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Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings(2007.02.15) |
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Article 2
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For securities issued or supplementarily issued pursuant to the screening procedures of the Securities and Exchange Act, the issuer, applying with Taiwan Stock Exchange Corporation ("this Corporation") for listing thereof in accordance with Article 139 of the Securities and Exchange Act, shall submit a relevant application for the listing of securities, specifying therein the particulars as required and attaching thereto the necessary supporting documents. This Corporation will examine the application in accordance with these Rules and the Implementing Procedures for Examination of the Listing of Securities.
In case the issuer and its securities underwriter have any of the following events, this Corporation will refuse to accept the due diligence report issued by the said underwriter, and will disagree to the listing of its securities:
1. Where each of the issuer and its securities underwriter has issued a due diligence report in respect of the initial listing or trading on the over-the-counter market of each other's securities.
2. Where there exists any of the events set forth in Article 26 of the Regulations Governing the Securities Firms.
3. Where the issuer and its securities underwriter are enterprises within the same group.
The application and the Implementing Procedures for Examination of the Listing of Securities referred to in Paragraph 1 hereof will be formulated by this Corporation, and will take effect after they have been approved by and recorded with the Competent Authority.
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Article 4
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Where an issuing company applying for the listing of its stock meets the criteria listed below, this Corporation will agree to list its stock:
1. Duration of corporate existence: It shall have been incorporated and registered under the Company Act for at least three years at the time of the application for listing; provided, this restriction shall not apply to public (state-owned) enterprises or to privatized public enterprises.
2. Amount of capital stock: The amount of its paid-in capital shall be NT$600 million or more at the time when it applies for listing.
3. Profitability: The operating income and income before tax in its separate financial statements, or in its consolidated financial statements prepared in accordance with the Statement of Financial Accounting Standards No. 7, meet either of the following criteria, and it does not have any accumulated deficit in the final accounting for the most recent fiscal year. However, if it has prepared a consolidated financial statement, the following criteria are not applicable to the operating income stated in its separate financial statements:
(1) Each of the operating income and income before tax for the most recent two fiscal years represents 6 percent or greater of the share capital stated on the financial report for the annual final accounts, or the average operating income and income before tax for the most recent two (2) fiscal years represent 6 percent or greater [of the amount of paid-in capital in its final accounts] and the profitability for the most recent fiscal year is greater than that for the immediately preceding fiscal year; or
(2) Each of the operating income and income before tax for the most recent five (5) years represents 3 percent or greater of the share capital stated on the financial report for the annual final accounts.
4. Dispersion of shareholdings: The number of holders of registered shares shall be 1,000 or more. Among them, the number of shareholders of a company limited by shares holding 1,000 shares to 50,000 shares shall not be less than 500, and the total number of shares they hold shall be 20 percent or greater of the total issued shares, or at least 10 million.
For the profitability in the consolidated financial statements referred to in subparagraph 3 of the preceding paragraph, the influence of net profit (loss) of minority interest on it shall not be taken into account.
A state-owned enterprise applying for listing of its stock shall have its financial report for the most recent fiscal year audited and attested by a certified public accountant, and shall prepare it in the form of a two-year comparative report. For other fiscal years if the stock was not yet publicly issued, the audit report issued by the auditing agency may be used instead.
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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, 9, or 10 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 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.
10. 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.
11. Where the listing is considered by this Corporation as inappropriate due to its scope of business, nature or special circumstances.
Subparagraph 2 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 10
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An application for initial listing of stock filed by an issuing company shall not be approved unless and until shares representing all 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), less those offered for public sale, have been placed in central custody with a central securities depository enterprise incorporated with the approval of the Competent Authority; provided however, that if the number of shares represented by shares placed in central 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 Rules, 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 Rules 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 shares to be placed in central custody by the issuing company under the preceding paragraph refers to the aggregate sum of common shares that have already been publicly offered and issued, as stated on the listing application documents,; the total ratio of shares to be placed in central custody by the issuing company shall be calculated as set forth below:
1. Where the total number of shares is 30 million or less, shares representing 25 percent thereof shall be placed in central custody.
2. Where the total number of shares is more than 30 million but 100 million or less, shares representing 20 percent of the portion of shares in excess of 30 million shares shall be placed in central custody in addition to those required under the preceding item.
3. Where the total number of shares is more than 100 million but 200 million or less, shares representing 10 percent of the portion of shares in excess of 100 million shall be placed in central custody in addition to those required under the preceding item.
4. Where the total number of shares is more than 200 million, shares representing 5 percent of the portion of shares in excess of 200 million shall be placed in central custody in addition to those required under the preceding item.
The remaining shares after deducting those required for the public offering, as referred to in paragraph 1, include the following:
1. From the date of application for initial listing to the listing date, all new shares obtained through capital increase for which amendment registration has been completed with the Ministry of Economic Affairs, as well as any shares that have come to be held for any other reason; for any shares that have not yet been obtained by the listing date, an undertaking shall be made to place the shares in central custody after obtaining them.
2. From among the old shares provided by directors and supervisors of the issuer for an overallotment (greenshoe) option for the securities underwriter, any shares that were not actually sold in exercise of the overallotment option and that have been returned by the securities underwriter.
One half of the shares placed in central custody by directors, supervisors and shareholders pursuant to the provisions of Paragraph 1 of this Article may be withdrawn only after the lapse of a six-month period starting from the listing date thereof; the remaining shares may be withdrawn in full only after the lapse of a one-year period starting from the listing date thereof.
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 central custody is assessed 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 central 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 central custody; provided, if the pledge is released during the custody period, the director, supervisor, or major shareholder shall deposit the same amount of shares into central 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 central custody.
Directors, supervisors, and shareholders shall not rescind the custodial agreement during the term thereof. Shares and certificates in central custody shall not be transferred or pledged. The validity of central custody shall not be affected by a change of the identity of the holders of shares in central 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 shares in central custody.
The total ratio of shares to be placed in central custody as specified in Paragraph 2 of this Article shall not apply to government-owned enterprises.
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Article 10-2
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Where a company is applying for listing and its stock is already listed and traded on the GreTai Securities Market in accordance with Article 3 of the GreTai Securities Market Rules Governing Review of Securities Traded on Over-the-Counter Markets, central custody of shares shall be made as set forth below, except that the provision of paragraph 2 of Article 10 in relation to the total ratio of shares does not apply:
(1) If the company makes the listing application before the end of the central custody period provided in Article 3 of the Provisions Relating to Article 3, Paragraph 1, Subparagraph 4 of the GreTai Securities Market Rules Governing Review of Securities Traded on Over-the-Counter Markets, personnel of the company that fall within the scope of Article 10 or Article 10-1 hereof at the time of the listing application shall place their shares in central custody in accordance with the provisions of those articles, except that those personnel who have placed their shares in central custody at the time when the company applied for OTC listing shall keep their shares in central custody until the end of the original central custody period required for the OTC listing.
(2) If the company makes the listing application after the end of the central custody period provided in Article 3 of the Provisions Relating to Article 3, Paragraph 1, Subparagraph 4 of the GreTai Securities Market Rules Governing Review of Securities Traded on Over-the-Counter Markets, personnel of the company that fall within the scope of Article 10 or Article 10-1 hereof at the time of the listing application shall place their shares in central custody in accordance with the provisions of those articles.
If the applicant company under the preceding paragraph is an investment holding company or a financial holding company, it shall comply with this Corporation's Rules for the Review of Stock Listing Applications by Investment Holding Companies or Rules for the Review of Stock Listing Applications by Financial Holding Companies, and, in addition, the provisions of the preceding paragraph shall apply mutatis mutandis with respect to the central custody of its stock.
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Article 12-1
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An issuing company that privately places securities may not apply for initial listing of such privately placed securities during the period of restriction of transfer as set forth in Article 43-8 of the Securities and Exchange Act. If, once the period of restriction of transfer has elapsed, the company intends to apply for listed trading of the securities, it may file such application only after first completing public issuance examination and approval procedures with the Competent Authority.
Securities that are privately placed by a listed company and securities subsequently distributed, converted, or subscribed may not be listed during the period of restriction of transfer as set forth in Article 43-8 of the Securities and Exchange Act. Once the period of restriction of transfer has elapsed, the company may file a listing application only after first applying to this Corporation for a letter of approval and, on the basis of that letter, completing issuance examination and approval procedures with the Competent Authority. However, it may be exempted from the requirement of carrying out public offering prior to listing under Article 11.
When applying to this Corporation for a letter of approval under the preceding paragraph, a listed company shall meet the standards in each of the following subparagraphs:
1. The financial reports for the most recent period and the most recent accounting year show an absence of accumulated deficit and a positive net worth.
2. Each of the operating income and income before tax for the most recent two fiscal years represents 4 percent or greater of the amount of paid-in capital in its final accounts, or the average operating income and income before tax for the most recent two accounting years represent 4 percent or greater [of the amount of paid-in capital in its final accounts] and the profitability for the most recent fiscal year is greater than that for the immediately preceding fiscal year. However, if the company has prepared a consolidated financial statement, the operating income stated in its separate financial statements may be exempted from this provision.
3. A certified public accountant has audited the financial reports for the most recent two accounting years and has signed and issued an audit report containing an unqualified opinion. If an audit report containing other than an unqualified opinion is issued, it does not affect the fairness of presentation of the financial reports.
4. None of the events set out in Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, 8, or 11 is present.
5. The total amount of registered shares held by the directors and supervisors as a whole is higher than the share ownership ratio prescribed by the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies.
6. The fund utilization plan has been completely executed for the funds obtained from the private placement of securities, and has yielded reasonable benefits; provided, this restriction shall not apply if there is legitimate reason.
7. Others consistent with the provisions of the Competent Authority.
Where the Competent Authority has restricted the listed trading of securities issued by a listed company, privately placed securities of the company may not be listed until such restriction has been lifted, even if the period of restriction of transfer has elapsed.
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Article 16
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Where an issuing company other than a government-owned enterprise applies for the listing of its stock and, in any of the most recent two fiscal years, its operating income derived from construction business represents 20 percent or greater of its total operating income, or its gross profit derived from construction business represents 20 percent or greater of its gross profit, or its operating income or gross profit derived from construction business is more than the operating income or gross profit derived from other items of its business activities, it shall in addition to complying with the relevant provisions of these Rules, meet the following conditions:
1. There shall have been eight full fiscal years since its incorporation.
2. The amount of its paid-in capital shall be NT$600 million or more at the time when it applies for listing.
3. The net worth before distribution of earnings shown in the most recent financial report and for the most recent fiscal year shall exceed one-third of the total value of its assets.
4. The total value of house units and land to be sold, and leased assets (minus net worth of accumulated depreciation) shown in the most recent financial report and for the most recent fiscal year shall not exceed 70 percent of its net value; provided that if the company has obtained the use license for less than one year, or if the company has reclassified under the leased assets any construction project that it launched with respect to superficies it had obtained under a contract stipulating that it may only be leased and not sold, such portion need not be included in the calculation.
5. Its operating income and income before tax for each of the most recent three fiscal years shall be in positive figures, and it does not have accumulated deficit in the most recent three fiscal years.
6. Where all income accounts are accounted based on the percentage completion method, the full completion method shall be adopted; where a portion of income accounts are accounted based on the percentage completion method, the full completion method and the percentage completion method, as the case may be, shall be adopted. In case the full completion method is used in declaring the income accounts, the profit and loss statements for the most recent three fiscal years shall have been prepared based on the percentage completion method and shall have been reviewed by certified public accountants and evaluated by the securities underwriter by comparing with the original profit and loss statements; and both of the auditor's report and the underwriter's evaluation report confirm that its profitability meets the listing criteria.
7. Where its profitability remains in compliance with the criteria for listing of its stock after the profit derived from each project as prescribed below is deducted according to the calculation of certified public accountants:
(1). Purchase or sale of completed or uncompleted construction projects by others (referring to those for which invested construction cost has reached 40 percent or more of total construction cost).
(2). Purchase or sale of bare-land or house units already built.
(3). Acquisition and subsequent sale of either land or house originally held by the opposite party/parties as co-contractor.
(4). Sale of house or land to related party.
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