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Article 10-1
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An application for initial listing of stock filed by an issuing company in accordance with Article 6-1 shall not be approved unless and until its directors, supervisors, shareholders holding 3 percent or more of the total issued shares, and the shareholders whose equity investment is made in the form of technical know-how and who hold 0.5 percent or more of the total number of issued shares or 100,000 shares or more have placed all of their shares specified in the application for listing, less the shares required for public offering, and in total not less than the total ratio calculated by the method enumerated below, with a centralized securities depository enterprise incorporated with the approval of the Competent Authority; provided however, that if the total number of shares held by directors and supervisors is less than the total number of shares held by them at the time when they were elected as directors and supervisors, then the total number of shares at the time when they were elected shall be the basis for counting the number of shares under this Article. If the number of shares represented by share certificates placed in custody pursuant to the above is less than the total ratio of shares required to be placed in centralized custody, the shortage shall be made up by other shareholders:
1. If the total number of shares intended for listing is one billion shares or less, 50 percent of the total number of shares shall be placed in custody.
2. If the total number of shares intended for listing exceeds one billion shares but not three billion shares, in addition to complying with the preceding subparagraph, 40 percent of the total number of shares shall be placed in custody for the portion exceeding one billion shares.
3. If the total number of shares intended for listing exceeds three billion shares but not five billion shares, in addition to complying with the preceding subparagraph, 30 percent of the total number of shares shall be placed in custody for the portion exceeding three billion shares.
4. If the total number of shares intended for listing exceeds five billion shares but not seven billion shares, in addition to complying with the preceding subparagraph, 20 percent of the total number of shares shall be placed in custody for the portion exceeding five billion shares.
5. If the total number of shares intended for listing exceeds seven billion shares, in addition to complying with the preceding subparagraph, 10 percent of the total number of shares shall be placed in custody for the portion exceeding seven billion shares.
When calculating the percentage of the “total number of shares intended for listing” that shall be placed in centralized custody in accordance with the preceding paragraph, the total number of shares shall be counted on the basis of the total shares of common stock that have been issued by the issuing company; shares of preferred stock and shares subscribable or convertible through corporate bonds with warrants and convertible corporate bonds may be exempted from inclusion in the calculation; furthermore, the stocks placed in centralized custody shall be limited to publicly offered and issued common stock certificates.
Among the share certificates placed in custody under paragraph 1, one-sixth of the portion thereof may be withdrawn only after the lapse of three full years from the listing date thereof; thereafter, one-sixth thereof may be withdrawn once every six months. If after lapse of the said period, the project constructed by the company has not been fully completed and the operation has not commenced, the custody period may be extended until the project is fully completed and the operation commences; provided, however, that if partial operation has commenced before the project is fully completed, the custody period shall be extended until the company's annual financial report shows an operating profit and before-tax net profit. The custody agreement shall not be terminated during the term thereof. Share certificates and vouchers evidencing that share certificates are placed in custody shall not be transferred or pledged. The validity of custody shall not be affected by any change of the identity of the holders of share certificates in custody.
At the time of applying for listing, the issuer shall undertake that, during the period of centralized custody of the stock, a shareholder that has already placed stock in centralized custody in accordance with paragraph 1 shall also carry out central custody placement for any shares of common stock that the shareholder may subsequently obtain through subscription or conversion of preferred shares or corporate bonds, according to the total ratio required to be placed in custody as calculated under paragraph 1 at the time of the listing application. The provisions of paragraph 3 shall apply mutatis mutandis to the time periods for custody and withdrawal thereof.
The provisions of Paragraph 1 shall not apply where, during the period in which an issuing company applying for initial listing of its stock is registered as an emerging stock company, shareholding of its recommending securities firm exceeds 3 percent of the total issued shares of said issuing company as a result of subscription or trading of operating securities during the emerging stock trading period.
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