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Article 51-2
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If a listed company that has carried out a demerger of one or more departments capable of operating independently pursuant to applicable law wishes to continue listed trading of its listed securities, or if the existing company or newly incorporated company that acquired the business of the aforesaid department(s) after the demerger (the "transferee company of the demerger") wishes to list its securities for trading, the company shall without exception comply with the provisions of this Article, and shall carry out applicable procedures for a company demerger and for listing.
The provisions of the preceding paragraph shall also apply where a single listed company demerges simultaneously into multiple transferee companies of the demerger, or multiple listed companies carry out demergers simultaneously to a single transferee company of the demergers.
A listed company to which any circumstance set forth in paragraph 1 or paragraph 2 applies shall apply to this Corporation at least 30 business days before the record date of the demerger. Where this Corporation has inspected all the documents submitted by the company for completeness and its administering department has examined them and found them to be free of all of the [negative] criteria set out in the subparagraphs below, the company may continue to be listed:
1. The pro-forma operating income as shown on the pro-forma financial statements for each of the most recent two accounting years excluding the financial data for the demerged department(s) and audited by a CPA, is down by 50 percent or more from the operating income shown on the financial statements for the same period.
2. The pro-forma operating loss as shown on the pro-forma financial statements for each of the most recent two accounting years excluding financial data for the demerged department(s) and audited by a CPA, is greater than the operating loss shown on the financial statements for the same period.
Where a listed company establishes an investment holding company for reasons of carrying out a demerger under paragraph 1 or 2, the listed company that undergoes the demerger may continue to be listed if it complies with Article 4, paragraph 1, subparagraphs 1, 2, 4, 5, 7, 8, and 9 of this Corporation's Regulations Governing the Review of Stock Listing Applications by Investment Holding Companies; the provisions of subparagraphs 1 and 2 of the preceding paragraph shall not apply.
When a listed company to which any circumstance set forth in paragraph 1 or paragraph 2 applies files an application for continuation of listing, it shall submit an opinion of an independent expert on the share exchange ratio for the demerger, the reasonableness of the acquisition price, and the effect on the shareholders’ equity of the listed company.
Except under any of the circumstances listed below, a listed company to which any circumstance set forth in paragraph 1 or 2 applies shall file to carry out the procedures for the demerger and the capital reduction and issuance of new securities certificates as a consolidated case. The trading of its listed securities shall be suspended 10 trading days prior to the record date of the demerger and such suspension shall continue until 30 trading days (or 15 trading days if the securities are not issued in physical form) after the record date of the demerger (i.e. the record date of the capital reduction), during which period the company shall have completed the procedures for issuing the new securities certificates in accordance with Article 45 and points 1, 2, and 3 of the Procedures for the Exchange of Securities Certificates by Listed Companies :
1. Where a listed company demerges but does not carry out a capital reduction, and issue of replacement shares is unnecessary.
2. Where the demerger of the listed company does not involve subsequent confirmation of the shareholder roster, or there is no difference in shareholder equity before and after the record date of the suspension of share transfer, and suspension of margin purchase and short sale or compulsory covering of short sale positions are unnecessary.
Where a listed company carries out capital reduction due to a demerger referred to in paragraph 1 or 2, and the newly incorporated company that acquires its business issues new shares for which the acquired business is the consideration, and issues them in full to the original shareholders of the demerged company on a pro-rata basis, approval may be given for listing and trading of the securities of the newly incorporated transferee company if it complies with all of the conditions listed below; provided, simultaneous application may not be made of related conditions such as those concerning lesser capital amount or profitability in Article 5, Article 6, or Article 6-1 of this Corporation's Rules Governing the Review of Securities Listings:
1. Capitalization: the share capital on the pro forma financial statement for the most recent period at the time of application complies with the provisions of Article 4, paragraph 1, subparagraph 2 of this Corporation's Rules Governing the Review of Securities Listings.
2. Profitability: complies with the provisions of Article 4, paragraph 1, subparagraph 3 of this Corporation's Rules Governing the Review of Securities Listings, according to the pro-forma financial statement.
3. No circumstance in Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, 8, 9, 11, or 12 of this Corporation's Rules Governing the Review of Securities Listings applies.
4. The pro forma financial statements for the most recent fiscal year shall be audited and certified by a CPA approved by the Competent Authority to perform financial certification for public companies, and an audit report containing an unqualified opinion issued.
5. Centralized custody of shares and pre-listing public sale shall be carried out pursuant to Article 10 or Article 10-1, and Article 11, of this Corporation's Rules Governing the Review of Securities Listings.
If in a demerger referred to in the preceding paragraph the demerged company does not carry out capital reduction or carries out only a partial reduction, the newly formed transferee company of the demerger, when applying to this Corporation for listing, shall comply with all of the below-listed conditions, in addition to complying with the requirements of the preceding paragraph:
1. Incorporation period: the time of incorporation of the demerged department, as shown in the financial data of the demerged company, shall comply with Article 4, paragraph 1, subparagraph 1 of this Corporation's Rules Governing the Review of Securities Listings.
2. Shareholding dispersion: shall comply with Article 4, paragraph 1, subparagraph 4 of this Corporation's Rules Governing the Review of Securities Listings.
3. None of the circumstances set forth in Articles 18 or 19 of this Corporation's Rules Governing the Review of Securities Listings under which listing is inappropriate exists.
4. None of the circumstances set forth in Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, 8, 9, 11, or 12 of the Rules Governing Review of Securities Listings exists.
If the transferee company of a demerger is an existing company and the operating revenue or operating income of a single listed company of which it is the transferee accounts for 50 percent or more of the total operating revenue or operating income on its pro forma consolidated financial statements, and accounts for 10 percent or more of the overall operating revenue or discernible assets of the demerged company, it shall comply with all the subparagraphs of paragraphs 7 and 8, but its pro forma financial statements shall be prepared as consolidated statements with those of the single or multiple independently operating departments of the listed company of which it is the transferee.
If more than one listed company carry out demergers and makes transfers to a single transferee on the same record date, the calculation of the incorporation period under paragraph 8 or 9 shall be based upon the listed company that transferred the business of which the operating revenue or operating income accounts for 50 percent or more of the total operating revenue of the transferee company and accounts for 10 percent or more of the overall operating revenue or discernible assets of such listed company. If more than one independently operating department was demerged, that with the longer period of incorporation may be selected as the basis for calculation.
In a demerger referred to in paragraphs 7, 8, or 9, where the period of listing, or combined period of listing and OTC-listing, of the securities of the demerged listed company is no less than three years and the transferee company of the demerger submits an application accompanied by the relevant documents to this Corporation in accordance with prescribed procedures within one year of the day of completion of amendment registration of the demerger, all of the below-listed provisions shall be complied with:
1. A newly formed transferee company of a demerger according to paragraph 7 whose listing application has passed review for completeness of the submitted application documents and passed review by the management department for compliance with regulations may apply to the Competent Authority for approval and announcement of listing.
2. For a newly formed transferee company of a demerger or existing transferee company of a demerger according to paragraph 8 or 9, the procedures for reviewing the listing application shall be governed by this Corporation's procedures for reviewing initial listing application cases.
If a listed company acquires new shares issued by a transferee company of a demerger as set out in paragraph 8 or 9, and within one year from the date on which the amendment registration in connection with the demerger is completed, the cumulative total of equity interest from cash capital increase that is sold or waived by the listed company reaches 20 percent or more of the equity interest acquired as a result of the demerger, such sale or waiver shall first be approved by a shareholders meeting resolution and carried out on the basis of a board of directors resolution. Both of the aforesaid resolutions shall be reported to the Internet information reporting website designated by this Corporation within the time period prescribed by this Corporation. The report content shall disclose the counterparty and transaction price of the sales, or relevant information such as an explanation regarding the method for deciding on, and reasonableness of, the cash capital increase issue price and of any waiver of cash capital increase and arrangement for [subscription thereof] by specified parties.
Where a listing application by a transferee company of a demerger is rejected by this Corporation, the applicant company may, within 20 days from the issuance date of this Corporation's rejection notice letter, submit relevant materials along with a request to this Corporation for reconsideration on the basis that the grounds for the original rejection were erroneous. This Corporation shall follow the provisions of the below subparagraphs after accepting the applicant's reconsideration application for processing:
1. For a request for reconsideration of a listing application under paragraph 7, the managing department shall review whether the grounds for the original rejection decision were erroneous and whether any other conditions have subsequently arisen rendering the applicant unsuitable for listing.
2. A request for reconsideration of a listing application under paragraph 8 or 9 shall be governed by subparagraphs 3 to 7 of Article 27 of this Corporation's Procedures for Review of Securities Listings.
If a transferee company of a demerger is unable to apply to this Corporation for listing in accordance with prescribed procedures, annexing relevant documents, within one year of the day of completion of amendment registration of the demerger, it may separately do so in compliance with the relevant provisions of this Corporation's Rules Governing the Review of Securities Listings, but the provisions of paragraph 8, subparagraph 1, paragraph 9, or paragraph 10 may respectively be applied mutatis mutandis to the calculation of the incorporation period thereof.
Within two years of the date of listed (or OTC) trading of securities of a transferee company of a demerger of a listed company pursuant to paragraphs 7, 8, or 9 herein, or to Article 16-3 of the ROC Over-the-Counter Securities Exchange Rules Governing Securities Trading on Over-the-Counter Markets, any further transferee company of a demerger of such listed company may not apply for listing of its securities pursuant to this article.
Where an OTC company carries out a demerger, and the transferee company of the demerger applies for listing, the applicable provisions of this Corporation's Regulations for the Review of Securities Listings and Procedures for the Review of Securities Listings shall be complied with.
If a listed company, after carrying out a demerger, wishes to apply for delisting of its securities, or such company is extinguished due to the demerger of its entire operations or assets, this Corporation shall delist the securities after applying and obtaining approval from the Competent Authority pursuant to Article 144 of the Securities and Exchange Act.
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