Amendments


Title： Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings(2017.08.11)
Date：
Article 2-2       An issuer applying for listing of Republic of China shares shall engage a professional shareholder services agent to process shareholder services matters before the TWSE will accept its listing application for processing. A listed company that was listed at any time from 2 January 2013 onward shall engage a professional shareholder services agent to process shareholder services matters, and may not take those matters back into its own hands.
    The TWSE will accept for processing an application for a primary listing of shares, for a secondary listing of shares, or for sponsoring the issuance of Taiwan depositary receipts by a depositary institution, by a foreign issuer only after it has appointed a professional shareholder services agent within the Republic of China to handle shareholder services, and has also designated a litigious and non-litigious agent within the Republic of China.
    The professional shareholder services agent referred to in the preceding two paragraphs shall have shareholder services personnel and equipment that comply with the provisions of the Regulations Governing Handling of Shareholder Services by Public Companies, and it shall not have any record in the past 3 fiscal years of having been given post-audit recommendations in writing by the Taiwan Depository and Clearing Corporation and failing to make improvements by the deadline.
    Issuers applying for listing Republic of China shares and foreign issuers applying for primary listing of shares shall incorporate the following in the articles of incorporation before the TWSE will entertain their applications:
  1. Electronic means as one of the avenues for the exercise of voting rights by shareholders.
  2. Election of directors of the company through the nomination system.
  3. An audit committee to be established by the company.
Article 6-1       Where the issuing company applying for the listing of its stock is a private enterprise participating in major national public construction projects under encouragement of the government, where it has acquired the concession agreement for investment, construction, and operation approved by the Central Government, municipality under direct jurisdiction of the Executive Yuan, and the local autonomy organization(s) or the juristic person(s) with 50 percent or greater of its capital fund contributed by the Central Government, municipality under direct jurisdiction of Executive Yuan, or the local autonomy organization(s) and the certification issued by the said agency(ies), and where it meets the following requirements, the TWSE will agree to list its stock:
  1. The company is newly established for procurement of the concession agreement and its business items have been approved by the central authority in charge of the enterprise concerned.
  2. Its paid in capital is NT$5 billion or more at the time when it applies for listing.
  3. The total cost expected to be injected in the construction project at the time when the concession agreement is procured is NT$20 billion or more.
  4. The remaining term of the concession agreement is 20 years or more at the time when it applies for listing.
  5. Its directors, shareholders holding 5 percent or more of its total issued shares, or its shareholders or operators who make equity investment in the form of technical know-how and hold 0.5 percent or more of its total issued shares or 100,000 shares or more shall have the technical capability, financial means, and other necessary abilities as required for the completion of the concession agreement, and a certification issued by the agency approving the concession agreement has been obtained.
  6. The dispersion of share ownership meets the criteria set forth in subparagraph 4, Article 4 of these Rules.
Article 9       Notwithstanding the fact that an issuing company applying for the listing of its stock meets the listing criteria set forth in these Rules, the TWSE may disagree to its listing if the issuing company has any of the events listed below, except for any of those in subparagraphs 8, 9, or 10 under which the TWSE shall disagree to its listing, and is deemed by the TWSE to be inappropriate for listing:
  1. It has any of the events set forth in Article 156, paragraph 1, subparagraphs 1 and 2 of the Securities and Exchange Act, or has made misrepresentation or false statement or conducted unlawful activities that may affect the price of its securities after listing thereof, and will cause fear that the market order may be affected or the public interests may be harmed.
  2. Its financial or business affairs are not independent from other person(s).
  3. It has had any material labor dispute or environmental pollution sufficient to affect its normal financial and business operations, and has not made improvement.
  4. It has been discovered any material non-arms-length transaction and has not made improvement.
  5. After the capital increase through a new share issue which has been effected or is being effected in the year in which it applies for listing is included in the amount of paid-in capital in its final account for the respective year, it does not meet the listing criteria.
  6. It has failed to effectively implement its written accounting system, internal control system, or internal audit system, or has failed to prepare financial reports in accordance with relevant laws and regulations and generally accepted accounting principles, and the event of this failure is considered as material.
  7. There has been serious deterioration in its business operation.
  8. Where the applicant company conducted any activities in violation of the principle of good faith in the most recent 5 years, or where its directors, general manager or de facto responsible person violated the same principle in the most recent 3 years.
  9. If an applicant company has less than five directors on its board of directors, or its independent directors number less than three persons or less than one-fifth of the number of directors; or if any of its board of directors are unable to independently exercise their functions; or if it has not appointed the remuneration committee pursuant to Article 14-6 of the Securities and Exchange Act and related provisions. Additionally, among the elected independent directors, at least one of them must be a professional in accounting or finance.
  10. Where the applicant company has been registered for trading as an emerging stock on the GTSM in the fiscal year of the listing application and the most recent fiscal year thereto, and there has been, from the GTSM registration date onward, any trading of stock issued by the applicant company by any incumbent director, or shareholder holding 10 percent or greater of its total issued shares other than on the emerging stock market; provided, this restriction shall not apply where such trading is for purposes of underwriting under Article 11 of these Rules or for other legitimate reason.
  11. Where the applicant company is the existing or newly established company accepting transfer of business or assets due to a demerger of a TWSE (or GTSM) listed company, and transfers of equity conducted by the TWSE (or GTSM) listed company in the most recent 3 years for purposes of reducing its shareholding ratio in the applicant company have damaged shareholders' equity.
  12. Where the listing is considered by the TWSE as inappropriate due to its scope of business, nature or special circumstances.
    Subparagraph 2 of the immediately preceding paragraph shall not apply to companies applying for listing which are government-owned enterprises.
    The ending date of the applicable periods referred to in various subparagraphs of paragraph 1 of this Article shall be the day immediately before the date on which the Agreement for Listing takes effect.
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, or Article 20, paragraph 1, Article 20-1, or Article 20-2 of these Rules, its directors, 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 or Article 20, paragraph 3 of these Rules or where the applicant is an information software enterprise, its personnel who shall handle central custody of the stock are as listed in the items below. 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.
    1. Where the applicant is a creative enterprise or information software enterprise, its directors, 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.
    2. Where the applicant is a technology enterprise, its president, research and development supervisor, and personnel mentioned in the preceding item.
    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 shareholders 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 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; all the shares may be withdrawn in full only after the end of a one-year period starting from the listing date thereof. However, a technology enterprise applying for listing pursuant to Article 5, and to Article 20, paragraph 3, may withdraw one-half of the shares only after the end of a 1-year period starting from the listing date thereof, and all the shares in full only after the end of a two-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 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 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 or major shareholders to deposit the same amount of shares into central custody.
    Directors 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 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, 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 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 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 shall 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 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.
  4. (deleted)
  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. 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.
Article 28-4       A foreign issuer that applies for a TWSE primary listing of its stock may not have less than five directors on its board, and shall appoint independent directors numbering not less than two persons and not less than one-fifth of the number of directors, and at least one of the independent directors shall be domiciled in the Republic of China. However, when the laws and regulations of a foreign issuer's country of registration explicitly provide that important matters in connection with protection of shareholder equity are subject to mandatory provisions regarding exclusive jurisdiction of courts, such that the jurisdiction of Republic of China courts is not adopted as part of its articles of incorporation or organizational documents, then it shall have no less than two directors (including the independent directors) who are domiciled in the Republic of China.
    A foreign issuer shall install an audit committee. That audit committee shall comprise all the independent directors; it may not have less than three members, one of whom shall be the convener.
    ROC laws and regulations regarding securities shall apply mutatis mutandis to the professional qualifications, restrictions on shareholding and the holding of concurrent posts, and the determination of independence, of the independent directors of the two preceding paragraphs.
    A foreign issuer shall appoint a remuneration committee. ROC securities laws and regulations shall apply mutatis mutandis to the professional qualifications of and the exercise of powers by the committee members and related matters.
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. 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, the profitability shall meet the requirement in Article 28-1, paragraph 1, subparagraph 4, provided that the aforesaid profitability requirement need not apply if the applicant foreign issuer makes its application for listing pursuant to Article 28-1, paragraph 2 or the amount of purchases/sales transactions between it 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 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.
  4. (deleted)
  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. 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 3 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.
Article 28-8       If a foreign issuer that applies for a TWSE primary stock listing complies with all listing requirements specified in Article 28-1, but any of the circumstances listed below exists at that foreign issuer or any controlled company thereof, and the TWSE deems the listing inappropriate, the TWSE need not approve its stock listing:
  1. Any circumstance having a serious impact on the company's financial or businesscondition, or sufficient to cause its dissolution or changes to its organization or capital, or it acts deceptively or illegally such that the post-listing price of its securities is affected, with a likelihood of affecting market order or harming the public interest.
  2. Its finances or operations cannot be independently and clearly distinguished from those of another person.
  3. Any material non arms-length transaction has occurred and has not been corrected.
  4. The applicant company or any controlled company thereof, or any incumbent director, supervisor, general manager or de facto responsible person of any of those companies, has acted in violation of the principle of good faith in the most recent 3 years.
  5. There has been serious deterioration in the applicant company's business operation.
  6. Any of the applicant company's board of directors are unable to independently exercise their functions.
  7. The TWSE deems listing inappropriate for any other reason related to the scope or nature of the enterprise or any other special circumstance.
Article 28-9       The TWSE will approve the application for primary listing of a foreign issuer's stock only after the following persons place in centralized custody in a central securities depository established with the approval of the Competent Authority the stocks comprising their respective individual shareholdings in full as recorded in the listing application documentation and whose sum total is not lower than the percentage specified by the TWSE minus the number of shares provided for public sale upon listing, provided that if the number of shares submitted is insufficient to meet the required percentage, the foreign issuer shall coordinate other shareholders to make up the shortfall.
  1. If the foreign issuer applies for TWSE primary listing pursuant to Article 28-1, paragraph 1, its directors, and shareholders holding more than 10 percent of the total number of shares.
  2. If the foreign issuer applies for TWSE primary listing pursuant to Article 28-1, paragraph 2, its directors, shareholders holding more than 5 percent of the total number of shares, president, research and development supervisor, and shareholders providing patent rights or technical know-how as capital contribution and holding a position in the company and also holding 0.5 percent or more, or at least 100,000 shares, of the total issued shares of the company at the time of the listing application, provided that this requirement shall not apply to a recommending securities firm holds 5 percent or more of the issuer's total issued shares as a result of subscription or trading, during the emerging stock registration period, of securities held for operations.
    The provisions of Article 10, paragraphs 2, 3, 4, and 6 shall apply mutatis mutandis to the allocation percentage, centralized custody period, withdrawal method, disposal of stocks in centralized custody, and the effect of custody, provided the centralized custody period of a technology enterprise applying for primarylisting pursuant to Article 28-1, paragraph 2 is governed by the proviso of Article 10, paragraph 4 mutatis mutandis.
     A GTSM primary listed company applying for TWSE primary listing shall carry out centralized custody of stocks by mutatis mutandis application of Article 10-2.