listed company. Where the above proviso is satisfied, if the listed company or the merged unlisted (non-OTC) company, from the date next following the date of the balance sheet in the most recent financial report to the date the application is filed with this Corporation, undergoes any material change in capital affecting the net worth per share, such as a capital increase or reduction or distribution of dividends, the net worth per share of the surviving company shall be higher than the net
worth per share of the original listed company, and the certifying CPA shall submit a review opinion following the imputed adjustment.
2. The unlisted company or non-OTC company being merged does not satisfy the circumstances specified in Subparagraphs 1, 3, 4, 6, 8, and 12 of Paragraph 1 of Article 9 of the Criteria for Review of Securities Listings.
3. The most recent annual financial reports of the unlisted company or non-OTC company being merged have been audited by a CPA approved by the Competent Authority to audit publicly listed companies, and the auditor issues an unqualified opinion.
4. Where the merged unlisted/non-OTC company is a foreign company meeting the conditions set forth in Article 21 of the Business Mergers and Acquisitions Act, the listed company shall submit the following documents for reference. Provided, that subparagraphs 1 and 2 and paragraph 4 shall not apply where the foreign company complies with Article 27, paragraph 1, subparagraphs 2 and 4 of this Corporation's Criteria for Review of Securities Listings:
(1) documentation of foreign investment approval by the Ministry of Economic Affairs Investment Commission.
(2) financial report for the unlisted or non-OTC company being merged, and an audit report with an unqualified opinion issued by the certifying CPA.
(3) an opinion by a Taiwan CPA regarding the differences in accounting principles applied in the Republic of China (Taiwan) and in the foreign company's home country and the resultant effects on the financial report.
(4) a written report analyzing and explaining the reasonableness of the share exchange ratio and price and overall synergy at the time of the merger between the listed company and the foreign company, issued by a CPA other than the original certifying CPA who is approved by the Competent Authority to perform financial certification for public companies.
For the new shares issued as a result of the merger referred to in the preceding two paragraphs, if such shares are of a different class from the listed securities, then such shares shall conform to Paragraph 2 of Article 14 of the Criteria for Review of Securities Listings.
Where a listed company undertakes a merger pursuant to Paragraph 2, and the additional common shares or overseas depositary receipts issued (whether by public offering or private placement) due to the merger will account for 10 percent or more of the aggregate shares already issued and anticipated to be issued by the listed companies, any directors, supervisors, and shareholders holding more than 10 percent of the issued shares of the company being merged shall place in centralized custody in compliance with all the below-listed provisions any additional common shares (including those publicly offered and issued or privately placed) or overseas depositary receipts issued due to the merger that they hold, with the exception that a listed company that merges into itself a subordinate company in which it holds 50 percent or more of the issued shares may be exempted from the provisions regarding the ratio of total shares that shall be placed in centralized custody; provided, this requirement may be waived where a listed company merges with a subordinate company of which it holds 90 percent or more of the outstanding shares in accordance with Article 316-2 of the Company Act:
1. Such persons obtaining common shares publicly offered and issued due to the merger shall place into centralized custody at least 50 percent of the total such shares they hold, and in aggregate not less than the total ratio calculated under Paragraph 2 of Article 10 of this Corporation's Criteria for Review of Securities Listings for the common shares offered and issued as a result of the merger. In case of shortage, negotiation shall be made with other shareholders holding common shares publicly offered and issued due to the merger to make up the shortfall. Of this portion of shares placed in central custody, one-fifth may be withdrawn after two full years have elapsed from the date that listed trading thereof commences; thereafter, a further one-fifth of such portion may continue to be withdrawn once every six months. If the proviso of Article 10, paragraph 4, subparagraph 1 of this Corporation's Criteria for Review of Securities Listings is satisfied, this portion of shares may be withdrawn early;
the remaining portion of shares may be withdrawn in full only after one full year has elapsed from the date that listed trading commences.
2. Such persons obtaining privately placed common shares due to the merger shall issue a written undertaking not to transfer the shares within a certain period. The written undertaking shall furthermore state: “The Taiwan Stock Exchange Corporation may from time to time send personnel to carry out spot checks to ascertain whether I have faithfully abided by my undertaking not to transfer the common shares I have obtained through private placement due to the merger. After expiration of the period in which I have undertaken restricted transfer, for those shares I obtained due to the merger that are still classified as privately placed common shares, I shall continue to abide by the restrictions on transfer under Article 43-8 of the Securities and Exchange Act.” If public issuance procedures for the shares are subsequently duly carried out during the restricted transfer period, the shareholder shall place its shareholding in centralized custody and withdraw it in periodic installments in accordance with
regulations. The total ratio of privately placed common shares subject to restriction of transfer and the period of the restriction shall accord with the provisions of the preceding subparagraph.
3. Such persons obtaining overseas depositary receipts issued for capital increase due to merger shall provide a written undertaking that for a certain period of time they shall not redeem or transfer the overseas depositary receipts held by them, and shall incorporate provisions restricting redemption into the contract signed and entered into with the custodian institution. The total ratio of global depositary receipts subject to restriction of redemption or transfer and the period of the restriction shall accord with the provisions of the preceding subparagraph.
Where the merger between a listed company and other companies does not conform with the preceding four Paragraphs, or where a new company is created as a result of the merger, the original listed company shall apply for the termination of listing. The surviving company or the newly established company may apply for listing of stocks after completion of the merger.
Where a listed company, pursuant to the Business Mergers and Acquisitions Act, Company Act, or other laws or regulations, acquires shares, business, or assets of an unlisted/non-OTC company, with shares or securities that may be converted into or may be used to subscribe shares as consideration, if such transaction reaches any of the following standards, such unlisted/non-OTC company shall additionally comply with all of the conditions set out in paragraph 2, and that unlisted/non-OTC company and any director, supervisor, or shareholder holding 10 percent or more of the shares thereof who has holdings of the new common shares (including those publicly offered and issued or privately placed) or overseas depositary receipts issued by the listed company for such capital increase shall also deposit the share certificates into central custody in accordance with the provisions of paragraph 4:
1. If the book entry amount of the shares or securities that may be converted into or may be used to subscribe shares that are obtained by the unlisted/non-OTC company as a result of being acquired reaches 70 percent or more of its book net asset value, or the shares or securities that may be converted into or may be used to subscribe shares that are paid by the listed company for the acquisition reach 10 percent or more of the aggregate shares already issued and anticipated to be issued by the listed companies.
2. If the total number of shares acquired from shareholders of the unlisted/non-OTC company reaches 70 percent or more of its issued shares.
3. If the operating revenue or operating profit or book net asset value of a division being spun off from the unlisted/non-OTC company to the listed company reaches 70 percent or more of its entire operating revenue or operating profit or book net asset value, or reaches 10 percent or more of the entire operating revenue or operating profit or book net asset value on the listed company's pro forma financial statements.
When a listed company files an application under Paragraph 1, Paragraph 2, or the preceding paragraph, it shall fill in the application form and submit relevant documents (attachments). After this Corporation has examined and approved the application, a written opinion approving the merger (or acquisition) shall be sent to the company. The said written opinion shall state "This approval letter is provided only for purposes of the applicant company registering with (applying to) the Competent Authority for capital increase and issuance of new shares as a result of merger (or acquisition). If the application is not approved by the Competent Authority, this approval letter shall become void."
If an unlisted/non-OTC company that is acquired or assigns business operations as set out in paragraph 6 is a foreign company, the provisions of paragraph 2, subparagraph 4 shall apply mutatis mutandis.
Article 51-1 Where a single listed company is converted into a financial holding company pursuant to Article 29 of the Financial Holding Company Act, and after this Corporation has reported to and obtained approval from the Competent Authority, the securities of the financial holding company shall be listed for trading from the record date of the share conversion, and the securities of the originally listed company shall be de-listed on the same date.
The provisions of the preceding paragraph shall also apply in cases where multiple listed or OTC companies, at least one of which is a listed company, are converted into a single financial holding company. However, if an unlisted/non-OTC company(ies) are converted together with other listed or OTC companies, such unlisted/non-OTC company(ies) shall conform to the following conditions:
1. It shall be free of any of the circumstances specified in Subparagraphs 1, 3, 4, 6, 8, or 12 of Paragraph 1 of Article 9 of this Corporation's Criteria for Review of Securities Listings.
2. Its most financial report for the most recent fiscal year shall have been audited by a CPA approved by the Competent Authority to audit public companies and have received an unqualified opinion from such CPA.
Where circumstances in Paragraph 1 or Paragraph 2 apply to a listed company(ies), the listed company whose converted shares are anticipated to account for the greatest proportion of the anticipated issued shares of the financial holding company shall carry out with this Corporation the various procedures set forth in the subparagraphs hereinbelow on behalf of all the companies whose shares are being converted, and, after this Corporation has obtained approval from the Competent Authority, the trading of such company's(ies') original listed securities shall be suspended eight trading days prior to (and non-inclusive of) the record date of the share conversion:
1. An Application for Listing of Shares of a Listed Company Converted into a Financial Holding Company shall be completed and filed, along with all specified attachments, with this Corporation at least fifteen trading days prior to (and non-inclusive of) the record date of the share conversion.
2. A Declaration of Suspension of Share Transfer Registrations shall be completed and filed by (inclusive of) the application date in the preceding subparagraph. This Corporation shall directly make an announcement to the market of suspension of amendments to entries in the shareholder rosters of the listed companies participating in the conversion into a financial holding company.
Where a financial holding company is established by means of assignment of operations by a listed company pursuant to Article 24 of the Financial Holding Company Act and the financial holding company holds 100 percent of the shares of the assigned company, an application for amendments to listed securities, accompanied by relevant documentation, shall be filed with this Corporation pursuant to Article 45; however, the provisions of Subparagraph 5 of Paragraph 1 of Article 50-1 shall not apply to the change in business scope.
Where shares of a single or multiple company(ies) limited by shares are converted into shares of a listed financial holding company pursuant to Article 29 of the Financial Holding Company Act, the financial holding company shall complete the relevant documentation and submit an application to this Corporation according to the procedures in Paragraph 3 hereof. After this Corporation has obtained approval from the Competent Authority, the listed securities shall be de-listed on the record date of the share conversion and the shares of the financial holding company into which they are converted shall be listed on the same day; provided, any unlisted/non-OTC company(ies) limited by shares participating in the share conversion shall conform to the requirements set forth in Subparagraphs 1 and 2 of Paragraph 2
Where circumstances set forth in Paragraphs 1, 2, or 5 apply to a company limited by shares participating in the share conversion and the company was a listed (or OTC) company before conversion, shares that prior to conversion were already duly placed in centralized custody by the company's directors, supervisors, and major shareholders at the time of initial listing (or OTC listing) shall remain in centralized custody after the conversion until the expiry of the custody period. If a converted company was an unlisted/non-OTC company prior to conversion and it is anticipated that the company's converted shares will account for 10 percent or more of the financial holding company's issued shares and shares anticipated to be issued by it, the centralized custody of shares of the directors, supervisors, and major shareholders of such unlisted/non-OTC company shall be handled in accordance with Article 51, paragraph 4, subparagraph 1. However, this restriction shall not apply where the circumstances set forth in
Paragraph 2 of Article 31 of the Financial Holding Company Act exist as a result of the share conversion.
A financial holding company established after conversion and meeting the requirements of Article 13 of this Corporation's Criteria Governing Information to be Published in Prospectuses for Initial Applications for Securities Listing, or a financial holding company converted from a single listed company or multiple listed or OTC companies, may prepare a simplified prospectus.
Article 51-3 Where a single listed company, pursuant to Article 31 of the Business Mergers and Acquisitions Act, converts its shares to another newly established or already-listed existing company, and becomes a 100 percent held subsidiary of such newly established or already-listed existing company, after the Competent Authority has given approval, the securities of the newly established or already-listed existing company shall be listed after completion of applicable listing procedures, and the listing of the securities of the original listed company shall be terminated on the record date of the share conversion.  
The provisions of the preceding paragraph shall also apply in cases where a single or multiple company(ies) limited by shares convert shares into a newly established or already-listed existing company; provided that if an unlisted (non-OTC) company(ies) converts shares together therewith, the operating revenue or operating income from said unlisted (non-OTC) company(ies) shall not exceed 50 percent of the total operating revenue or operating income on the pro-forma post-conversion consolidated financial statements of said newly established or already-listed existing company for the most recent fiscal year, and said unlisted (non-OTC) company(ies) limited by shares shall conform to the provisions of all the following subparagraphs:
1. Profitability shall conform to Subparagraph 3 of Paragraph 1 of Article 4 of this Corporation's Criteria for Review of Securities Listings.
2. There shall not exist any circumstance specified in Subparagraphs 1, 3, 4, 6, 8, or 12 of Paragraph 1 of Article 9 of this Corporation's Criteria for Review of Securities Listing.
3. The financial report for the most recent fiscal year shall have been audited by a CPA approved by the Competent Authority to audit public companies and issued an unqualified opinion from such CPA.
If any unlisted (non-OTC) company included in a conversion as set out in the preceding paragraph is a foreign company, the listed company shall submit the following documents for reference. Provided, that subparagraphs 1 and 2 of the preceding paragraph, and paragraph 7, shall not apply where the foreign company complies with Article 27, paragraph 1, subparagraphs 2 and 4 of this Corporation's Criteria for Review of Securities Listings:
(1) documentation of foreign investment approval by the Ministry of Economic Affairs Investment Commission.
(2) the submitted financial report, and an audit report with an unqualified opinion issued by the certifying CPA.
(3) an opinion by a Taiwan CPA regarding the differences in accounting principles applied in the Republic of China (Taiwan) and in the foreign company's home country and the resultant effects on the financial report.
(4) a written report analyzing and explaining the reasonableness of the share exchange ratio and price and overall synergy at the time of the merger between the listed company and the foreign company, issued by a CPA other than the original certifying CPA who is approved by the Competent Authority to perform financial certification for public companies.
Where an investment holding company is established by means of share conversion in accordance with Paragraph 1 or Paragraph 2, such investment holding company shall comply with the provisions of Subparagraphs 1, 2, 4, 5, 7, 8, and 9 of Paragraph 1 of Article 4 of this Corporation's Criteria for Review of Listing Applications by Investment Holding Companies before it may be listed.
Where circumstances in Paragraph 1 or 2 apply to a company limited by shares, the listed company whose converted shares are anticipated to account for the greatest proportion of the anticipated issued shares of the newly established or already-listed existing company shall carry out with this Corporation the various procedures set forth in the subparagraphs hereinbelow on behalf of all the companies whose shares are being converted, and, where this Corporation has inspected all the documents submitted by the company for completeness and its administering department has examined them and found them in compliance with regulations, after approval has been applied for and obtained from the Competent Authority, the trading of such company's(ies') originally listed securities shall be suspended two trading days prior to (and non-inclusive of) the record date of the share conversion; provided, where shares of a single or multiple listed or OTC companies are converted into a newly established company to form an
investment holding company, the securities of the investment holding company may be listed and traded from the record date of the share conversion, but trading of the originally listed securities shall be suspended beginning eight days before the record date of the share conversion (counting non-inclusively of that date).
1. An Application for Listing of Shares of a Newly Established Company or Listed Company Receiving Assignment of Shares shall be completed and filed, along with all specified attachments, with this Corporation no later than 15 trading days prior to (and non-inclusive of) the record date of the share conversion.
2. An Application for Suspension of Share Transfers shall be completed and this Corporation shall directly make an announcement to the market of suspension of amendments to entries in the shareholder rosters of the listed company(ies) among the companies participating in the share conversion.
Where pursuant to Article 27 of the Business Merger and Acquisition Act a listed company undergoes general assignment to an investment holding company incorporated under Article 185, Paragraph 1, Subparagraph 2 of the Company Act, and such investment holding company complies with Subparagraphs 1, 2, 4, 5, 7, 8, and 9 of Paragraph 1 of Article 4 of this Corporation's Regulations Governing the Review of Stock Listing Applications by Investment Holding Companies, and it holds 100 percent of the assignee company's shares, it shall apply to this Corporation for amendment of content of listed securities pursuant to Article 45. However, the provisions of Subparagraph 5 of Paragraph 1 of Article 50-1 shall not apply to any change in business scope.
Under the circumstances set forth in Paragraphs 1, 2, or the preceding paragraph, where before the conversion the company is a listed (or OTC-listed) company, those shares already duly placed in centralized custody by directors, supervisors, and major shareholders thereof at the time of initial listing (or OTC listing) shall remain in centralized custody after the conversion until the expiration of the custody period; if before the conversion the company was an unlisted (non-OTC) company, and the aggregate of the shares already issued by it and those anticipated to be converted will account for 10 percent or more of the shares anticipated to be issued by the company that is the assignee of the shares, the centralized custody of shares held by the directors, supervisors, and major shareholders of such unlisted (non-OTC) company in the company that is the assignee of the shares shall be handled in accordance with Article 51, paragraph 4, subparagraph 1. When a listed company carries out a case under
Paragraphs 1 or 2, after this Corporation has examined and approved the application, a written opinion approving the share conversion shall be sent to the company, stating "This approval letter is provided only for purposes of the applicant company registering with (applying to) the Competent Authority for capital increase and issuance of new shares as a result of share conversion. If the application is not approved by the Competent Authority, this approval letter shall become void." Provided, where shares of a single or multiple listed or OTC companies are converted into a newly established company to form an investment holding company, the case shall be submitted directly to the Competent Authority after examination and approval by this Corporation.