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Article 4
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For initial stock listing applications, after receiving the application and supporting documents, the administering department shall form a task force consisting of two or more persons (depending on the overall current status of the human resources of the department) to assess each application. For applications by already-listed companies for issuance of new shares for capital increase, or for corporate bonds or other securities listings, the administering department shall designate a person to handle such applications. In addition to keeping the application and supporting documents in safe custody, for initial stock listing applications, the designated person shall also submit one copy each of the prospectus and the draft underwriter assessment report for public display.
After accepting the application for processing, the managing department shall retain an outside reviewer with field-specific expertise to give a consulting opinion on the matters provided in the Table of Consultation Matters. If questions arise relating to financial, accounting, or legal matters, the case-handling unit may also retain outside financial, accounting, and/or legal professionals to give a written opinion. Solicitation of written opinions shall be handled in accordance with the TWSE "Rules for Solicitation of Opinions in Reviews of Initial Applications for TWSE Listing by Public Companies." The aforesaid Rules will be separately adopted. The above regulations in regard to outside reviewers shall not apply to cases that, pursuant to Article 7-1, are exempt from review by the Review Committee. A company referred to in Articles 53-8, 53-18, 53-21 and 53-24 of the TWSE Operating Rules, when applying for stock listing, may be exempt from the above provisions regarding solicitation of opinions.
The consulting opinions of the outside reviewers referred to in the preceding paragraph shall be delivered to the TWSE 15 days before the Review Committee meets.
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Article 7
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Review Process:
- After they have been delegated a securities listing case, the case handlers shall complete the following review procedures:
- Application Documents: Check all application documents received and complete a "Stock Listing Application Receipt Record." (Attachment 1).
- Prospectus: Examine each item detailed in the content of the prospectus according to the TWSE Regulations Governing the Particulars to be Recorded in Prospectuses for Initial Listing of Securities and other relevant regulations and re-examine a Checklist of Legal Issues to be Examined upon Application by Issuers for Exchange Listings of Stock (Attachment 2) provided by a lawyer.
- Underwriter's Assessment Report:
Review the underwriter's assessment report and check whether each item is assessed in accordance with the rules and regulations of the TWSE and whether it draws clear and definitive conclusions. Any matters relating to the provisions of the TWSE Regulations for Handling Deficiencies in Evaluation Reports or Other Related Information Submitted by a Securities Underwriter shall be handled, after obtaining signed approval by the TWSE's president, pursuant to Article 9 of the same Regulations.
The above-mentioned Regulations for Handling Deficiencies in Evaluation Reports or Other Related Information Submitted by a Securities Underwriter shall be separately prescribed by the TWSE.
- Internal Control Systems
- Gain an understanding of the results and attached assessment opinion from the CPAs' internal control system investigation, and of the CPAs' recommendations regarding internal control systems as stated in the recommendation report, in compiling the Record of the Internal Control System Documentary Review (Attachment 3).
- Carry out the review in accordance with the TWSE Procedures for Reviewing Internal Control System Audit Reports Issued by Certified Public Accountants, and complete Attachment 2 of said Procedures, the Opinion Form for Review of the Internal Control System Audit Reports Issued by Certified Public Accountants.
- Comprehensive Analysis of Financial Information:
Review the annexed survey report for related industries, explanations of major changes in accounting items published in the prospectus, analytical data from the CPAs' permanent records, and the underwriter's assessment report to ascertain and assess the financial condition and trends of the applicant company and excerpt important items or irregularities to compile the Comprehensive Analysis of Financial Data (Attachment 4).
- CPA auditing procedures and financial report:
Review the CPAs' permanent files, the working papers for the internal accounting control system for the most recent fiscal year and the audit working papers for the most recent 3 years preceding the date of application and re-examine the Certified Public Accountant Auditing Procedure Checklist (Attachment 5) completed by the CPAs to ensure compliance with Statement on Auditing Standards No. 3 ("Audit Working Paper Standards"), Statement on Auditing Standards No. 5 ("Investigation and Assessment of Internal Accounting Control Systems"), the Regulations for Auditing and Attestation of Financial Statements by Certified Public Accountants, and all other applicable regulations. Include excerpts or photocopies of important or irregular items in the report. Examine the CPA audit reports for the most recent 3 fiscal years and the notes and statements of major accounting items therein to ensure that the applicant company's financial reports is prepared in compliance with the regulations prescribed by the competent authority governing the preparation of financial reports by each enterprise. [After completion of the above] the case handlers shall note their opinion in the opinion column of the Certified Public Accountant Auditing Procedure Checklist. If the applicant company is found in violation of any of the requirements of the TWSE Regulations Governing the Handling of Errors by Certified Public Accountants in Auditing of Initial Applications for Market Listing, the case handlers shall refer the matter to the Review Committee and execute the resolution passed by the committee.
The above-mentioned TWSE Regulations Governing the Handling of Errors by Certified Public Accountants in Auditing of Initial Applications for Market Listing shall be separately prescribed by the TWSE.
- Dispersion of Shareholding and Custodial Undertaking: Examine the following items:
- Whether the ratio of shares to be publicly offered is in compliance with the regulations of the TWSE.
- Whether shareholding dispersion after public offering is in compliance with the provisions of the TWSE's Regulations for Review of Securities Listings.
- Whether the ratio of shares held by directors is in compliance with the regulations of the competent authority.
- Whether the undertaking regarding the ratio of shares in centralized custody to total issued shares complies with regulations.
- Examine whether the applicant company is in compliance with each of the items listed in Article 9, Paragraph 1 of the TWSE's Regulations for Review of Securities Listings and complete the "Regulations for Review of Securities Listings Article 9, Paragraph 1 Itemized Checklist" (Attachment 6).
- The case handlers shall consolidate all the above review data and relevant documentation (Attachments 1 through 9) into a binder.
- To ascertain the actual status of the financial and business operations of the applicant company, the case handlers shall carry out an on-site audit and conduct the following procedures:
- Seek briefings to ascertain the following:
‧ The past business achievement and philosophy of the applicant company's responsible person.
‧ Changes in the shareholdings of directors, and shareholders with a greater than 10 percent share of the company's total issued equity during the most recent 3 fiscal years and random checks of actual shareholdings when necessary.
‧ Management and operational objectives of the company.
‧ Financial structure and management policies.
‧ Production processes.
‧ Production status.
‧ Analysis of sales income and costs and the state of competition in the industry.
‧ The system for taking stock of and valuating inventory, and warehousing management.
‧ Dealings among affiliates.
‧ Salary and benefit regime.
- Inspect factories, paying particular attention to the operational status of machinery and equipment.
- For other significant irregularities discovered in the documentary review, the case handlers may draft an inspection plan and then conduct an audit of the irregularities.
- Findings of on-site audits shall be recorded in detail in the "On-Site Audit Record" (Attachment 7).
- In order to clarify other major issues in relation to the current status and future development of the industry to which the company belongs, as well as financial accounting, taxes, legal issues, and other material issues arising from operations in that industry, the case handler may duly engage an expert as an external Review Committee member, and in addition to obtaining the opinion of that expert, may also seek the opinions of other experts on related questions with approval by the president of the TWSE of a written request for permission.
- Compilation of working papers: The case handlers shall consolidate and record in detail all review items and findings of the review, together with all relevant information and number them in order for cross-referencing. Upon completion of the review, the case handlers shall compile all review information (Attachments 1 through 7) and supporting documentation into a binder to serve as the working papers and file it together with other public issuance approval information and keep it in the custody of the Listing Department (for a minimum of 5 years) for future reference and case management.
- After completion of the working papers, the case handlers shall set forth the key findings, and may as necessary solicit the opinions of relevant experts and examine other relevant information. The case handler shall then compile this information into a"" proposal for reference during the review and deliberation of the case.
- Review Period: Applications for initial stock listing shall be submitted for deliberation by the Review Committee within six weeks after their receipt. Under extraordinary circumstances, however, the Listing Department may, based upon review requirements or at the request of the applicant company and no less than 10 days prior to the Review Committee meeting, extend the deadline for submission to the Review Committee, subject to the signed approval of the president of the TWSE. Extensions granted at the request of the applicant company shall be limited to a maximum period of 1 month.
- Force of the Securities Listing Review: The findings of the review of an application for securities listing reflect the financial and business condition of the applicant company during a specified period of time only, and should not be taken as a reflection of the overall or future performance of the applicant company. The results also depend largely on whether the applicant company has made full disclosure of information relating to its financial and business condition. The review results do not provide a guarantee of the quality of the applicant company and shall not be taken as a substitute for the functions and status of [reports of] securities underwriters and CPAs. Therefore, case handlers reviewing applications filed by first-time applicants shall:
- Carry out the review work with a positive service attitude and full rely on all information and opinions provided by the applicant company, CPAs, and securities underwriters, unless any nondisclosure, fraud, falsehood, or error is discovered.
- Where information or statements of opinion provided by the applicant company, securities underwriter, or CPAs are found to contain any nondisclosure, fraud, error, falsehood, or otherwise seriously violate applicable laws or the rules and regulations of the TWSE, those responsible shall be held fully liable under the law, and the matter shall be duly reported to the competent authority after handling by the TWSE pursuant to relevant regulations. The TWSE undertakes only the review and deliberation of applications. Case handlers shall, at the time of processing applications, act in accordance with the provisions of the TWSE's Disciplinary Standards for Securities Listing Review Personnel and Matters for Mutual Compliance by Securities Listing Review Committee Members, and remain detached, impartial, and objective to ensure compliance with all the procedural requirements of these Procedures and other applicable regulations. In the event of any violation or negligence, where verified through investigation, personnel shall be responsible for matters that fall within the scope of their duties.
- Where any concerns arise during the review period, the case handlers shall contact the applicant company, securities underwriter, CPAs and lawyers and request that they take the initiative to collect relevant information in timely fashion and provide explanations.
- Prior to the submission of the listing case for the review of the Review Committee, if the administering department has resolved to deny approval for listing, the TWSE's senior executive vice president shall convene relevant personnel to review the listing case again, and when necessary, invite the applicant company and the securities underwriter to provide explanations; if they resolve to deny approval for listing, the signed approval of the TWSE's president may be obtained and the application then rejected outright.
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Article 27
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Reconsideration of Initial Stock Listing Applications
- In cases where the Review Committee has decided to reject the application or in cases where the application has been rejected by a resolution of the administering department pursuant to Article 7, paragraph 6 or Article 7-2, the applicant company may, within 20 days of the date of receipt of the TWSE's rejection notice, submit its reasons for requesting reconsideration and relevant materials to the TWSE for reconsideration.
- An applicant company's reasons for requesting reconsideration shall be limited to whether the grounds for the original rejection decision were erroneous.
- After the administering department has rendered a specific opinion on the application for reconsideration, the application shall be resubmitted to the Review Committee for review. During the review, the administering department shall compile the items discussed during the previous review's question and answer session for the reference of committee members. Following the Review Committee's review of the application for reconsideration, where there are determined to be no grounds for reconsideration or where according to relevant information the applicant is still unsuitable for listing, the signed consent of the TWSE's president shall be obtained and the application returned. Where there are determined to be grounds for reconsideration, the application shall be re-submitted to the TWSE's board of directors for ratification. In cases where the application was rejected in accordance with Article 7(6) or 7-2, the case shall be reviewed again by the administering department. If it holds that there are no grounds for reconsideration of the application or that relevant materials indicate there are still circumstances making listing unsuitable, it shall reject the application subject to signed approval from the president of the TWSE. Only where it deems there are grounds for reconsideration shall it submit the listing case for the review of the Review Committee based on the nature of the case, or submit the application for ratification by the board of directors.
- Where the Review Committee or the administering department has resolved that there are no grounds for reconsideration or that based upon the relevant materials the applicant is still unsuitable for listing, the applicant company may not make another application for reconsideration.
- Where an application for reconsideration is ratified by the board of directors, the company's stock shall be approved for listing.
- Where an applicant company withdraws its application for reconsideration during the reconsideration process, it shall be deemed not to have applied for reconsideration.
- The content to be reviewed in applications for reconsideration shall be strictly limited to whether the grounds for the original rejection decision were erroneous and whether any other conditions have subsequently arisen rendering the applicant unsuitable for listing. Apart from the provisions regarding solicitation of opinions in the listing review, the provisions of these Procedures shall apply mutatis mutandis to the reconsideration process and the period for reconsideration.
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