| Title： |
Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings(2013.01.23) |
| Date： |
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Article 4
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The term "related party" as used in the Rules is defined in accordance with Article 18 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers. However, if other laws or regulations provide otherwise, those provisions shall govern.
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Article 5
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The terms "parent" and "subsidiary" as used in the Rules are defined in accordance with the International Accounting Standards (IAS) 27.
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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:
- The relationship is a parent-subsidiary one.
- 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:
- Obtaining more than half of the director's positions in the other company.
- Having an appointee selected as general manger of the other company.
- Owning management rights to the other company under a joint venture agreement.
- Providing financing for the other company that equals or exceeds one-third of the total assets of the other company.
- Providing endorsement for a guarantee for the other company that equals or exceeds one-third of the total assets of the other company.
- 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:
- 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.
- 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.
- 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:
- The shares held by or capital contributions made to another company by the subsidiary of a company.
- Shares held by or capital contributions made by a third party for the applicant company.
- Shares held by or capital contributions made by a third party for a subsidiary company of the applicant company.
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Article 10
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The term "material non-arms-length transaction" as used in Article 9, paragraph 1, subparagraph 4 of the Rules shall mean the occurrence of any of the following circumstances with respect to the applicant company, provided that publicly-owned enterprises operated under the relevant accounting laws shall not be subject to this restriction:
- Where the purpose, terms, or price of purchase or sale of goods, or where the occurrence of a transaction, or its form or substantive nature or the procedure involved, are at variance with those of a normal transaction or are obviously unreasonable.
- Where, in regard to transactions for acquisition or disposal of assets that require public announcement and reporting in accordance with the competent authority's Regulations Governing the Acquisition and Disposal of Assets by Public Companies, the company fails to reasonably demonstrate the legality of its internal decision-making process, the necessity of the transaction, ample disclosure of related financial statements, or reasonable price and payment terms and conditions.
- Occurrence of any of the following circumstances with regard to real estate transactions during the most recent 5 years, as determined by the signing date of any such transaction:
- A real estate purchase from a related party in which the price of the purchase is higher than the assessed value obtained in accordance with the methods given under Article 15 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies, and which does not comply with Article 16 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.
- A sale of real estate to a related party in which the price of the sale is lower than the assessed value obtained in accordance with the methods given under Article 15 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.
- Terms of payment in a purchase or sale of real estate with a related party obviously different from those of ordinary real estate transactions, and for which there is no legitimate reason.
- The applicant company purchases or sells land at approximately the same time in an area adjacent to land purchased or sold by a related party, where there is an obvious difference in price, and where there is no legitimate reason for such difference.
- The revenues from sales of products or leasing of real estate to a related party in the final quarters of the most recent 5 fiscal years exceeds 20 percent of yearly operating revenues, and where no legitimate reason exists for the excess.
- Purchase or sale of real estate to a non-related party where other evidence exists to show that the transaction is obviously at variance with normal transactions, and where there no legitimate reason exists for the difference.
- Where loans are extended to another person for purposes other than the financing necessary for business transactions between companies.
The provisions regarding the purchase or sale of real estate involving a related party under subparagraph 3 of the preceding paragraph shall also apply where either of the two previous owners had the status of related party, provided that there may be exemption from application if the period from the date on which the trading counterpart was to acquire the property under the contract to the date of execution of the present contract exceeds 5 years.
Where an applicant company profits from any of the circumstance set forth under paragraph 1, it shall meet the listing criteria for profitability after deduction of those profits.
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Article 13
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The term "has failed to prepare financial reports in accordance with relevant laws and regulations and generally accepted accounting principles" as used in Article 9, paragraph 1, subparagraph 6 of the Rules shall mean any of the following:
- The financial report is not prepared in accordance with relevant laws and regulations and generally accepted accounting principals, and a certified public accountant issues an adverse opinion or a disclaimer of opinion, or a certified public accountant issues an audit report with a qualified opinion, thereby affecting fair presentation of the financial report.
- Failure by a company to make correction in its financial report after being instructed to do so by the competent authority in a letter.
- The audit working papers of the certified public accountant are reviewed by the TWSE and found to contain a significant deficiency such that it cannot be ascertained whether fair presentation is achieved in the financial report.
The term "has failed to effectively implement its written accounting system, internal control system, or internal audit system" in the same subparagraph shall mean the occurrence of any of the following circumstances:
- During the year in which it applies for market listing, the applicant company fails to establish a sound accounting system in writing in accordance with the regulations issued by the competent authority to govern the preparation of financial reports for the relevant industry.
- Where the TWSE finds, through on-site audit, that the company fails to operate in reasonable accordance with its written accounting system.
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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:
- Operating revenue and operating income 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.
- Net pre-tax income 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.
- There is continuing negative growth in operating revenues and operating income for each of the 3 most recent fiscal years.
- There is continuing negative growth in net pre-tax income for each of the 3 most recent fiscal years.
- The company's products or technology are outdated, and it has no plan for improvement.
The preceding paragraph shall not apply if, for the most recent fiscal year, the ratio of operating revenue and net profit before tax to share capital of the company applying for stock listing is not lower than 12 percent.
For the "other enterprises in the same industry" in paragraph 1, subparagraphs 1 and 2, the securities underwriter shall evaluate and explain the reasonableness of the enterprises sampled for comparison.
The provisions of subparagraphs 3 and 4 of paragraph 1 do not apply to a company already having a concrete improvement plan that is producing positive effects.
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Article 18
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(deleted)
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Article 18-1
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The term "lease-out rate of investment property " as used in Article 16, subparagraph 4 of the Rules shall mean the ratio, in an individual construction project, of the floor area that is leased out under already-signed-and-effective lease(s) to the total floor area available for leasing.
If the lease-out rate of investment property referred to in the preceding paragraph reaches 50 percent or more, the securities underwriter shall evaluate and explain the necessity and reasonableness of the applicant company's reclassification of investment property, including, with respect to the purpose of the leasing project, whether the planning, motivation for leasing, decision-making process, counterparty(ies), lease period(s), agreement content, and terms and conditions of the transaction(s) are reasonable.
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Article 20
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(deleted)
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