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Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings(2021.07.29) |
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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 shall disagree to its listing, notwithstanding the fact that its application is otherwise in compliance with these Rules:
- 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.
- 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.
- 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.
- 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.
- The purchase amount in the most recent period or most recent fiscal year from the time of the application for listing from a company within the same group enterprise does not exceed 70 percent, provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
- The operating revenue or operating profit derived from 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 fiscal year, does not exceed 50 percent, or the operating revenue derived from the use of a critical technology or asset provided by the companies mentioned above does not exceed 50 percent; provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes, which situation accounts for not more than 70 percent.
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19
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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 shall disagree to the listing, notwithstanding the fact that its application meets the criteria set forth in these Rules:
- 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, unless the applicant company is applying for listing pursuant to paragraph 2 or 4 of Article 4, or Article 5, Article 6, or Article 6-1, or in the fiscal year of the application for listing and the most recent fiscal year the amount of purchase/sales transactions between it and its parent company is less than 10 percent of its total purchase/sales amount.
- 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 profit before tax shall each represent 3 percent or greater of the total amount of net worth in each of the most recent two fiscal years, provided that such shall not apply where such event is the product of business nature, market demand and supply condition, government policy, or any other reasonable cause.
- The total number of shares of the applicant company held by the parent company and all of its subsidiaries, and by those companies' directors, supervisors, representatives, and greater than 10 percent shareholders, and by 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 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 in the applicant company.
- If the stock of the parent company is already traded on the TWSE (or the TPEx), at the time of its application for TWSE listing, the pro forma operating revenue or net 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 two fiscal years. However, this need not apply if the parent company and the subsidiary have different business types, industrial classifications, or product types, and moreover are not mutually competitive, or if it resulted from another reasonable cause.
When a subsidiary applies for TWSE listing pursuant to the proviso of subparagraph 6 of the preceding paragraph, any transfer of shares within the three years prior to the application for TWSE listing for purposes of reducing the parent company's shareholding in the subsidiary shall have been conducted in a manner in which the pre-emptive subscription right is given to the original shareholders of the parent company or another manner not detrimental to the rights and interest of the shareholders of the parent.
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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:
- 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.
- 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.
- 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.
- There shall be no material irregularities in its financial or business condition or in its above-cited operational guidelines in comparison with other companies in the same industry.
- The purchase amount in the most recent period or most recent fiscal year from the time of the application for listing from companies within the same group enterprise does not exceed 70 percent, provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
- The amount of its operating revenue or operating profit derived from companies within the same group enterprise in the most recent period and most recent fiscal year from the time of its application for listing does not exceed 50 percent, or the operating revenue derived from the use of a critical technology or asset provided by the companies mentioned above does not exceed 50 percent, provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes, which situation accounts for not more than 70 percent.
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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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, the TWSE shall not approve its stock listing:
- It shall submit the consolidated financial statement of the parent company and all of its subsidiaries. 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, unless the applicant company is applying for listing pursuant to Article 28-1, paragraph 2, 5 or 6, or in the fiscal year of the application for listing and the most recent fiscal year the amount of purchase/sales transactions between it and its parent company is less than 10 percent of its total purchase/sales amount.
- As calculated based on the consolidated financial statement submitted pursuant to the preceding subparagraph, the profitability shall meet the requirement in Article 28-1, paragraph 1, subparagraph 4, provided that the aforesaid profitability requirement need not apply where such event is the product of business nature, market demand and supply condition, government policy, or any other reasonable cause.
- The total holdings of its shares by the parent company and all of its subsidiaries, and by those companies' directors, supervisors, representatives, and greater than 10 percent shareholders, and by 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, 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.
- 6.If the stock of the parent company is already traded on the TWSE (or the TPEx), at the time of its application for TWSE listing, the pro forma operating revenue or net 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 two fiscal years. However, this need not apply if the parent company and the subsidiary have different business types, industrial classifications, or product types, and moreover are not mutually competitive, or if it resulted from another reasonable cause.
When a subsidiary applies for TWSE listing pursuant to the proviso of subparagraph 6 of the preceding paragraph, any transfer of shares within the three years prior to the application for TWSE listing for purposes of reducing the parent company's shareholding in the subsidiary shall have been conducted in a manner in which the pre-emptive subscription right is given to the original shareholders of the parent company or another manner not detrimental to the rights and interests of the shareholders of the parent.
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32
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An application for listing of its stock at the TIB by a domestic issuer or foreign issuer of the group enterprise shall be rejected if it fails to meet the following requirements, despite that it has complied with the applicable provisions of these Rules:
- The major business or products of the applicant and those of the other companies within the same group enterprise are not competing with each other, except where the applicant has the ability to make independent operation decisions.
- Where the applicant has business dealings with the other companies with the same group enterprise, each entity shall establish a specific written system for operating policies on finance and business between them, for approval by their respective board of directors, and shall issue a written undertaking or guarantee on the absence of irregular transactions. If there is no business dealings between them, the applicant shall issue a written statement, undertaking they will never have irregular transactions if there are business dealings between them in the future.
- Its financial and business conditions and operating regulations should have no major irregularities when compared to those of the other companies in the same industry.
- It should have the development potential for independent marketing of the products to be sold to the other companies within the same group enterprise.
- The purchase amount in the most recent period or most recent fiscal year from the time of the application for listing from a company within the same group enterprise does not exceed 70 percent, provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
- The operating revenue or operating profit derived from other companies within the same group enterprise in the most recent period, and in the most recent fiscal year the time of application for listing does not exceed 50%, or the operating revenue derived from the use of a critical technology or asset provided by the companies mentioned above does not exceed 50 percent; provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
Subparagraph 5 of the preceding paragraph may be waived if the circumstance under this subparagraph is due to characteristics of the trade, market supplies and demands, government policies or other reasonable cause.
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33
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An application for listing of stocks at the TIB by a subsidiary that maintains the parent and subsidiary relationship at the time of the application shall be rejected if it fails to meet the following requirements, despite that it has complied with the applicable provisions of these Rules:
- The parents company and all its subsidiaries and their directors, supervisors and representatives, and shareholders holding more than 10% of the company’s total shares, and their related parties all together shall not hold more than 70% of the total issued shares of the applicant. Where the above shareholding exceeds 70%, there should be prelisting public sales of shares to reduce the shareholding to less than 70%.
- Where the stocks of its parent company are traded at the TWSE/TPEx centralized securities exchange market, the pro forma operating revenues or operating income shown in the pro forma consolidated financial statements that excludes the applicant’s financial data, audited by CPA, for the most recent four quarters at the time of the application indicate no decline of over 50% compared to the consolidated financial statements for the current term, and no transfer of business of any major client of the parent company has occurred during the most recent two fiscal years. The above, however, may be waived if the parent company and the subsidiary engage in different types of business, conduct business in different industries or have different types of products and are not competing with each other, or it is due to other reasonable cause.
Where a subsidiary applies for listing at the TIB in accordance with the proviso of subparagraph 3 of the preceding paragraph, when the parent company transfer shares to reduce its shareholding in the subsidiary during the three years prior to the application for listing, the shares to be transferred should be offered for subscription by existing shareholders on a priority basis or the transfer should be made in a way that will not injure the equity of the shareholders’ of the parent company.
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