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Amendments

Title：

Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings  CH

Amended Date： 2024.03.11 (Articles 4, 28-1, 40 amended,English version coming soon)
Current English version amended on 2023.09.05 
Categories： Primary Market > Review
Article Content Chapter Content Search Article No. Search Legal Basis Subordinate Legislation Amended Article Attachment Legislative History Chinese

Title： Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings(2013.01.23)
Date：
Article 4     Where an issuing company applying for the listing of its stock meets the criteria listed below, the TWSE 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 3 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 net income before tax in its financial reports meets either of the following criteria, and it does not have any accumulated deficit in the final accounting for the most recent fiscal year:
    1. The net income before tax for the most recent 2 fiscal years represents 6 percent or greater of the share capital stated on the financial report for the annual final accounts.
    2. The net income before tax for the most recent 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
    3. The net income before tax for the most recent 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 registered shareholders shall be 1,000 or more. Excluding company insiders and any juristic persons in which such insiders hold more than 50 percent of the shares, the number of registered shareholders shall be at least 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.
Article 5     Where the central authority in charge of the enterprise concerned has issued an unequivocal opinion certifying that the issuing company applying for the listing of its stock is a technology-based enterprise and the said issuing company meets the criteria listed below, the TWSE will agree to list its stock:
  1. Its paid-in capital is NT$300 million or more at the time when it applies for listing.
  2. It has successfully developed a product or a technology with market potential, and the company has obtained an appraisal opinion from the central authority in charge of the enterprise concerned.
  3. It is recommended in writing by the securities underwriter.
  4. Its net worth in both its most recent financial report and in its financial report for the most recent fiscal year represents two-thirds or greater of the share capital stated on the financial report.
  5. The number of registered shareholders shall be 1,000 or more. Excluding company insiders and any juristic persons in which such insiders hold more than 50 percent of the shares, the number of registered shareholders shall be at least 500.
Article 7      A financial report as referred to in Chapter II of these Rules shall mean a consolidated financial report prepared pursuant to the applicable regulations governing the preparation of financial reports adopted by the competent authority for the relevant industry. However, if the issuing company does not have a subsidiary, individual financial forecasts shall be prepared. The aforementioned financial reports shall be duly audited and certified or reviewed by two or more certified public accountants (CPAs) of an accounting firm; provided that for a stated-owned enterprise, the financial reports for the most recent fiscal year shall be prepared pursuant to the applicable regulations governing the preparation of financial reports adopted by the competent authority for the relevant industry, and audited and attested by CPAs, and if in other years, the securities have not been publicly issued, the financial reports audited by the auditing agency may be used instead.
    The amount of capital referred to in Chapter II of these Rules shall be the amount shown on the certifying documents following registration (or amendment registration). However shares of privately placed securities that have not been publicly issued shall not be counted in the calculation of the aforesaid amount of capital.
     The net worth and net income before tax as referred to in Chapter II of these Rules shall mean, for consolidated reports, the amount attributable to owners of the parent.
Article 8     Where an issuing company merely applies with the TWSE for listing its common stock or any type(s) of preferred stock, the amount of paid-in capital required under Articles 4, 5 and 6 hereof shall be calculated on the basis of the total par value of all shares to be listed. In respect of the dispersion of shareholdings, the number of registered shareholders and the ratio between the number of shares held by them and the total number of issued shares shall be computed and determined in accordance with the respective types of the stock to be listed.
    Where an issuing company applies for listing its common stock along with any type(s) of preferred stock, the total amount of the par value of the common stock to be listed shall at least meet the paid-in capital as required by Article 4, 5, 6, 6-1 or 16, and that of any type of preferred stock to be listed shall be NT$300 million or more. Each type of the stock to be listed shall meet the criteria governing the dispersion of shareholding.
    With respect to the criteria governing the dispersion of shareholding for the listing of any type(s) of preferred stock under the preceding two paragraphs, the requirement of 500 or more registered shareholders shall be met, and the combined total number of shares held by all the registered shareholders, excluding company insiders and any juristic persons in which such insiders hold more than 50 percent of the shares, shall account for 20 percent or more of the total issued shares of each type of preferred stock or be at least 10 million shares.
Article 10     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, 6, 16, 20 or 20-1 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 end of a 6-month period starting from the listing date thereof; the remaining shares may be withdrawn in full only after the end 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 custody period. 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.
Article 10-1     An application for initial listing of stock filed by an issuing company in accordance with Article 6-1 shall not be approved unless and until its directors, supervisors, shareholders holding 3 percent or more of the total issued shares, and the shareholders whose equity investment is made in the form of technical know-how and who hold 0.5 percent or more of the total number of issued shares or 100,000 shares or more have placed all of their shares specified in the application for listing and in total not less than the ratio of shares as required in paragraph 2 of this Article, minus the shares required for public offering, with a central securities depository enterprise incorporated with the approval of the Competent Authority; provided however, that if the total number of shares held by directors and supervisors is less than the total number of shares held by them at the time when they were elected as directors and supervisors, then the total number of shares at the time when they were elected shall be the basis for counting the number of shares under this Article. If the number of shares represented by shares placed in custody pursuant to the above is less than the total ratio of shares required under paragraph 2, the shortage shall be made up by other shareholders.
     The total of shares that the issuing company shall place in central custody with the central securities depository, as required under the preceding paragraph, shall mean the total ratio calculated by the method enumerated below based on the total number of issued common shares specified in the application for listing, and the shares placed in central custody shall be the offered and issued common shares only.
  1. If the total number of shares is one billion shares or less, 50 percent of the total number of shares shall be placed in custody.
  2. If the total number of shares exceeds one billion shares but not three billion shares, in addition to complying with the preceding subparagraph, 40 percent of the total number of shares shall be placed in custody for the portion exceeding one billion shares.
  3. If the total number of shares exceeds three billion shares but not five billion shares, in addition to complying with the preceding subparagraph, 30 percent of the total number of shares shall be placed in custody for the portion exceeding three billion shares.
  4. If the total number of shares exceeds five billion shares but not seven billion shares, in addition to complying with the preceding subparagraph, 20 percent of the total number of shares shall be placed in custody for the portion exceeding five billion shares.
  5. If the total number of shares exceeds seven billion shares, in addition to complying with the preceding subparagraph, 10 percent of the total number of shares shall be placed in custody for the portion exceeding seven billion shares.

    Among the shares placed in custody under paragraph 1, one-sixth of the portion thereof may be withdrawn only after the end of 3 full years from the listing date thereof; thereafter, one-sixth thereof may be withdrawn once every 6 months. If after the end of the said period, the project constructed by the company has not been fully completed and the operation has not commenced, the custody period may be extended until the project is fully completed and the operation commences; provided, however, that if partial operation has commenced before the project is fully completed, the custody period shall be extended until the company's annual financial report shows an operating income and net income before tax. The custody agreement shall not be terminated during the custody period. Shares and certificates in custody shall not be transferred or pledged. The validity of custody shall not be affected by any change of the identity of the holders of shares in custody.
    At the time of applying for listing, the issuer shall undertake that, during the period of central custody of the stock, a shareholder that has already placed stock in central custody in accordance with paragraph 1 shall also carry out central custody placement for any shares of common stock that the shareholder may subsequently obtain through subscription or conversion of preferred shares or corporate bonds, according to the total ratio required to be placed in custody as calculated under paragraph 1 at the time of the listing application. The provisions of paragraph 3 shall apply mutatis mutandis to the time periods for custody and withdrawal thereof.    The provisions of paragraph 1 shall not apply where, during the period in which an issuing company applying for initial listing of its stock is registered as an emerging stock company, shareholding of its recommending securities firm exceeds 3 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.
Article 10-2     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 the GTSM, 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 the GTSM, 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 GTSM listing shall keep their shares in central custody until the end of the original central custody period required for the GTSM 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 the GTSM; unless the TWSE deems necessary, personnel that meet the requirements of Article 10 or Article 10-1 of these Rules at the time of its application for listing may be exempt from the requirement to place their shares in centralized custody.
Article 12-1     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 the TWSE 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 the TWSE 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 fiscal year show an absence of accumulated deficit.
  2. The net income before tax in the financial reports meets one of the following standards:
    1. The net income before tax for each of the most recent 2 fiscal years represents 4 percent or greater of the share capital stated on the financial report for the annual final accounts.
    2. The average net income before tax for the most recent 2 fiscal years represents 4 percent or greater of the share capital stated on the financial report for the annual final accounts, and the profitability for the most recent fiscal year is greater than that for the immediately preceding fiscal year.
  3. A CPA has audited the financial reports for the most recent 2 fiscal 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 12 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. For an applicant company that had net income after tax and no accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the ratio of net income before tax to the share capital stated on the financial report for the annual final accounts for the most recent fiscal year shall be better than that for the fiscal year before the shareholders meeting resolved on the private placement of securities:
    1. The private placement solely introduced strategic investors, and at the time the company applies for the letter of approval, the privately placed shares have not been transferred, or have been transferred to the holding of any non-insider(s) or non related party(ies) of the applicant company.
    2. There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, but the applicant company for a legitimate reason is unable to reasonably correct the situation and unable to conduct the public offering, and is urgently in need of capital, and is granted permission for the private placement by the TWSE, and at the time the company applies for the letter of approval for listing of the privately placed securities, the securities have not been transferred, or have been transferred to the holding of any non-insider(s) or non related party(ies) of the applicant company.
  8. For an applicant company that had net profit after tax and no accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the ratio of net income before tax to the share capital stated on the financial report for the annual final accounts for the most recent fiscal year may not be lower than 200 percent of that for the fiscal year before the shareholders meeting resolved on private placement of securities:
    1. The private placement solely introduced strategic investors, and at the time the company applies for the letter of approval, part or all of the privately placed shares have been transferred to the holding of any insider(s) or related party(ies) of the applicant company.
    2. The private placement did not introduce strategic investors.
    3. There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, but the applicant company for a legitimate reason is unable to reasonably correct the situation and unable to conduct the public offering, and is urgently in need of capital, and is granted permission for the private placement by the TWSE, and at the time the company applies for the letter of approval for listing of the privately placed securities, part or all of the securities have been transferred to the holding of any insider(s) or related party(ies) of the applicant company.
    4. The conducting of the private placement of securities was not done in accordance with the Directions for Public Companies Conducting Private Placements of Securities ("the Directions for Private Placements"), where the circumstances were serious.
  9. For an applicant company that had net loss after tax or accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the ratio of net income before tax to the share capital stated on the financial report for the annual final accounts for the most recent fiscal year shall be 6 percent or higher:
    1. Any insider or related party of the company participates in the private placement, and the subscription price does not comply with the percentage requirements set out by the Competent Authority.
    2. The private placement of securities is not carried out in accordance with the Directions for Private Placements, and the circumstances are serious.
  10. Others consistent with the provisions of the Competent Authority.

    Prior to the listing, all privately placed shares held by non-strategic investors, insiders, and related parties as referred to in subparagraph 8 or 9 of the preceding paragraph, shall be placed in central custody with a central securities depository enterprise incorporated with the approval of the Competent Authority. One half of the shares placed in central custody may be withdrawn only after the end of a 6-month period starting from the date of commencement of listed trading; the remaining shares may be withdrawn in full only after the end of a 1-year period starting from the date of commencement of listed trading. The custodial agreement may not be rescinded during the custody period, and the shares in central custody may 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.    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 of the privately placed shares has elapsed.
Article 14     Where a listed company issues new shares that are of the same type of stocks as those which has already been listed and applies for listing the new shares, such new shares may be listed in accordance with the provisions of Article 139, paragraph 2 of the Securities and Exchange Act, and any certificates carrying right to convert bonds into stock issued by the listed company may also be listed on the TWSE in accordance with the said provisions of the Securities and Exchange Act.
    Where a listed company issues new shares that are not of the same type of stocks as those which have already been listed and applies for listing of the new shares, the TWSE may agree to list the new shares only if the total par value of the shares under application for listing is NT$300 million or more and the company offers the shares for sale to the public before listing in accordance with Article 11, paragraph 1 and complies with the shareholding dispersion standards in Article 8, paragraph 3 of these Rules. Provided, the TWSE may disagree to the listing in any of the following events:
  1. It has had net loss before tax for each of the most recent 2 years.
  2. At the time of approving the issuance of new shares, the Competent Authority deemed it inappropriate to offer the new shares to the public at market price, and the causes therefor have not been extinguished.
  3. The most recent application for public offering and issuance of securities was returned or disapproved by the Competent Authority, and the causes therefor were material and have not been improved.
  4. The securities previously issued by the company were restricted from listing for causes under Article 156, paragraph 1 of the Securities and Exchange Act, and such causes have not be extinguished, or any event under Article 156, paragraph 1 of the Securities and Exchange Act has occurred.
  5. There exists other events that are deemed by the TWSE as inappropriate for listing.

    A listed company applying for listing of shares issued by it that are not of the same type of stock as those already listed and that are redeemable for cash upon maturity shall comply with the provisions of the preceding paragraph; however, the shareholding dispersion standards in Article 8, paragraph 3 of these Rules shall not apply.    A listed company shall promptly report to the TWSE, by submitting a Listed Securities Report Form, any common shares created through the exercise of conversion rights or subscription rights under any preferred shares with warrants, convertible preferred shares, corporate bonds with warrants, convertible corporate bonds, and detached company warrants offered and issued by it, and may be exempted from the requirement of public offering under Article 11. Provided, if such offered and issued preferred shares are prohibited from listing under the proviso to paragraph 2 of this Article, common shares created through the exercise of conversion rights or subscription rights thereunder shall also be prohibited from listing.
Article 16     Where an issuing company other than a government-owned enterprise applies for the listing of its stock and, in the financial reports for the most recent 2 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 8 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 shown in the most recent financial report and in the financial report for the most recent fiscal year shall reach 30 percent or more of the total value of its assets.
  4. The combined net value of houses and land held for sale and investment property shown in the most recent financial report and for the most recent fiscal year shall not exceed 70 percent of its net worth. However, if the company has obtained the use license for less than one year, or the company has reclassified under investment property any construction project that it launched with respect to superficies it had obtained under an agreement stipulating that it may only be leased and not sold, or the lease-out rate of the investment property reaches 50 percent or higher, such portion need not be included in the calculation.
  5. Its net income before tax for each of the most recent 3 fiscal years shall be in positive figures, and it does not have accumulated deficit in the most recent 3 fiscal years.

  6. 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 CPAs:
    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.
Article 17     Where an issuing company referred to in the immediately preceding article other than a government-owned enterprise, in the past 2 fiscal years, contracted with any construction company with an annual contract sum in excess of NT$200 million, or the contract sum did not exceed NT$200 million but the construction company is a related party of the issuing company, then in each of the said 2 fiscal years the following provisions shall have been complied with:
  1. The construction company must be a Class A construction firm; its financial statements and gross profit gained from each individual project in the most recent 2 fiscal years shall each have been jointly audited and attested by two CPAs of an accounting firm.
  2. The gross profit for each individual project undertaken by the issuing company and construction company in the most recent 2 fiscal years does not show abnormal circumstances.
  3. The contracting process, formation of the contract price, and payment terms have been evaluated by a professional institution as reasonable.
  4. The construction company did not in the most recent 2 years materially violate any relevant building and construction laws and regulations, nor did the construction company materially breach any construction contract with a development company in the most recent 2 years.
  5. There has been no unusual or abnormal fund transmission between the issuing company and the construction company.
  6. There does not exist between the issuing company and the construction company any of the events set forth in Article 9, paragraph 1, subparagraph 2 hereof.

     If the issuing company and the construction company are not related parties, and a complete internal control system has been established, and the bidding procedures and payment method for contracting meet trade practices, the application of the provisions in subparagraphs 1 to 3 of the preceding paragraph may be excluded.
Article 18     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, 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, at the time of the application for listing, in the most recent period, 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.
Article 19     Where, upon application, 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, 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 CPA 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 net worth shall be NT$1 billion or more in the most recent fiscal year and the net income before tax shall each represent 3 percent or greater of the total amount of net worth 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 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 and all of its subsidiaries, and by those companies' directors, supervisors, representatives, and 10 percent or greater shareholders, and related parties thereof, 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.
Article 20      An issuing company applying for listing of its stock as a professional investment company with the purpose of controlling the business operations of other companies, shall be approved for the listing of its stock if it meets the requirements of the following subparagraphs:
  1. Years of incorporation: Three full years have elapsed following registration of incorporation, or the years of actual operation of any of its held companies exceed three years.
  2. Equity: The net worth for the most recent fiscal year reaches NT$1 billion or more.
  3. Profitability: The ratio of net income before tax to net worth as stated on the financial report for each of the most recent 2 fiscal years reaches 3 percent or higher.
  4. Dispersion of equity ownership: The standard of Article 4, subparagraph 4 is met.
  5. The company does not engage in any business other than investment.
  6. The company shall have two or more held companies, and the held companies may not be professional investment companies and may not hold shares of the applicant company.
  7. At least 70 percent of the operating income in the financial reports shall come from the held companies.
  8. The sum total of the book value of its investment in the held companies shall equal 50 percent or more of each of its equity-method investment and net worth, as stated in the parent company only financial report.
  9. The company has not engaged in any borrowing or lending of funds with a non-financial institution.
  10. The ratio of net worth to total assets in the financial report for the most recent fiscal year shall reach one-third or more.
     A held company shall mean any of the following:
  1. An invested company of which an investment holding company directly holds more than 50 percent of the issued voting shares or has made a capital contribution of more than 50 percent.
  2. An invested company of which an investment holding company through its subsidiaries indirectly holds more than 50 percent of the issued voting shares or has made a capital contribution of more than 50 percent.
  3. An invested company of which an investment holding company directly, and indirectly through its subsidiaries, holds more than 50 percent of the issued voting shares or has made a capital contribution of more than 50 percent.
  4. A company of which an investment holding company directly or indirectly elects or appoints more than half of the directors for the board of directors.
     If an investment holding company applying for listing of its stock has a net worth for the most recent fiscal year reaching NT$800 million or more, and its held companies have successfully developed products or technology and those products or technology are marketable, and the central competent authority for the relevant industry has provided an unequivocal opinion stating that the company is a technology enterprise, it may be exempted from the application of paragraph 1, subparagraphs 1 and 3.
     If the held company is required to be a professional investment company because the investment holding company has invested via a third location, it may be exempted from application of the provision of paragraph 1, subparagraph 6 that a held company may not be a professional investment company.
     Notwithstanding that an investment holding company applying for the listing of its stock meets the listing criteria set forth in these Rules, the TWSE shall disagree to its listing if the circumstance in Article 9, paragraph 1, subparagraph 8 applies to any of its held companies, and the TWSE may disagree to its listing if any of the circumstances in Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, or 12 applies to any of its held companies and the TWSE deems the listing inappropriate.
     A held company more than 70 percent of whose shares are held by an investment holding company that is already domestically listed on the TWSE (or GTSM) may not apply for domestic TWSE listing.
Article 20-1      A financial holding company applying for listing of its stock, shall be approved for the listing of its stock if it meets the requirements of the following subparagraphs:
  1. It has obtained a letter of approval for the TWSE listing application from the competent authority for the relevant industry.
  2. Years of Incorporation: Three full years have elapsed since registration of incorporation, or the years of actual operation of any of its subsidiaries exceed three years.
  3. Profitability: The ratio of net income before tax to net worth as stated on the financial report for most recent two fiscal years reaches 3 percent or higher.
  4. Dispersion of equity ownership: The standard of Article 4, subparagraph 4 is met.
     Notwithstanding that a financial holding company applying for the listing of its stock meets the listing criteria set forth in these Rules, the TWSE shall disagree to its listing if the circumstance of Article 9, paragraph 1, subparagraph 8 applies to any of its subsidiaries, and the TWSE may disagree to its listing if any of the circumstances of Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, or 12 applies to any of its subsidiaries and the TWSE deems the listing inappropriate.
     A subsidiary more than 70 percent of whose shares are held by a financial holding company that is already domestically listed on the TWSE (or GTSM) may not apply for domestic TWSE listing.
Article 23-1     Where a trustee institution or special purpose company applies for the listing of beneficiary securities or asset-backed securities offered by it that have been approved for public issuance and meet all of the below-listed conditions, the TWSE may agree to the listing of such securities:
  1. The total issue amount of the beneficiary securities or asset-backed securities under application for listing is NT$500 million or more.
  2. The date of maturity of the securities is at least one year from the date of listing for trading.
  3. The number of beneficiaries or holders is not less than five persons, and the total amount of any individual holdings of such beneficiary securities or asset-backed securities shall not exceed 20 percent of the total issue amount. Provided, this 20 percent holding restriction shall not apply where the holder is an independent institutional investor.
  4. The limit on par value is NT$10,000.
    The term "independent institutional investor" in the preceding paragraph means a juristic person or institution under Article 13, paragraph 1, subparagraph 1 of the Real Estate Securitization Act or a fund under Article 13, paragraph 1, subparagraph 2 of the same Act; and does not mean an originator as referred to in the Financial Asset Securitization Act, or an interested party thereof, or an affiliated enterprise as referred to in the Company Act, or a related party as defined under Article 18 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
Article 23-2     Where approved real estate investment trust beneficiary securities offered and issued by a domestic closed-end real estate investment trust fund established by a trustee institution meet all the below-listed conditions, and the offering trustee institution applies for listing, the TWSE may agree to the listing thereof:
  1. The total issue amount is NT$3 billion or more.
  2. The duration of the contract must be one year or more from the date of listing for trading.
  3. The number of beneficiaries holding a total amount of NT$1 million or less of the beneficial units shall not be less than 500, and the total amount of all beneficial units held by such beneficiaries shall not be less than NT$200 million.
  4. The total price amount of the beneficial units held by any five beneficiaries shall not exceed 50 percent of the total issue amount of the beneficiary securities. Provided, this restriction shall not apply where the holder is an independent institutional investor.
  5. Each beneficiary security shall represent 1,000 beneficial units, and have a par value limited to NT$10,000.
  6. The owner of the real estate or rights owner of rights related to the real estate invested in by the fund, in accordance with Article 8, paragraph 4 of the Regulations Governing the Offering or Private Placement of Real Estate Investment Trust or Real Estate Asset Trust Beneficiary Securities by Trustee Institutions, shall place in full the beneficiary securities it holds from the assignment of the real estate or real estate related rights in central custody, and shall undertake that it shall neither release the beneficiary securities from custody, nor transfer or pledge the beneficiary securities or certificates under custody, nor shall it use those beneficial securities as collateral to engage in any repo transaction, before one year has elapsed from the time it comes to hold them, and only after one year has elapsed may it retrieve them in full.
    Where approved real estate asset trust beneficiary securities offered and issued by a trustee institution meet all the below-listed conditions, and the offering trustee institution applies for listing, the TWSE may agree to the listing thereof:
  1. The total issue amount of the real estate asset trust beneficiary securities under application for listing is NT$500 million or more.
  2. The date of maturity is at least one year from the date of listing for trading.
  3. The number of beneficiaries shall be no less than five, and furthermore the total amount of the first-payment-priority beneficiary securities held by any five beneficiaries shall not exceed 50 percent of the total issue amount of the beneficiary securities. Provided, this 50 percent holding restriction shall not apply where the holder is an independent institutional investor.
  4. The par value shall be limited to NT$100,000.
  5. Beneficiary securities under application for listing shall be rated by a credit rating institution.
    The term "independent institutional investor" in this Article means a juristic person or institution under Article 13, paragraph 1, subparagraph 1 of the Real Estate Securitization Act or a fund under Article 13, paragraph 1, subparagraph 2 of the same Act; and does not mean a promoter of a real estate investment trust or a settler of a real estate asset trust, or an interested party thereof, or an affiliated enterprise as referred to in the Company Act, or a related party or substantially related party as defined under Article 18 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
Article 26     Approval will be granted for the application submitted by a foreign issuer or its depositary institution for listing of Taiwan depositary receipts proposed to be issued if the application meets the following requirements:
  1. Units of Taiwan depositary receipts to be listed: 20 million units or more or market value of NT$300 million or more; provided that the listed units may not exceed 50 percent of the total number of shares issued by the foreign issuer.
  2. The stock, or the securities representing the stock, issued by the foreign issuer in accordance with the laws of its country of registration are already listed and traded on the main board of one of the overseas securities markets approved by the Competent Authority before the listing of the Taiwan depositary receipts under the listing application.
  3. Net worth: At the time of application for listing, the net worth stated on the financial report audited and attested by a CPA for the most recent period shall not be less than the equivalent of NT$600 million.
  4. Profitability: It does not have accumulated deficit in the most recent one (1) fiscal year and meets one of the following criteria:
    1. The ratio of net income before tax to net worth in the final accounting for the most recent 1 year is 6 percent or higher.
    2. The ratio of net income before tax to net worth in the final accounting for each of the past 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 net income before tax for each of the most recent 2 years shall be NT$250 million or more.
  5. Dispersion of shareholdings: At the time of proposed listing, the number of holders of the Taiwan depositary receipts in the Republic of China is not less than 1,000 persons, and the total number of units held by holders other than insiders of the foreign issuer and juristic persons of which such insiders own over 50 percent of the shareholding is not less than 20 percent of the total units issued or is 10 million units or more.
  6. There shall be no restriction on transfer of stock, or securities representing such stock, represented by Taiwan depositary receipts.
  7. The rights and obligations of the holders of stock, or securities representing such stock, represented by Taiwan depositary receipts shall be identical with those of other stock, or securities representing such stock, of the same class issued at the same time.
  8. There is no abnormal fluctuation in the price of the stock represented by the Taiwan depositary receipts during the 3 months before the listing agreement for Taiwan depositary receipts takes effect.
  9. The depositary institution has not, within the past year, been sanctioned by the TWSE for any error in information reporting, where the circumstances were serious.
    The financial information referred to in subparagraphs 3 and 4 of the preceding paragraph will be examined [by the TWSE] based on the consolidated report or the consolidated financial statement prepared by the said foreign issuer in accordance with the laws and regulations of its country of registration or the country of listing and the audit opinion issued by a CPA 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 country of registration or the country of listing of the said foreign issuer and the impact of such differences on such financial reports.
     The net worth and net income before tax as referred to in paragraph 1, subparagraphs 3 and 4 shall mean, for consolidated financial reports, the amount attributable to owners of the parent.
    Unless otherwise prescribed by the Competent Authority, after the listing agreement with respect to the application for listing of Taiwan Depositary Receipts has taken effect, the foreign issuer shall conduct a public sale pursuant to regulations from the date of the TWSE's written notification. If the Taiwan Depositary Receipts for which the foreign issuer applied for listing are not listed for trading within 3 months from the date of the TWSE's written notification, the TWSE shall void the listing agreement, and report to the Competent Authority for recordation. Notwithstanding, if the foreign issuer, with legitimate reason, applies for an extension, then after the TWSE approves such extension, the foreign issuer may be granted a one-time only 3-month extension, which shall be reported to the Competent Authority for recordation.    The foreign issuer shall undertake in writing that, after listing, it will establish a reporting system with the TWSE for automatic synchronous reporting of material information.
Article 27     Approval will be granted for an application by a foreign issuer for a secondary listing of stock issued by that foreign issuer ("a TWSE secondary listing") if the requirements listed below are met:
  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; provided that the number of shares may not exceed 50 percent of the total number of shares issued by the foreign issuer.
  2. The registered shares issued by the foreign issuer in accordance with the laws of its country of registration are already listed and traded on the main board of one of the overseas securities markets approved by the Competent Authority before the listing of the stocks under the listing application.
  3. Net worth: At the time of application for listing, the net worth stated on the financial report audited and attested by a CPA for the most recent period shall be the equivalent of NT$600 million or more.
  4. Profitability: It does not have accumulative loss for the most recent one (1) fiscal year and meets one of the following criteria:
    1. The net income before tax for the most recent one year represents not less than 6 percent of the net worth as shown in its final accounts; or
    2. The ratio of net income before tax to net worth in the final accounting for each of the past 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 net income before tax for the most recent 2 years shall be NT$250 million or more.
  5. Dispersion of shareholdings: At the time of the proposed listing, the number of registered shareholders in the Republic of China is not less than 1,000 persons, and the total number of shares held by shareholders other than insiders of the foreign issuer and juristic persons of which such insiders own over 50 percent of the shareholding is 20 percent or more of the total number of issued shares or is 10 million shares or more.
  6. The stock under the application for listing shall be the same class of stock listed and traded on the overseas securities market, and the rights and obligations of the holders of stock shall be identical with those of the same class of stock listed and traded on the other securities market, and local holders of the stock shall not be restricted from selling the stock in which they have invested on the overseas securities market.
  7. During the 3 months before the listing agreement for the foreign stock takes effect, there is no abnormal fluctuation in the price of the stock that is already listed and traded on the overseas securities market.

    The provisions of Article 26, paragraphs 2 and 3 shall apply mutatis mutandis to the financial reports referred to in subparagraphs 3 and 4 of the immediately preceding paragraph.
    After the listing agreement with respect to the foreign issuer's application for listing of shares has taken effect, the foreign issuer shall conduct a public sale pursuant to regulations as from the date of the TWSE's written notification. If the stock for which the foreign issuer applied for listing is not listed for trading within 3 months from the date of the TWSE's written notification, the TWSE shall void the listing agreement, and report to the Competent Authority for recordation. Notwithstanding, if the foreign issuer, with legitimate reason, applies for an extension, then after the TWSE approves such extension, the foreign issuer may be granted a one-time-only 3-month extension, which shall be reported to the Competent Authority for recordation.    The foreign issuer shall undertake in writing that, after listing, it will establish a reporting system with the TWSE for automatic synchronous reporting of material information.
Article 27-1     Approval will be granted for listing of the stock or Taiwan depositary receipts of a foreign issuer that applies for a TWSE secondary 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 the TWSE 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 or units of Taiwan depositary receipts to be listed: 20 million shares or more, or shares with a market price of NT$300 million or more; or 20 million units or more, or units with a market price of NT$300 million or more; provided that it may not exceed 50 percent of the total number of shares issued by the foreign issuer.
  2. The securities underwriter has provided a written recommendation.
  3. The stock, or the securities representing such stock, issued by the foreign issuer in accordance with the laws of its country of registration is already listed and traded on the main board of one of the overseas securities markets approved by the Competent Authority before the listing of the stocks or Taiwan depositary receipts under the listing application.
  4. At the time of application for listing, the net worth stated on the financial report audited and attested by a CPA for the most recent period shall be the equivalent of NT$300 million or more and not less than two-thirds of the sum of capital stock and capital reserve; evidence shall also be required supporting that there is a sufficient amount of working capital covering the period of 12 months after the listing and half or more of such working capital is derived from the principal operating activities.
  5. At the time of the proposed listing, the number of registered shareholders or holders of the Taiwan depositary receipts in the Republic of China is not less than 1,000 persons, and the total number of shares held by the shareholders or holders of the Taiwan depositary receipts other than insiders of the foreign issuer and juristic persons of which such insiders own over 50 percent of the shareholding is 20 percent or more of the total number of issued shares or is 10 million shares or more.
  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 exchanges or securities markets. Local holders of the stock shall not be restricted from selling the stock on foreign stock exchanges or securities markets.
  7. There is no abnormal fluctuation in the price of the stock, or securities representing the stock, issued by the foreign issuer under the law of the country of registration, during the 3 months before the agreement takes effect for listing of shares or Taiwan depositary receipts with respect to which the listing application is submitted.
  8. The depositary institution has not, within the past year, been sanctioned by the TWSE for any error in information reporting, where the circumstances were serious.
     The provisions of Article 26, paragraphs 2 and 3 shall apply mutatis mutandis to the financial reports referred to in subparagraph 4 of the preceding paragraph.
    The foreign issuer shall undertake in writing that, after listing, it will establish a reporting system with the TWSE for automatic sychronous reporting of material information.
Article 28-1     The TWSE may issue documentation evidencing listing approval of the application by a foreign issuer for a TWSE primary 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. However, if individuals, juristic persons, groups, or other institutions from the Mainland Area have direct or indirect shareholding or capital contribution exceeding 30 percent in, or effective control over, the foreign issuer, special-case permission shall be obtained from the competent authority.
  2. At the time it applies for listing, the applicant company or any of its controlled companies shall have an operational track record of 3 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 net worth is NT$600 million or higher.
    2. At the time of listing, market capitalization is NT$1.6 billion or higher.
  4. Its cumulative net income before tax for the most recent 3 fiscal years is NT$250 million or higher, and its net income before tax for the most recent fiscal year is NT$120 million or higher, and it does not have any accumulated deficit.
  5. Its number of shareholders of record is 1,000 or more, and the number of shareholders other than insiders of the foreign issuer and juristic persons of which such insiders own over 50 percent of the shareholding is no less than 500 and their total shareholdings constitute 20 percent or more of the total issued shares or not less than 10 million shares.
  6. The number of shares planned to be listed and traded shall exceed 50 percent of the total number of its issued shares.
  7. It is recommended, in writing, by two or more securities underwriters.
    Where a foreign issuer applies for a TWSE primary listing of stock, if, for the foreign issuer or a company controlled by it whose successfully developed products or technology contribute 50 percent of its overall operating revenue, there has been issued an unequivocal opinion by the Industrial Development Bureau, Ministry of Economic Affairs, or a TWSE-designated professional institution, indicating that the company is a technology enterprise and has successfully developed products or technology and those products or technology are moreover marketable, if the foreign issuer meets the requirements of the following subparagraphs, the TWSE may issue evidentiary documentation indicating its approval of the listing:
  1. It complies with the relevant provisions of the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area. However, if individuals, juristic persons, groups, or other institutions from the Mainland Area have direct or indirect shareholding or capital contribution exceeding 30 percent in, or effective control over, the foreign issuer, special-case permission shall be obtained from the competent authority.
  2. At the time of the listing application, the applying company or the controlled company that is a technology enterprise shall have a business record of one full fiscal year or more.
  3. At the time of the listing application, the paid-in capital or net worth reaches NT$300 million or more, or the market capitalization reaches NT$800 million or more.
  4. At the time of the listing application, the net worth on the most current financial report audited and attested by a CPA is not lower than two-thirds of the capital stock, with proof that the company has operating capital sufficient for 12 months of operation following the listing. In the case of a foreign issuer whose shares have no par value or a par value other than NT$10, the issuer's net worth shall be not less than two-thirds of the sum of the share capital plus capital reserves minus original issue premium.
  5. Its number of shareholders of record is 500 or more, and the total shareholdings of the shareholders of record other than insiders of the foreign issuer and juristic persons of which such insiders own over 50 percent of the shareholding constitute 20 percent or more of the total issued shares or not less than five million shares.
  6. The number of shares planned to be listed and traded shall exceed 50 percent of the total number of its issued shares.
  7. It is recommended by two or more securities underwriters.
    When a foreign issuer applies for a TWSE primary listing of stock, if its operating revenue derived from construction business as stated in the financial reports represents 20 percent or greater of its total operating revenue, or its gross profit derived from construction business represents 20 percent or greater of its total gross profit, or its operating revenue or gross profit derived from construction business is more than that derived from other business items, during the most recent 2 fiscal years, it shall meet all of the requirements provided in Articles 16 and 17 herein, in which case, the TWSE may issue evidentiary documentation indicating its approval of the listing thereof; in the case of a foreign issuer whose shares have no par value or a par value other than NT$10, the requirement of Article 16, paragraph 1, subparagraph 2 shall be calculated on the basis of the net worth reaching NT$600 million or more.
    "Controlled company" in paragraphs 1 and 2 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.
  4. A company of which a foreign issuer directly or indirectly elects or appoints more than half of the directors for the board of directors.
    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.
Article 28-3     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 1-month period before the foreign issuer applied for listing.
    The standard basis for the "net worth" and "net income before tax" specified by Articles 28-1, 28-6, and 28-13 shall be the CPA audited and attested consolidated financial report, and shall refer to the amount attributable to owners of the parent.
    The "consolidated financial report" referred to in the preceding paragraph shall be prepared in accordance with the applicable regulations governing the preparation of financial reports adopted by the competent authority for the relevant industry, the generally accepted accounting principles of the United States, or the International Financial Reporting 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 applicable regulations governing the preparation of financial reports adopted by the competent authority for the relevant industry 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.
Article 28-6     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, 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 the applicable regulations governing preparation of financial reports adopted by relevant competent authority, the generally accepted accounting principles of the United States, or the International Financial Reporting Standards. If that statement is not prepared in accordance with the applicable regulations governing the preparation of financial reports adopted by the competent authority for the relevant industry, 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 net worth in the most recent fiscal year shall be NT$1 billion or higher, and the net income before tax in each of the most recent 2 fiscal years shall be 3 percent or more of the total net worth, 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 all of its subsidiaries, and by those companies' directors, supervisors, representatives, and 10 percent or greater shareholders, and related parties thereof, 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. In the case of a foreign issuer whose shares have no par value or a par value other than NT$10, the same shall apply 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, have the equivalent of NT$6 billion or more in the net worth.
  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.
Article 28-13     A foreign issuer 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, applied mutatis mutandis under Article 165-1, of the Securities and Exchange Act. If, once the period of restriction of transfer has elapsed, the issuer intends to apply for listed trading of the securities, it may file such application only after first supplementally completing public issuance examination and approval procedures with the Competent Authority.
    Securities that are privately placed by a primary 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, applied mutatis mutandis under Article 165-1, 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 the TWSE for a letter of approval and, on the basis of that letter, supplementarily completing issuance examination and approval procedures with the Competent Authority. However, the company may be exempted from the requirement of carrying out public sale prior to listing under Article 28-10.
    When applying to the TWSE for a letter of approval under the preceding paragraph, a primary 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 fiscal year show an absence of accumulated deficit.
  2. Its cumulative net income before tax for the most recent 3 fiscal years is NT$160 million or higher, and its net income before tax for the most recent fiscal year is NT$80 million or higher.
  3. A CPA has audited the consolidated financial reports for the most recent 2 fiscal 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 28-8, subparagraphs 1, 3, 4, or 7 is present.
  5. 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.
  6. For an applicant company that had net income after tax and no accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the ratio of net income before tax to year-end share capital for the most recent fiscal year shall be better than that for the fiscal year before the shareholders meeting resolved on the private placement of securities:
    1. The private placement solely introduced strategic investors, and at the time the company applies for the letter of approval, the privately placed shares have not been transferred, or have been transferred to the holding of non-insider(s) or non related party(ies) of the applicant company.
    2. There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Foreign Issuers, but the applicant company for a legitimate reason is unable to reasonably correct the situation and unable to conduct the public offering, and is urgently in need of capital, and is granted permission for the private placement by the TWSE, and at the time the company applies for the letter of approval for listing of the privately placed securities, the securities have not been transferred, or have been transferred to the holding of non-insider(s) or non related party(ies) of the applicant company.
  7. For an applicant company that had net income after tax and no accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the ratio of net income before tax to year-end share capital for the most recent fiscal year may not be lower than 200 percent of that for the fiscal year before the shareholders meeting resolved on private placement of securities:
    1. The private placement solely introduced strategic investors, and at the time the company applies for the letter of approval, part or all of the privately placed shares have been transferred to the holding of insider(s) or related party(ies) of the applicant company.
    2. The private placement did not introduce strategic investors.
    3. There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Foreign Issuers, but the applicant company for a legitimate reason is unable to reasonably correct the situation and unable to conduct the public offering, and is urgently in need of capital, and is granted permission for the private placement by the TWSE, and at the time the company applies for the letter of approval for listing of the privately placed securities, part or all of the securities have been transferred to the holding of insider(s) or related party(ies) of the applicant company.
    4. The conducting of the private placement of securities was not done in accordance with the Directions for Private Placements, where the circumstances were serious.
  8. For an applicant company that had net loss or accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the net income before tax for the most recent fiscal year shall be NT$120 million or higher:
    1. Any insider or related party of the company participates in the private placement, and the subscription price does not comply with the percentage requirements set out by the Competent Authority.
    2. The private placement of securities is not carried out in accordance with the Directions for Private Placements, and the circumstances are serious.
  9. Others consistent with the provisions of the Competent Authority.

    In the provisions regarding the ratio of net income before tax to year-end share capital in subparagraphs 6 and 7 of paragraph 3, if the stock of a primary listed company has no par value or a par value per share other than NT$10, the calculation shall be of the ratio of net income before tax to the sum of the share capital plus capital reserves minus the original issue premium.
    Prior to the listing, all privately placed shares held by non-strategic investors, insiders, and related parties as referred to in subparagraph 7 or 8 of paragraph 3, shall be placed in central custody with a central securities depository enterprise incorporated with the approval of the Competent Authority. One half of the shares placed in central custody may be withdrawn only after the end of a 6-month period starting from the date of commencement of listed trading; the remaining shares may be withdrawn in full only after the end of a 1-year period starting from the date of commencement of listed trading. The custodial agreement may not be rescinded during the custody period, and the shares in central custody may 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.    Where the Competent Authority has restricted the listed trading of securities issued by a primary 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 of the privately placed shares has elapsed.