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Article 51-3
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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 securities of the original listed company shall be delisted 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 the TWSE's Rules Governing the Review of Securities Listings.
2. There shall not exist any circumstance specified in subparagraphs 1, 3, 4, 6, 8, or 11 of paragraph 1 of Article 9 of the TWSE's Rules Governing the 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 9, shall not apply where the foreign company complies with Article 27, paragraph 1, subparagraphs 2 and 4 of the TWSE's Rules Governing the 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 the TWSE's Rules Governing the 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 the TWSE the various procedures set forth in the subparagraphs hereinbelow on behalf of all the companies whose shares are being converted, and, where the TWSE 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 book closure date; 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 the TWSE no later than 30 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 the TWSE 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 a listed company, or that company and another company(ies), converts its shares into shares of an unlisted existing company pursuant to Article 31 of the Business Mergers and Acquisitions Act and become that existing company's wholly-owned subsidiary, the listed company shall file an application with relevant documentation to the TWSE no later than 30 business days before the share conversion record date; trading of its securities shall be suspended beginning two business days before (but non-inclusive of) the book closure date, and shall be delisted beginning from the record date of the share conversion.
If the pro forma post-share-conversion consolidated financial statement for the most recent year of the unlisted existing company that receives a transfer of shares through a share conversion under the preceding paragraph shows that more than 50 percent of its total operating revenue or operating income is derived from the listed company that participated in the share conversion, and the unlisted existing company meets all of the requirements in the subparagraphs of paragraph 2, then after the TWSE 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, and after approval has been applied for and obtained from the Competent Authority, the unlisted company's securities may be listed for trading. However, if shares are simultaneously also being converted from a non-exchange-listed/non-OTC-listed company, such company shall also meet the requirements under paragraph 2.
Where pursuant to Article 27 of the Business Merger and Acquisition Act a listed company undergoes a general transfer and assignment, or assigns business or assets under Article 185, paragraph 1, subparagraph 2 of the Company Act, it shall, at least 30 days prior to the assignment record date, file the application with the TWSE, and may remain listed if all required documents have been submitted to the TWSE, and, after review by the managing department, none of the following conditions is found:
1. The pro forma operating revenue or operating income as stated on the pro forma financial statements, excluding the business or assets under assignment, for the most recent two accounting years, has declined by 50% or more, compared with the operating revenue (including discontinued operations) or operating income (including discontinued operations) as stated on the financial statements of the same period.
2. The pro forma operating loss as stated on the pro forma financial statements, excluding the business or assets under assignment, for the most recent two accounting years, has increased by 50% or more, compared with the operating loss (including discontinued operations) as stated on the financial statements of the same period.
Where pursuant to Article 27 of the Business Merger and Acquisition Act a listed company undergoes a general transfer and assignment, or an investment holding company is 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 the TWSE's Regulations Governing the Review of Stock Listing Applications by Investment Holding Companies, and it holds 100 percent of the transferee company's shares, an application shall be filed with the TWSE 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 7, 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 total number of shares anticipated to be converted will account for 10 percent or more of the shares already issued and anticipated to be issued by the company that is the transferee 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 transferee of the shares shall be handled in accordance with Article 51, paragraph 4, subparagraph 1. In addition, a company that applies for exchange listing pursuant to paragraph 7 shall
place shares in centralized custody pursuant to Article 10 of the Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings before listing securities.
When a company carries out a case under paragraphs 1, 2, or 7, after the TWSE 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 filing for registration with the Competent Authority for capital increase and issuance of new shares as a result of share conversion. If the registration fails to become effective, 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 the TWSE.
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