| Title： |
Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings(2007.02.15) |
| Date： |
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Article 6
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The term "group enterprise" as used in the Rules refers to a group of corporate entities which, during the fiscal year in which the application for listing is filed and the most recent fiscal year, have a controlling or subordinate relationship with the applicant company.
Under any one of the following conditions, a controlling or subordinate relationship will be deemed to exist:
1. The relationship is one of parent company, subsidiary company, or affiliated company.
2. The applicant company directly or indirectly controls personnel, financial, or business operations; or another company directly or indirectly controls the personnel, financial, or business operations of the applicant company.
A relationship of "direct or indirect control of personnel, financial, or business operations" between two companies refers to any one of the following circumstances:
(1) Obtaining more than half of the director's positions in the other company.
(2) Having an appointee selected as general manger of the other company.
(3) Owning management rights to the other company under a joint venture agreement.
(4) Providing financing for the other company that equals or exceeds one-third of the total assets of the other company.
(5) Providing endorsement for a guarantee for the other company that equals or exceeds one-third of the total assets of the other company.
3. The amount of cross-investment between the applicant company and another company reaches an amount equal to or greater than one-third of the total voting shares or capital of each company, and personnel, financial, or business operations of the other company can be directly or indirectly controlled.
Where any of the following circumstances exist, it will be deemed that there exists a subsidiary or controlling relationship between the applicant company and another company, provided that where the applicant company submits evidence proving that no controlling or subsidiary relationship exists, this restriction will not apply:
1. More than half of the total number of directors, supervisors, and general managers for the applicant company and another company are the same. Calculation of this figure shall include the spouses, children, and relatives in the second degree of the aforementioned persons.
2. More than half of the outstanding shares of voting stock or capital of the applicant company and another company are held by the same the shareholders or capital contributors.
3. Another investing company and its related parties, applying the equity method of valuation with respect to the applicant company, hold more than one-half of the total outstanding shares of voting stock in the applicant company; or where the applicant company and its related parties, applying the equity method of evaluation, hold a total number of shares in another invested company exceeding one-half of the total number of outstanding shares of voting stock.
Calculation of the amount of stock held by or the amount of capital contributions to another company made by the applicant company shall include each of the following stock or capital amounts:
1. The shares held by or capital contributions made to another company by the subsidiary of a company.
2. Shares held by or capital contributions made by a third party for the applicant company.
3. Shares held by or capital contributions made by a third party for a subsidiary company of the applicant company.
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Article 8
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The term "financial or business affairs are not independent from other person(s)" as used in Article 9, paragraph 1, subparagraph 2 of the Rules shall mean any of the circumstances below:
1. Sources of capital are heavily concentrated in non-financial institutions.
2. The applicant company has entered into contracts that severely limit its operations or that are patently unreasonable such that it creates an adverse influence on the company.
3. The applicant company jointly shares a line of credit with another person in which its own credit utilization cannot be distinguished, provided that the sharing of a line of credit between a parent company and a subsidiary shall not be subject to this restriction.
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Article 14
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The term "serious deterioration" as used in Article 9, paragraph 1, subparagraph 7 of the Rules shall mean any of the following circumstances:
1. Operating revenues and operating profits for the most recent fiscal year or the fiscal year in which the application for listing is filed show a marked deterioration relative to other enterprises in the same industry.
2. Net pre-tax profits for the most recent fiscal year or the fiscal year in which the application for listing is filed show a marked deterioration relative to other enterprises in the same industry.
3. There is continuing negative growth in operating revenues and operating profits for each of the three most recent fiscal years.
4. There is continuing negative growth in net pre-tax profits for each of the three most recent fiscal years.
5. Aggregate capital increases for the three most recent fiscal years equal NT$1 billion or more, or are equal to 200% of the company's capital stock at the closing date of the fourth fiscal year prior to that period, and growth in operating revenues, comparing the most recent fiscal year with the fourth prior fiscal year, falls below 100% or NT$500 million, and the profit per share has been declining in each of the previous three years, provided that capital increases in accordance with mandatory government laws and regulations shall not be subject to these limitations.
6. The company's products or technology are outdated, and it has no plan for improvement.
The provisions of the preceding paragraph do not apply where, as prescribed for companies applying for market listing under Article 4 of the Rules, the ratio of paid-in capital to operating revenues and net pre-tax profit in the most recent fiscal year are not lower than 12%.
When consolidated financial statements are prepared, the provisions of paragraph 1, subparagraphs 1 and 3 and of paragraph 2 with regard to operating revenues and operating profits need not apply to the individual financial statements of which it is comprised.
The provisions of subparagraphs 3 and 4 of paragraph 1 do not apply where, due to economic conditions prevailing in the industry, similar enterprises also exhibit deterioration.
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Article 15
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The term "conduct any activities in violation of the principle of good faith" as used in Article 9, paragraph 1, subparagraph 8 of the Rules shall mean any of the following circumstances:
1. With respect to the company:
(1) The bills clearing house announces that a checking account opened by the company applying for listing has been declined, or that checks or negotiable instruments issued by the company with a financial institution as its paying agent were dishonored due to insufficient funds and the records thereof have not yet been cancelled.
(2) The company has been delinquent in the repayment of any loan extended to it by a financial institution.
(3) A criminal sanction has been imposed on the company by a final judgment of violation of the Labor Standards Law, provided that where, within the most recent two years, an examination agency has found through re-inspection that the violation has been corrected.
(4) A final judgment has found the company in violation of the Tax Collection Law.
(5) The company breaches the warranties and representations made in its application for listing.
(6) The company has made materially false and misleading representations, violated the law, or lost creditworthiness resulting in injury to the company's interests or the rights and interests of the shareholders or the public.
2. With respect to the directors, supervisors, general manager, or de facto responsible person:
(1) Any of the circumstances set forth in subparagraphs 1-5 of the preceding paragraph, provided that those subparagraphs shall not apply in the case of delinquency in the repayment of a loan to a financial institution when the delinquency is not of a material nature or when there is a reasonable cause for the delinquency.
(2) Commission of breach of faith, for which a fixed sentence or more severe criminal penalty was delivered.
(3) Other acts in serious violation of laws and regulations or the principle of good faith.
(4) Other serious violations of laws or regulations or the principles of good faith.
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Article 16
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(This article is deleted)
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Article 17
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The phrase "the board of directors or any supervisor(s) are unable to independently exercise their functions" as used in Article 9, paragraph 1, subparagraph 9 of the Rules means none of the following circumstances may be present:
1. A person serving as an independent director of the applicant company fails to satisfy any prerequisite set forth in the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.
2. Where a person serving as independent director of the applicant company has failed to receive training of three [course] hours per year to acquire professional knowledge in the areas of law, finance, or accounting and obtain relevant certification documents issued from any of the continuing education systems under (i), (ii), and (iv) of 3.(4) of the Rules Governing Implementation of Continuing Education for Directors and Supervisors of Exchange-Listed and OTC-Listed Companies.
3. Where more than one-half of the directors of the applicant company are mutually related, or all supervisors are mutually related to one another or related to any member of the board of directors, in any of the following ways:
(1) Spouses;
(2) Lineal relatives within the second degree of kinship;
(3) Collateral relatives within the third degree of kinship; or
(4) Representatives of the same juristic person.
The provisions of subparagraph 3 of paragraph 1 shall also apply where the government or a juristic person is the shareholder, and in their capacity as government or juristic person are elected as director or supervisor and designate a natural person as representative to exercise those functions on their behalf, and shall also apply to their representatives who, in that capacity, are elected to serve as director or supervisor.
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Article 19
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(This article is deleted)
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