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Article 49-1
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If any of the circumstances listed below apply to a primary listed company, the TWSE may classify that company's listed securities as securities placed under an altered trading method:
- Net worth, as indicated in its duly announced and filed financial report for the most recent period, of less than one-half of its share capital stated in the financial report.
- Failure to convene and bring to completion a regular shareholders meeting within 6 months after the conclusion of the fiscal year.
- The attesting CPA for the most recent financial report publicly announced and registered pursuant to Article 36 of the Securities and Exchange Act issues an audit report or review report indicating substantial doubt about the going-concern assumption, or the attesting CPA issues a qualified audit report or a qualified review report. However, this shall not apply in the case of an interim financial report if the reason is that the calculation of investment in a non-major subsidiary, or investment accounted for using the equity method, and the amount of profit or loss thereupon, is based on a financial report that has not been audited or reviewed by a CPA, and the attesting CPA fully discloses in the audit or review report the reasons for the qualified opinion and the monetary amounts of any accounting items that may be affected thereby, and no material irregularities are present.
- It violated any rule or regulation relating to listed foreign securities such as rules or regulations regarding the disclosure of material information, was notified to conduct supplementary disclosure procedures, failed to do so before the deadline, and the circumstances of the case were serious.
- Any petition for its reorganization has been submitted to the court in the country where it is registered.
- If the situation in Article 28-8, paragraph 1, subparagraph 4 of the TWSE Rules Governing Review of Securities Listings applies to the incumbent director, supervisor, or general manager of the primary listed company or any company it controls, and corrective action is not taken within the period prescribed by the TWSE.
- Inability to redeem ordinary corporate bonds or convertible corporate bonds upon maturity or upon creditor request.
- A negotiable instrument has been dishonored by a financial institution due to insufficient funds and the TWSE is aware of the situation.
- Explanations in a press conference concerning material information fail to clarify the points in question and the TWSE deems it necessary to protect the rights and interests of investors.
- The number of TWSE listed common shares does not reach 25 percent of the total number of the company's issued common shares, and does not reach 60 million shares.
- The requirements of Article 50-3, paragraph 2, subparagraph 11 cannot be met within 6 months after trading is suspended pursuant to Article 50-3, paragraph 1, subparagraph 11.
- The TWSE deems it necessary to do so for any other reason.
When a primary listed company's securities have been classified as securities placed under an altered trading method due to any circumstance in a subparagraph of the preceding paragraph, if the company meets the respective requirements listed below and is free of any other circumstances in the subparagraphs of the preceding paragraph, the TWSE may restore the regular trading method for the company's listed securities:
- After placement under an altered trading method pursuant to subparagraph 1 of the preceding paragraph, the net worth in its consolidated financial reports as duly filed and announced for each of the most recent two periods exceeds NT$300 million and is one-half or more of its share capital as stated therein, and the operations for exchange of securities upon capital reduction have been completed.
- After placement under an altered trading method pursuant to subparagraph 2 of the preceding paragraph, it convenes and brings to completion the regular shareholders meeting.
- After placement under an altered trading method pursuant to subparagraph 3 of the preceding paragraph, the circumstance under that subparagraph ceases to exist after supplementary or corrective action.
- After placement under an altered trading method pursuant to subparagraph 4 of the preceding paragraph, it conducts supplementary disclosure procedures as per notification.
- After placement under an altered trading method pursuant to subparagraph 5 of the preceding paragraph, the petition for its reorganization is withdrawn, provided that the altered trading method implementation period may not be less than 3 months.
- After placement under an altered trading method pursuant to subparagraph 6 of the preceding paragraph, supplementation or corrective action is taken.
- After placement under an altered trading method pursuant to subparagraph 7 of the preceding paragraph, the company settles its obligation or reaches a conciliation agreement with the creditor.
- Within 3 months from the next business day after placement under an altered trading method pursuant to subparagraph 8 of the preceding paragraph, it extinguishes the debt under the negotiable instrument by actual settlement of the amount of the negotiable instrument or completes payment negotiation procedures with its financial institution, and has the negotiation documents signed and certified by a CPA and lawyer and submits them together with other relevant documentation to the TWSE for review and recordation.
- After placement under an altered trading method pursuant to subparagraph 9 of the preceding paragraph, it clarifies the points in question.
- Where supplementation or correction has been made after the trading method was changed pursuant to subparagraph 10 of the preceding paragraph, and the single-quarter net pofit before tax attributable to owners of the parent for each of the most recent consecutive two quarters is positive.
- Within two years after the securities have been placed under the altered trading method due to the circumstances in subparagraph 11 of the preceding paragraph, the sum of the net pofit before tax attributable to owners of the parent stated in the publicly announced and filed financial reports for the most recent four periods reaches NT$60 million, and the requirements of Article 50-3, paragraph 2, subparagraph 11, items B to F are met.
- After placement under an altered trading method under subparagraph 12 of the preceding paragraph, it provides supplementation or takes corrective action as required by the TWSE.
Within 1 month after it places the listed shares of a primary listed company under an altered trading method pursuant to the circumstances of paragraph 1, or restores that company's listed shares to the regular trading method under paragraph 2, the TWSE shall file with the Competent Authority for recordation.
After a primary listed company, under Article 28-7 of the Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings, adds in its articles of incorporation, organizational documents, or important financial or business documents any important matters as designated by the TWSE in connection with the protection of shareholders equity, it shall submit the draft amendment with a legal opinion by a lawyer regarding important matters in connection with the protection of shareholders equity of its articles of incorporation, organizational documents, or important financial or business documents to the TWSE 15 days before the notice or announcement of the shareholders meeting. If the TWSE deems that the draft amendment is likely to impair shareholders equity, it may issue an opposing opinion to the draft amendment. If the primary listed company, without the prior approval of the TWSE, fails to submit the draft amendment by the above-stated deadline, the TWSE may impose a penalty of NT$30,000.
If the TWSE deems that any content of a primary listed company's articles of incorporation, organizational documents, or important financial or business documents is likely to impair shareholders equity, it may require the primary listed company to amend its articles of incorporation, organizational documents, or important financial or business documents by a deadline. If the primary listed company fails to amend its articles of incorporation, organizational documents, or important financial or business documents by the deadline, the TWSE may impose a penalty of NT$30,000, and further impose a deadline for amendment of the articles of incorporation, organizational documents, or important financial or business documents. If the primary listed company still fails to amend the articles of incorporation, organizational documents, or important financial or business documents by the deadline, the TWSE may designate its listed stock as securities placed under an altered trading method. However, if in an individual case the circumstances of the impairment to shareholder equity are serious, the TWSE may proceed directly to designate the listed stock as securities placed under an altered trading method, without first imposing the penalty.
When listed stock of a primary listed company is designated as securities placed under an altered trading method because of circumstances in paragraph 5, then once the articles of incorporation, organizational documents, or important financial or business documents have been amended so that there is no longer any likelihood of impairment to shareholder equity, nor is there any other of the circumstances set out in the subparagraphs of paragraph 1, the TWSE may resume normal trading of the company's listed stock.
When the TWSE designates the listed stock of any primary listed company as securities placed under an altered trading method pursuant to paragraph 5, or resumes normal trading of its listed stock pursuant to paragraph 6, it shall report to the competent authority for recordation within 1 month after executing the measure.
If a secondary listed company, or a foreign issuer that issues Taiwan Depositary Receipts or the depositary institution thereof, breaches an undertaking executed at the time of its application for listing, the TWSE may depending on the case impose a breach penalty of NT$30,000 and order it to make supplementation or corrections within a certain period of time.
If any of the circumstances listed below exists with respect to a TWSE secondary listed company, the TWSE may place its listed securities under an altered trading method:
- The company fails to publicly announce and file its consolidated financial report by the prescribed deadline.
- Its net worth indicated in its duly announced and filed consolidated financial report for the most recent period is less than one-half of its share capital stated in the consolidated financial report.
- The attesting CPA for the most recent consolidated financial report publicly announced and registered pursuant to Article 36 of the Securities and Exchange Act issues an audit report or review report indicating substantial doubt about the going-concern assumption, or the attesting CPA issues a qualified audit report or a qualified review report. However, this shall not apply in the case of an interim financial report if the reason is that the calculation of investment in a non-major subsidiary, or investment accounted for using the equity method, and the amount of profit or loss thereupon, is based on a financial report that has not been audited or reviewed by a CPA, and the attesting CPA fully discloses in the audit or review report the reasons for the qualified opinion and the monetary amounts of any accounting items that may be affected thereby, and no material irregularities are present.
- For the duly announced and filed consolidated financial report for the most recent period. the CPA issues a disclaimer of opinion or an adverse opinion in the audit report, or issues an adverse opinion or disclaimer of opinion in the review report.
- The company is unable to punctually repay straight corporate bonds or convertible corporate bonds upon maturity or upon the demand of creditors.
- Dishonor of a negotiable instrument by a financial institution because of insufficient funds on deposit, where the TWSE is aware of such dishonor.
- Any document or information that has been submitted is suspected to be untrue, and upon the request of the TWSE to explain the matter, no explanation is provided within the prescribed time period.
- The company has violated relevant rules concerning the material information of the listed foreign securities, and failed to rectify the situation within the specified time after having been notified to proceed with the disclosure process, and such violation is serious.
- The company has breached an undertaking it gave when applying for TWSE listing, and failed to make supplementation or corrections within a prescribed time limit after having had a penalty imposed under the preceding paragraph.
- The company has violated Article 6 of the TWSE Procedures for the Review of Financial Reports of TWSE Secondary Listed Companies, and failed to make supplementation or corrections within a prescribe time limit after having been notified by the TWSE to do so.
- Other causes for which the GTSM deems it necessary.
If the listed securities of a TWSE secondary listed company have been placed under an altered trading method due to a circumstance in a subparagraph of the preceding paragraph, upon satisfaction of the below conditions, and freedom of any other of the above circumstances, the TWSE may restore the original trading method for the company's securities:
- Where the change of trading method was imposed pursuant to subparagraph 1 of the preceding paragraph, a supplementary consolidated financial report is duly announced and filed.
- Where the change of trading method was imposed pursuant to subparagraph 2 of the preceding paragraph, the duly announced and filed consolidated financial reports for the most two recent periods show net worth exceeding NT$300 million and reaching one-half or more of the share capital stated on the financial report.
- Where the change of trading method was imposed pursuant to subparagraph 3 of the preceding paragraph, the circumstance under that subparagraph ceases to exist after supplementary or corrective action.
- Where the change of trading method was imposed pursuant to subparagraph 4 of the preceding paragraph, the CPA has re-audited the financial report, and issued an audit report free of the original disclaimer of opinion or adverse opinion, or a review report free of the original adverse opinion or disclaimer of opinion, and there is no qualified opinion in the audit report or qualified review report as specified in subparagraph 3 of paragraph 9.
- Where the change of trading method was imposed pursuant to subparagraph 5 of the preceding paragraph, and the company has repaid the debt or reached a settlement agreement with the creditors.
- Within three months from the following business day after the change of trading method was imposed pursuant to subparagraph 6 of the preceding paragraph, the company extinguishes the debt under the negotiable instrument by actual settlement of the amount of the instrument, or completes debt settlement negotiations with the financial institutions, and the documents have been duly signed and certified by the CPA and lawyer, and then submitted to the TWSE along with other relevant documents and data for approval and recordation.
- Where the change of trading method was imposed pursuant to subparagraph 7 of the preceding paragraph, the situation has been duly corrected or explanations have been made as required by the TWSE, and substantial evidence can be provided.
- Where the change of trading method was imposed pursuant to subparagraph 8 of the preceding paragraph, the company has proceeded with the disclosure process as required by the notification.
- Where the change of trading method was imposed pursuant to subparagraph 9 of the preceding paragraph, the company has duly made supplementation or correction, and fulfilled the undertaking that it gave.
- Where the change of trading method was imposed pursuant to subparagraph 10 of the preceding paragraph, the company has duly made supplementation or correction.
- Where the change of trading method was imposed pursuant to subparagraph 11 of the preceding paragraph, the company has made correction or improvement as required by the GTSM.
With respect to the imposition by the TWSE of an altered trading method on the listed securities of a TWSE secondary listed company pursuant to paragraph 9, or the restoration of the trading method of the listed securities pursuant to the preceding paragraph, the company shall file a report with the competent authority for recordation within one month after the implementation thereof.
If a primary listed company or secondary listed company fails to publicly announce a new litigious and non-litigious representative within 15 days counting inclusively from the date of dismissal of its litigious and non-litigious representative, the TWSE may impose a penalty of NT$30,000 and set a deadline of 15 days for the company to correct the failure. If the company fails to correct the failure by the deadline, the TWSE may impose consecutive penalties of NT$10,000 per day until the company has corrected the failure.
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