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Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings(2008.05.16) |
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Article 2-1
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Unless it is a state-owned enterprise, any issuer applying for listing of domestic securities shall first have applied for registration of its stock as emerging stock and have had it traded over the counter for not less than six months, and have completed relevant procedures for dematerialized registration of the issued securities, before this Corporation will accept its listing application for processing.
This Corporation will accept for processing an initial application by a foreign issuer for a first-time listing of stock issued by the foreign issuer that is not listed on any foreign securities exchange or securities market ("a primary listing") only after that foreign issuer has first been under advisement regarding listing by the lead securities underwriter, or has applied for registration of its stock as emerging stock and had it traded over the counter, for not less than six months, and the foreign issuer also undertakes that the shares for which it is applying for listing shall be delivered by the book-entry method.
The issuance of stocks delivered by the book-entry method under the preceding paragraph may be done in dematerialized form.
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Article 2-2
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An issuer applying for listing of securities shall establish a professional shareholder services agent or entity in the area where this Corporation is located to process shareholder services matters before this Corporation will accept its listing application for processing.
This Corporation will accept for processing an application for a primary listing by a foreign issuer only after it has appointed a professional shareholder services agent within the Republic of China to handle shareholder services, and has also designated a litigious and non-litigious agent within the Republic of China to handle matters regarding compliance with the laws and regulations of the Republic of China.
The professional shareholder services agent or entity referred to in paragraph 2 shall have shareholder services personnel and equipment that comply with the provisions of the Regulations Governing Handling of Shareholder Services by Public Companies, and it shall not have any record in the past three fiscal years of having been given post-audit recommendations in writing by the Taiwan Depository and Clearing Corporation and failing to make improvements by the deadline.
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Article 27
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This Corporation may issue documentation evidencing its approval for the listing application for stock issued by a foreign issuer whose stocks are already listed on a foreign securities exchange or securities market ("a secondary listing") if that foreign issuer meets the requirements listed below:
1. Number of shares to be listed: 20 million shares or more, or the market price of the shares to be listed is NT$300 million or more.
2. The registered shares issued by the foreign issuer in accordance with the laws of its home country have been listed for a full six months on one of the stock exchanges or securities markets approved by the Competent Authority.
3. Shareholders' equity: At the time of application for listing, the shareholders' equity stated on the financial report audited and certified by a Certified Public Accountant for the most recent period shall be the equivalent of NT$1 billion or more.
4. Profitability: The income before tax for each of the most recent two (2) fiscal years is in positive figure, and it does not have accumulative loss and meets one of the following criteria:
(1) The income before tax for each of the most recent two years represents not less than 6 percent of the shareholders' equity as shown in its final accounts, or the average income before tax for the most recent two years is 6 percent or greater and the profitability for the most recent year is greater than that for the immediately preceding year; or
(2) The ratio of income before tax to shareholder's equity in the final accounting for each of the past two (2) fiscal years is 3 percent or higher, or the average is 3 percent or higher, and the profitability in the most recent fiscal year is better year-on-year than in the preceding year.
(3) The income before tax for the most recent two years shall be NT$400 million or more.
5. Dispersion of shareholdings: At the time of the proposed listing, the number of registered shareholders in the Republic of China shall not be less than 1,000 persons, and the total number of shares held by the shareholders who hold one 1,000 shares to 50,000 shares shall represent 20 percent or more of the total number of issued shares, or shall be 10 million shares or more. In addition, the total number of registered shareholders shall be 2,000 persons or more, and the ratio of shareholding by the general public other than the insiders of the company shall not be less than 25 percent of its total issued shares.
6. The stock to be listed shall be the same class of stock listed on other stock exchanges or securities markets. The rights and obligations of the holders of stock shall be identical with those of the same class of stock listed on other stock exchange or securities markets. Local holders of the stock shall not be restricted from selling the stock on foreign stock exchanges or securities markets.
The provisions of Paragraph 2 of Article 26 shall apply mutatis mutandis to the financial reports referred to in Subparagraphs 3 and 4 of the immediately preceding paragraph.
Where it has obtained a certificate from this Corporation approving the application of the foreign issuer for the listing of its stock, this Corporation will, after a filing for effective registration of the issuance of such stock made with the Competent Authority, submit the Agreement for Listing Foreign Stock to the Competent Authority for approval, and will publicly announce the listing thereof after obtaining an approval from the Competent Authority.
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Article 27-1
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This Corporation may issue documentation evidencing approval of listing of the stock or Taiwan depositary receipts of a foreign issuer that applies for a secondary stock listing or that sponsors issuance of Taiwan Depositary Receipts by a depositary institution if the Industrial Development Bureau of the Ministry of Economic Affairs or a professional institution engaged by this Corporation issues an unequivocal opinion it is a technology enterprise, has successfully developed marketable goods or technology, and meets each of the following criteria:
1. Number of shares to be listed: 20 million shares or more, or shares with a market price of NT$300 million or more.
2. The securities underwriter has provided a written recommendation.
3. The registered shares issued by the foreign issuer in accordance with the laws of its home country have been listed for a full six months on one of the stock exchanges or securities markets approved by the Competent Authority.
4. Shareholders' equity: At the time of application for listing, the shareholders' equity stated on the financial report audited and certified by a Certified Public Accountant for the most recent period shall be the equivalent of NT$500 million or more.
5. Profitability: There are neither accumulated deficits in the most recent accounting year nor the period of the most recent financial report audited and certified by a Certified Public Accountant as of the time of application for listing.
6. Dispersion of shareholdings: At the time of the proposed listing, the number of registered shareholders in the Republic of China shall not be less than 1,000 persons, and the total number of shares held by the shareholders who hold 1,000 shares to 50,000 shares shall represent 20 percent or more of the total number of issued shares, or shall be 10 million shares or more. In addition, the total number of registered shareholders shall be 2,000 persons or more, and the ratio of shareholding by the general public other than the insiders of the company shall not be less than 25 percent of its total issued shares.
7. The stock to be listed shall be the same class of stock listed on other stock exchanges or securities markets. The rights and obligations of the holders of stock shall be identical with those of the same class of stock listed on other stock exchanges or securities markets. Local holders of the stock shall not be restricted from selling the stock on foreign stock exchanges or securities markets.
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Article 28-1
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This Corporation may issue documentation evidencing listing approval of the application by a foreign issuer for a primary stock listing if that issuer meets all of the requirements listed below:
1. It complies with regulations in connection with the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area.
2. At the time it applies for listing, the applicant company or any of its controlled companies shall have an operational track record of three years or longer.
3. The company scale meets one of the following criteria:
(1) At the time of application for listing, paid-in capital or shareholders' equity is NT$600 million or higher.
(2) At the time of listing, market capitalization is NT$1.6 billion or higher.
4. Its cumulative income before tax for the most recent three fiscal years is NT$250 million or higher, and its income before tax for the most recent fiscal year is NT$120 million or higher.
5. Its number of shareholders of record is 1,000 or more, of which there are no less than 500 shareholders holding from 1,000 to 50,000 shares and whose total shareholdings constitute 20 percent or more of the total issued shares or not less than 10 million shares.
6. It is recommended, in writing, by two or more securities underwriters.
"Controlled company" in the preceding paragraph means any of the following circumstances:
1. Any controlled company in which the foreign issuer directly holds more than 50 percent of the issued voting shares or has contributed more than 50 percent of the capital.
2. Any controlled company in which the foreign issuer, indirectly through a subsidiary company, holds more than 50 percent of the issued voting shares or has contributed more than 50 percent of the capital.
3. Any controlled company in which the foreign issuer directly, or indirectly through a subsidiary, holds more than 50 percent of the issued voting shares or has contributed more than 50 percent of the capital.
If a foreign issuer is a professional investor and its purpose is to directly, or indirectly through a subsidiary company, control the operations of a holding company or companies, 70 percent or more of that foreign issuer's operating income in its consolidated financial statement shall be derived from a controlled company or companies.
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Article 28-2
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The securities underwriter referred to in the preceding article shall be registered as a member of the Taiwan Securities Association and establish a place of business within the Republic of China.
A lead securities underwriter must undertake, in writing, that it has performed due diligence procedures, that the evaluation report, other documentation, and attachments it issues all are true, and that it has not concealed or omitted any material financial or operating information regarding the foreign issuer.
The foreign issuer and its directors shall assist the securities underwriter to conduct due diligence procedures, and provide any required information.
A foreign issuer shall continuously engage a lead securities underwriter in the fiscal year in which it applies for listing and in the two subsequent fiscal years to assist it in compliance matters regarding Republic of China securities acts and regulations, the bylaws, rules, and public announcements of this Corporation, and the listing contract.
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Article 28-3
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The standard basis for the paid-in capital of Article 28-1, paragraph 1, subparagraph 3, item 1 is the amount of paid-in capital recorded in the evidentiary documents of the foreign issuer's registration or amendment registration translated into New Taiwan Dollars based on the average of the daily foreign exchange rates at market close, as announced by the designated foreign exchange bank in the Republic of China, for the one-month period before the foreign issuer applied for listing.
The standard basis for the "shareholders' equity" specified by Article 28-1, paragraph 1, subparagraph 3, item 2 and the "income before tax" specified by subparagraph 4 shall be the CPA audited and attested consolidated financial report for the most recent fiscal year.
The "consolidated financial report" referred to in the preceding paragraph shall be prepared in accordance with the financial accounting standards of the Republic of China, the generally accepted accounting principles of the United States, or international accounting standards, with an audit report issued by two ROC-licensed CPAs of a joint accounting firm approved by the Competent Authority to attest to the financial reports of public companies, or audited by an international CPA firm that has a cooperative relationship with the aforementioned accounting firm accompanied by an audit report issued by an ROC-licensed CPA.
A consolidated financial report of the preceding paragraph that is not prepared in accordance with the financial accounting standards of the Republic of China shall disclose any items with material discrepancies and the amount of any monetary impact of those discrepancies, and provide an opinion by an ROC-licensed CPA regarding those items.
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Article 28-4
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A foreign issuer that applies for a primary stock listing may not have less than five directors on its board, and shall appoint no less than two independent directors, at least one of whom shall be domiciled in the Republic of China.
A foreign issuer shall install either an audit committee or supervisors. That audit committee shall comprise all the independent directors; it may not have less than three members, one of whom shall be the convener. The minimum number of supervisors is three.
ROC acts and regulations regarding securities shall apply mutatis mutandis to the professional qualifications, restrictions on shareholding and the holding of concurrent posts, and the determination of independence, of the independent directors of the two preceding paragraphs.
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Article 28-5
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If a foreign issuer that applies for a primary stock listing is part of a consortium and complies with the provisions of this chapter, but does not meet all of the conditions below such that this Corporation deems the listing inappropriate, this Corporation shall not approve its stock listing:
1. There is no mutual competition between the primary businesses or primary products of the applicant company and the companies in the same consortium, and the products that the applicant company sells to those same-consortium companies shall have independent sales development potential. Any determination of "mutual competition" shall be based on an overall assessment of general factors such as enterprise type, product substitutability, and target customers.
2. If the applicant company and a company in the same consortium have a business relationship, they shall each adopt concrete, written systems of operational guidelines for their mutual finances and business, and have those guidelines approved by the board of directors.
3. There shall be no material irregularities in its financial or business status or in its above-cited operational guidelines in comparison with other companies in the same industry.
4. The amount of its purchases and operating revenue from companies in the consortium in the fiscal year in which it applies for listing, and in the most recent two fiscal years, does not exceed 50 percent, provided that this restriction shall not apply to the amount of purchases and operating revenues from the parent company or a subsidiary.
Subparagraph 4 of the preceding paragraph need not be applied if circumstances under that subparagraph are due to special industry characteristics, conditions of supply and demand in the market, or another legitimate reason.
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Article 28-6
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If a foreign issuer that is a subsidiary of a parent company applies to list its stock as a primary stock listing, and complies with the provisions of this Chapter but cannot meet all of the following requirements, and this Corporation deems it inappropriate for listing, this Corporation shall not approve its stock listing:
1. It shall submit the consolidated financial statement of the parent company and all of its subsidiaries prepared in accordance with Republic of China, United States, or international accounting standards. If that statement is not prepared in accordance with ROC financial accounting standards, the foreign issuer shall disclose any items with material discrepancies and the amount of any monetary impact of those discrepancies, and an opinion expressed by an ROC-licensed CPA regarding those items.
2. As calculated based on the consolidated financial statement submitted pursuant to the preceding subparagraph, total shareholders' equity in the most recent fiscal year shall be NT$1 billion or higher, and each of operating income and income before tax in each of the most recent two fiscal years shall be three percent or more of total shareholders' equity, provided that the aforesaid profitability percentages need not apply if the amount of purchases/sales transactions between the foreign issuer and its parent company in the fiscal year in which it applies for listing and the most recent fiscal year do not constitute 10 percent of the foreign issuer's total purchases/sales.
3. The total holdings of its shares by the parent company and its affiliated companies; the applicant company's directors, supervisors, and representatives; shareholders holding over 10 percent of the total number of shares; and by their related parties may not be more than 70 percent of the total number of its shares. If those total holdings exceed 70 percent, the foreign issuer shall reduce that percentage to 70 or lower when it conducts the pre-listing public sale of its shares.
4. In the fiscal year in which it applies for listing and the most recent fiscal year, it does not derive more than 50 percent of its operating revenue, or more than 70 percent of its principal raw materials, principal products, or the amount of its total purchases, from the parent company, provided that these restrictions shall not apply if due to special industry characteristics, conditions of supply and demand in the market, or another legitimate reason.
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Article 28-7
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A foreign issuer that applies for a primary stock listing shall in writing undertake as follows:
1. When this Corporation deems it necessary to audit the foreign issuer's financial operations or money flow, the foreign issuer is willing to fully cooperate with the investigations of this Corporation and any attorney, CPA, or professional institution designated by this Corporation, to provide any and all information required by this Corporation, and agrees to be responsible for payment of investigation expenses.
2. The foreign issuer will appoint a professional shareholder services agent in the Republic of China to handle shareholder services, will designate a litigious and non-litigious agent within the Republic of China to handle matters relating to compliance with ROC securities acts and regulations, the bylaws, rules, and public announcements of this Corporation, and the listing contract, and will continuously engage a lead securities underwriter in the fiscal year in which it applies for listing and in the two subsequent fiscal years to assist it in complying with ROC securities acts and regulations, and the listing contract.
3. Shall add important matters concerning the protection of shareholders' equity in its company bylaws or organizational documents.
4. Par value per share for the shares under the listing application shall be NT$10, and shall be delivered by the book-entry method.
5. After listing, it will continue to comply with ROC securities acts and regulations, the listing contract, and the bylaws, rules, and public announcements of this Corporation.
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Article 28-8
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If a foreign issuer that applies for a primary stock listing complies with all listing requirements specified in Article 28-1, but any of the circumstances listed below exists at that foreign issuer or any controlled company thereof, and this Corporation deems the listing inappropriate, this Corporation need not approve its stock listing:
1. Any circumstance having a serious impact on the company's financial or business status, or sufficient to cause its dissolution or changes to its organization or capital, or it acts deceptively or illegally such that the post-listing price of its securities is affected, with a likelihood of affecting market order or harming the public interest.
2. Its finances or operations cannot be independently and clearly distinguished from those of another person.
3. Any material non arms-length transaction has occurred and has not been corrected.
4. The applicant company or any controlled company thereof, or any incumbent director, supervisor, general manager or de facto responsible person of any of those companies, has acted in violation of the principle of good faith in the most recent three years.
5. This Corporation deems listing inappropriate for any other reason related to the scope or nature of the enterprise or any other special circumstance.
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Article 28-9
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This Corporation will approve a foreign issuer's application for a primary stock listing only after its directors, supervisors, and its shareholders holding more than 10 percent of the total number of shares, as recorded in its listing application documentation, place in centralized custody in a central securities depository established with the approval of the Competent Authority the stocks comprising their respective individual shareholdings in full as recorded in the listing application documentation and whose sum total is not lower than the percentage specified by this Corporation minus the number of shares provided for public sale upon listing, provided that if the number of shares submitted is insufficient to meet the required percentage, the foreign issuer shall coordinate other shareholders to make up the shortfall.
The provisions of Article 10, paragraphs 2, 3, 4, and 6 shall apply mutatis mutandis to the allocation percentage, centralized custody period, withdrawal method, disposal of stocks in centralized custody, and the effect of custody.
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Article 28-10
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A foreign issuer applying for a primary stock listing shall first allocate 10 percent of its total number of shares as recorded in its listing application documentation to a cash capital increase through a new share issue and engage a securities underwriter to conduct a pre-listing public sale of those shares under mutatis mutandis application of the provisions of the Securities and Exchange Act, Article 71, paragraph 1 regarding securities underwriting on a firm commitment basis.
The total amount of stock that a foreign issuer shall allocate for public sale as specified in the preceding paragraph shall be calculated according to the method prescribed in Article 10, paragraph 2, and include any stock added from the listing application date until the listing date, provided that shares allocated for public sale are limited to common stock.
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Article 28-11
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A foreign issuer applying for a primary stock listing shall, after the listing contract has been approved by the Competent Authority and the issuer has been notified of that approval in writing by this Corporation, then proceed to conduct the public sale pursuant to the preceding Article. If the stock for which the foreign issuer applied for listing has not been listed for trading within three months from the date on which the issuer was notified in writing, this Corporation shall, after obtaining approval from the Competent Authority, void the listing contract. If the foreign issuer applies for an extension with a legitimate reason, it may be granted a three-month extension, one time only, subject to the approval of this Corporation and review and recordation by the Competent Authority.
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Article 28-12
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If a foreign issuer, having applied for [and obtained] a primary stock listing, [subsequently] reports the issuance, for purposes of distribution of bonus shares, of new common shares that are identical to its already listed stock, and those new shares are distributed to shareholders within the Republic of China, then 12 business days before the new shares are to be listed for trading it shall file a written report for the listing of the new capital-increase shares along with relevant documentation to this Corporation. After this Corporation has reviewed and found all of the attached documentation to be complete and in compliance with relevant provisions, this Corporation will publicly announce its listing.
If a foreign issuer, having applied for [and obtained] a primary stock listing, [subsequently] for the purpose of a cash capital increase issues in the Republic of China new common shares that are identical to its already listed stock, it shall complete an application and submit it with the relevant documentation to this Corporation. After this Corporation has reviewed the documentation, this Corporation may issue evidentiary documentation approving listing of the shares. After filing and effective registration with the Competent Authority, the foreign issuer shall file a written report for the listing of the new capital-increase shares along with the relevant documentation to this Corporation 12 business days before the new shares are to be listed for trading, for public announcement of the listing of the shares.
If a foreign issuer, having applied for [and obtained] a primary stock listing, [subsequently] applies for the listing of common shares issued elsewhere than within the Republic of China, this Corporation will publicly announce listing of the shares after it has reviewed the applicant's attached documentation and found it to be in compliance with all of the following provisions:
1. It complies with the laws and regulations regarding capital increase in the country in which it is registered.
2. There is no likelihood of serious harm to shareholders' equity in connection with the conditions, price, or issuees of the issue.
3. No other material irregularities exist.
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