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Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings(2011.03.03) |
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Article 18
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Where an issuing company of a group enterprise, other than a government-owned enterprise, applies for the listing of its stock but does not meet the following requirements, the TWSE may disagree to its listing if the listing of its stock is deemed to be inappropriate by the TWSE, notwithstanding the fact that its application is otherwise in compliance with these Rules:
1. The principal business or products of the applicant company are not in mutual competition with those of any other companies within the same group enterprise. However, this requirement shall not apply if the applicant company has independent operational decision-making ability.
2. Where there are business transactions between the applicant company and other companies within the same group enterprise, written rules and regulations governing the financial and business affairs among them shall have been formulated and approved by the board of directors of each such company, and in addition, each company within a group enterprise shall execute an undertaking in writing to the effect that its financial and business affairs with other companies are free from any non-arms-length transaction. Where there is no business transaction between them, the applicant company shall execute an undertaking in writing to the effect that in case there is any business transaction in the future, it will be free from non-arms-length transaction.
3. Its financial and business conditions and its rules and regulations. above-mentioned shall not be materially abnormal as compared with those of other enterprises in the same industry.
4. The applicant company shall have the potential to develop independent marketing of the products that it sells to other companies within the same group enterprise.
5. The cost for procurement of products from or the operating income derived from selling products to other companies within the same group enterprise in the fiscal year in which the application for listing is filed and in the most recent 2 fiscal years is less than 50 percent of its total cost for procurement of products or operating income; provided that this provision shall not apply to the procurement amount or operating income derived from the parent company or subsidiary or in cases of company demerger pursuant to the Company Act or Business Mergers and Acquisitions Act.
Application of the provisions of subparagraph 5 of paragraph 1 may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
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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 is unable to meet the requirements set forth in all the subparagraphs below, the TWSE may disagree to the listing if the listing of its stock is deemed to be inappropriate by the TWSE, 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 2 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 applicant company 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 applicant company 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. The applicant company shall have at least three independent directors.
5. The applicant company's 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.
6. If the stock of the parent company is already traded on the TWSE (or the GTSM), at the time of its application for TWSE listing, the pro forma operating revenue or operating income as stated in the pro forma consolidated financial statements for each of the most recent 4 quarters, excluding the financial data for the applicant company, and reviewed by a CPA, was not down by 50 percent or more from the operating revenue or operating income stated in the consolidated financial statements for the same period, and the parent company has not transferred any material customers or business within the most recent 2 fiscal years.
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Article 28-5
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If a foreign issuer that applies for a TWSE primary listing of its stock is part of a consortium and complies with the provisions of this chapter, but does not meet all of the conditions below such that the TWSE deems the listing inappropriate, the TWSE 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 However, this requirement shall not apply if the applicant company has independent operational decision-making ability.
2. The products that the applicant company sells to other companies within the same group enterprise shall have the potential for the development of independent marketing.
3. 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 after having those guidelines approved by the board of directors, shall declare or undertake in writing that there are no non-arms-length transactions. If they do not have a business relationship, the applicant company shall undertake in writing that in the event of any subsequent business relationship, there will be no non-arms-length transactions.
4. 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.
5. 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 2 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 5 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 for TWSE primary listing of its stock, and complies with the provisions of this Chapter but cannot meet all of the following requirements, and the TWSE deems it inappropriate for listing, the TWSE 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 2 fiscal years shall be 3 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, and their corporate 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. The same does not apply, however, if the applicant company meets the following criteria:
(1) Where it has an audit committee, or has independent directors constituting more than one half of the total number of directors.
(2) Where one or more persons, other than those subject to the shareholding restriction in terms of the total number of shares as set out in this subparagraph, hold 300 million shares or more.
4. It shall have at least three independent directors.
5. 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.
6. If the stock of the parent company is already traded on the TWSE (or the GTSM), at the time of its application for TWSE listing, the pro forma operating revenue or operating income as stated in the pro forma consolidated financial statements for each of the most recent 4 quarters, excluding the financial data for the applicant company, and reviewed by a CPA, was not down by 50 percent or more from the operating revenue or operating income stated in the consolidated financial statements for the same period, and the parent company has not transferred any material customers or business within the most recent 2 fiscal years.
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