||Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings(2007.04.09)
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 income and income before tax 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 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. However, the same does not apply where the applicant company meets the requirements of both of the following subparagraphs:
(1) It has established an audit committee or has independent directors numbering more than one-half of the total number of directors.
(2) Persons, other than those restricted by this subparagraph with respect to the total amount of shareholdings, hold a total of no less than 300 million shares.
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.