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Article 9
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Notwithstanding the fact that an issuing company applying for the listing of its stock meets the listing criteria set forth in these Rules, this Corporation may disagree to its listing if the issuing company has any of the events listed below, except for any of those in Subparagraphs 8, 10, or 11 under which this Corporation shall disagree to its listing, and is deemed by this Corporation to be inappropriate for listing:
1. It has any of the events set forth in subparagraphs 1 and 2, Paragraph 1 of Article 156 of the Securities and Exchange Act, or has made misrepresentation or false statement or conducted unlawful activities that may affect the price of its securities after listing thereof, and will cause fear that the market order may be affected or the public interests may be harmed.
2. Its financial or business affairs are not independent from other person(s).
3. It has had any material labor dispute or environmental pollution sufficient to affect its normal financial and business operations, and has not made improvement.
4. It has been discovered any material non-arms-length transaction and has not made improvement.
5. After the capital increase through a new share issue which has been effected or is being effected in the year in which it applies for listing is included in the amount of paid-in capital in its final account for the respective year, it does not meet the listing criteria.
6. It has failed to effectively implement its written accounting system, internal control system, or internal audit system, or has failed to prepare financial reports in accordance with relevant laws and regulations and generally accepted accounting principles, and the event of this failure is considered as material.
7. There has been serious deterioration in its business operation.
8. Where the company applying for listing conducted any activities in violation of the principle of good faith in the most recent five years, or where its directors, supervisors, general manager or de facto responsible person violated the same principle in the most recent three years.
9. Where the directors, supervisors and shareholders who hold more than 10 percent of the total number of issued shares have transferred a large number of shares in the year in which it applies for listing and in the most recent fiscal year.
10. Where the company applying for listing has less than five members on its board of directors, or less than two independent directors; less than three supervisors; or where the board of directors or any supervisor(s) are unable to independently exercise their functions. Additionally, the elected independent directors must be persons that are not juristic persons or representatives thereof under Article 27 of the Company Act, and at least one of them shall be a professional in accounting or finance.
11. Where the Company applying for listing has been registered for trading as an emerging stock on the OTC market in the fiscal year of the listing application and the most recent fiscal year thereto, and there has been, from the OTC registration date onward, any trading of stock issued by the applicant company by any incumbent director, supervisor, or shareholder holding 10 percent or greater of its total issued shares other than on the emerging stock market; provided, this restriction shall not apply where such trading is for purposes of underwriting under Article 11 of these Rules or for other legitimate reason.
12. Where the listing is considered by this Corporation as inappropriate due to its scope of business, nature or special circumstances.
Subparagraphs 2 and 9 of the immediately preceding paragraph shall not apply to companies applying for listing which are government-owned enterprises.
The ending date of the applicable periods referred to in various subparagraphs of Paragraph 1 of this Article shall be the day immediately before the date on which the letter approving its Agreement for Listing is issued by the Competent Authority.
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Article 19
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Where a subsidiary, other than a government-owned enterprise, applies for the listing of its stock but does not meet the following requirements, this Corporation may disagree to the listing if the listing of its stock is deemed to be inappropriate by this Corporation, notwithstanding the fact that its application meets the criteria set forth in these Rules:
1. A consolidated financial statement of the parent company and all of its subsidiaries which is prepared in accordance with the accounting principles of the home country of its parent company and an audit opinion issued by a certified public accountant in the Republic of China stating the differences between the accounting principles applicable in the Republic of China and the accounting principles applicable in the home country of the parent company and the impact of such differences on such financial statement shall be submitted along with the application.
2. According to the consolidated financial statement submitted pursuant to the preceding paragraph, the total amount of shareholders' equity shall be NT$1 billion or more in the most recent fiscal year and the operating profit and before-tax net profit shall each represent 3 percent or greater of the total amount of shareholders' equity in each of the most recent two fiscal years; provided, if the applicant company is applying for listing pursuant to Article 5, Article 6, or Article 6-1, or if the amount of its purchase/sale transactions with its parent company in the fiscal year of the application for listing and in the most recent fiscal year is less than 10 percent of its total amount of purchases/sales, it will not be subject to the above-stated profitability ratio.
3. The total number of shares of the company applying for listing held by its parent company, affiliated companies and its directors, supervisors, representatives and shareholders who hold 10 percent or greater of the total number of its issued shares and its related parties shall not exceed 70 percent of the total number of its issued shares. If this 70 percent limit is exceeded, the company applying for listing shall conduct a pre-listing initial public offering to reduce the percentage of shares held by the aforesaid persons to 70 percent or lesser.
4. It shall have at least three independent directors.
5. Its operating revenue derived from its parent company in the fiscal year of the application for listing and in the most recent fiscal year shall not exceed 50 percent of its operating revenue; its principal raw materials or principal products or total amount of purchases [obtained from its parent company] during such periods shall not exceed 70 percent of its purchases. However, this restriction shall not apply where the cause is characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
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