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Article 10
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An application for initial listing of stock filed by an issuing company shall not be approved unless and until share certificates representing at least 50 percent of the number of shares held by each of the following persons of the issuing company specified in the application for listing (with the total number of such shares being not less than the ratio specified in Paragraph 2 of this Article), along with the remaining share certificates representing all other shares after deducting those required for public offering, have been placed in centralized custody 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 thereof 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 centralized custody pursuant to the above is less than the ratio specifies in Paragraph 2 of this Article, the shortage shall be made up by other shareholders:
1. Where the application for listing is filed in accordance with the provisions of Article 4 or Article 6 of these Criteria, its directors, supervisors and the shareholders holding 10 percent or greater of the total number of issued shares of the issuing company.
2. Where the application for listing is filed in accordance with the provisions of Article 5 of these Criteria or where the applicant is an information software enterprise, its directors, supervisors, shareholders holding 5 percent or greater of the total number of issued shares, and/or shareholders whose equity investment is made in the form of patent rights or technical know-how, and who are working for the issuing company and hold 0.5 percent or greater of the total number of shares or 100,000 or more shares as of the date on which the application for listing is filed. However, this restriction shall not apply where shareholding of a recommending securities firm during the period of registration as emerging stock exceeds 5 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.
The total number of shares with respect to the share certificates to be placed in centralized custody by the issuing company under the preceding paragraph refers to the total number of shares intended for listing calculated as the aggregate of common shares and preferred shares that have already been issued and shares subscribable or convertible through corporate bonds with warrants and convertible corporate bonds; the total ratio of share certificates to be placed in centralized custody by the issuing company shall be calculated as set forth below, provided, the number of shares to be placed in centralized custody by the issuing company shall not exceed a maximum of 50 percent of its total number of issued shares, and share certificates placed in centralized custody shall be confined to share certificates of publicly offered and issued common stock:
1. Where the total number of shares intended for listing is 30 million or less, share certificates representing 25 percent thereof shall be placed in centralized custody.
2. Where the total number of shares intended for listing is more than 30 million but 100 million or less, share certificates representing 20 percent of the portion of shares in excess of 30 million shares shall be placed in centralized custody in addition to those required under the preceding item.
3. Where the total number of shares intended for listing is more than 100 million but 200 million or less, share certificates representing 10 percent of the portion of shares in excess of 100 million shall be placed in centralized custody in addition to those required under the preceding item.
4. Where the total number of shares intended for listing is more than 200 million, share certificates representing 5 percent of the portion of shares in excess of 200 million shall be placed in centralized custody in addition to those required under the preceding item.
Among the share certificates placed in centralized custody by the directors, supervisors and shareholders pursuant to the provisions of Paragraph 1 of this Article, one-fifth of the portion thereof comprising not less than 50 percent of the shares held by the respective person with the total number of shares being not less than the ratio specified in Paragraph 2 of this Article may be withdrawn only after the lapse of two full years from the listing date thereof; thereafter, one-fifth thereof may be withdrawn once every six months. The share certificates other than those referred to in the preceding sentence and those for public offering may be withdrawn after the lapse of one full year from the listing date thereof. However, for an issuing company that applies for listing under the provisions of Article 4, where the total number of its shares required to be placed in centralized custody for two years and in centralized custody for one year is confirmed to exceed 50 percent of the issued shares of the issuing company, and the issuing company has paid-in capital of at least NT$30 billion, if the portion of the number of shares required to be placed in centralized custody exceeding the above-stated 50 percent of issued shares has been pledged to a financial institution by the director, supervisor, or shareholder of the issuing company who holds the shares for purposes of guaranteeing financing for the company or for him/herself, evidentiary documents furnished by the financial institution may be substituted for shares required to be placed in centralized custody for one year; provided, if the pledge is released during the custody period, the director, supervisor, or major shareholder shall deposit the same amount of shares into centralized custody; or, if the subject of the pledge is disposed by the financial institution, the issuing company shall contact other directors, supervisors, or major shareholders to deposit the same amount of shares into centralized custody.
Directors, supervisors, and shareholders shall not rescind the custodial agreement during the term thereof. Share certificates and vouchers evidencing that share certificates are placed in centralized custody shall not be transferred or pledged. The validity of centralized custody shall not be affected by a change of the identity of the holders of share certificates in centralized custody; provided that, however, if the holder's identity changes during the custody period, and all the circumstances in the below subparagraphs are complied with, share certificates representing the same amount of shares may be withdrawn from custody:
1. During the period from the date of listing for trading until one day before two years have elapsed, the holder has negotiated with directors and/or supervisors who took office at the time of the initial application for listing to cover the withdrawal by placing the same number of shares in centralized custody.
2. During the period from two years after the date of listing for trading until the expiry of the centralized custody period, the holder has negotiated with directors and/or supervisors who took office at the time of the initial application for listing, or current directors and/or supervisors, to cover the withdrawal by placing the same number of shares in centralized custody.
The provisions of Paragraph 1 of this Article shall not apply to directors, supervisors and shareholders of government authorities, government-owned enterprises, or which have obtained an approval from the authority in charge of the enterprise concerned for the sale of the shares held by them and have been determined to be inappropriate to place such share certificates in centralized custody.
The total ratio of share certificates to be placed in centralized custody as specified in Paragraph 2 of this Article shall not apply to government-owned enterprises.
When the directors and supervisors of an issuing company referred to in Paragraph 3 above withdraw their share certificates placed in centralized custody after lapse of the centralized custody period, if such withdrawal causes the total shares placed in centralized custody by all the directors and supervisors to become less than the ratio of total shareholding under the "Regulations Governing the Shares Ownership Ratio of the Directors and Supervisors of Public companies and Examination and Enforcement Thereof" (hereinafter referred to as the "Shareholding Ratio"), the directors and supervisors may only withdraw the portion in excess of the Shareholding Ratio. The remaining shares shall continue to be placed in centralized custody. If re-election of directors and supervisors occurs during the centralized custody period, the portion of the shares of all re-elected directors and supervisors meeting the Shareholding Ratio shall continue to be placed in centralized custody. This provision shall also apply after lapse of the centralized custody period. Provided, that if a director or supervisor of a state-owned-enterprise applicant company is itself a state-owned enterprise or government agency, the shares it holds in the applicant company may be included in the calculation of the shareholding in centralized custody referred to above.
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