Taiwan Stock Exchange - Rules & Regulations Directory

Amendments

Title:
Operating Rules of the Taiwan Stock Exchange Corporation(2004.03.12)

Article 51
 Upon the merger between two listed companies or between a listed company and an OTC company, the surviving company shall remain a listed company, and the terminated company shall publicly announce the de-listing of its securities. If by reason of the merger, the surviving company issues new shares or certificates of entitlement to new shares of the same class of stocks that are already listed, listing of the shares may commence from the record date of the merger; provided, trading of the originally listed securities shall be suspended eight trading days before the record date of the merger (and non-inclusive of that date), and an application shall be completed and filed with this Corporation, annexing the relevant documents, at least 15 trading days before the record date of the merger (and non-inclusive of that date).
 Upon the merger between a listed company and an unlisted or non-OTC company, the surviving company shall remain a listed company. Except in the case of a securities, financial, or insurance company with special approval from the authority in charge of the industry concerned, or where a listed company merges into itself its 100 percent owned subsidiary, the following conditions shall be met:
 1. The financial data of the unlisted company or non-OTC company that was merged and the consolidated financial data of the two merged companies satisfy the profitability requirements of listed companies enumerated in Article 4 of the Criteria for Review of Securities Listings;provided, the said provision shall not apply where the net worth per share of the surviving company, both in the most recent financial year and on the most recent pro-forma financial report, is higher than the net worth per share of the original listed company. Where the above proviso is satisfied, if the listed company or the merged unlisted (non-OTC) company, from the date next following the date of the balance sheet in the most recent financial report to the date the application is filed with this Corporation, undergoes any material change in capital affecting the net worth per share, such as a capital increase or reduction or distribution of dividends, the net worth per share of the surviving company shall be higher than the net
worth per share of the original listed company, and the attesting CPA shall submit a review opinion following the imputed adjustment.
 2. The unlisted company or non-OTC company being merged does not satisfy the circumstances specified in Subparagraphs 1, 4, 5, 8, 9, 10, and 14 of Paragraph 1 of Article 9 of the Criteria for Review of Securities Listings.
 3. The most recent annual financial reports of the unlisted company or non-OTC company being merged have been audited by a CPA approved by the Competent Authority to audit publicly listed companies, and the auditor issues an unqualified opinion.
4. If the merged unlisted/non-OTC company is a foreign company meeting the conditions set forth in Article 21 of the Business Mergers and Acquisitions Act, the listed company shall obtain documentation of foreign investment approval by the Ministry of Economic Affairs Investment Commission. Also, the financial report submitted for the foreign company shall have been issued an audit report with an unqualified opinion by the attesting CPA, as well as an opinion by a Taiwan CPA regarding the differences in accounting principles applied in the Republic of China and in the foreign company's home country and the resulting effects on the financial report. In addition, a CPA other than the original attesting CPA, and approved by the Competent Authority to perform financial attestation for public companies, shall submit a written reference report analyzing and explaining the reasonableness of the share exchange ratio and price and overall synergy at the time of the merger between the listed company and the foreign
company.
 For the new shares issued as a result of the merger referred to in the preceding two paragraphs, if such shares are of a different class from the listed securities, then such shares shall conform to Paragraph 2 of Article 14 of the Criteria for Review of Securities Listings.
 Where a listed company undertakes a merger pursuant to Paragraph 2, any directors, supervisors, and shareholders holding more than 10 percent of the issued shares of the company being merged shall place in centralized custody in compliance with all the below-listed provisions any new stock issued for capital increase due to the merger or overseas depositary receipts issued for capital increase due to the merger that they hold, with the exception that a listed company that merges into itself a subordinate company in which it holds 50 percent or more of the issued shares may be exempted from the provisions regarding the ratio of total shares that shall be placed in centralized custody; provided, this requirement may be waived where a listed company merges with a subordinate company of which it holds 90 percent or more of the outstanding shares in accordance with Article 316-2 of the Company Act:
1. Such persons obtaining new shares issued for capital increase due to the merger shall place all such shares into centralized custody. The provisions of Paragraph 2 of Article 10 of the Criteria for Review of Securities Listings shall apply mutatis mutandis to the calculation of the ratio of new share issued as a result of the merger that should be placed in centralized custody. In case of shortage, negotiation shall be made with other shareholders holding new shares issued for capital increase due to the merger to make up the shortfall. Of the share certificates placed in central custody, one-fifth of the portion comprising 50 percent thereof may be withdrawn after the lapse of two full years from the listing date thereof; thereafter, a further one-fifth of such portion may be withdrawn once every six months. The remaining 50 percent may withdrawn in full after the lapse of six full months from the listing date thereof. However, these provisions may be waived where, pursuant to Article 316-2 of the
Company Act, a listed company merges with a subordinate company of which it holds 90 percent or more of the issued shares.
2. Such persons obtaining overseas depositary receipts issued for capital increase due to merger shall provide a written undertaking that for a certain period of time they shall not redeem or transfer the overseas depositary receipts held by them, and shall incorporate provisions restricting redemption into the contract signed and entered into with the custodian institution. The total ratio of global depositary receipts subject to restriction of redemption or transfer and the period of the restriction shall accord with the provisions of the preceding subparagraph.
 Where the merger between a listed company and other companies does not conform with the preceding four Paragraphs, or where a new company is created as a result of the merger, the original listed company shall apply for the termination of listing. The surviving company or the new company may apply for listing of stocks after completion of the merger.
Where a listed company, pursuant to the Business Mergers and Acquisitions Act, Company Act, or other laws or regulations, acquires shares, business, or assets of an unlisted/non-OTC company, with shares, cash, or other assets as the consideration, or acquires from a shareholder of an unlisted/non-OTC company his/her shares therein, or acquires in full or in part the business of an unlisted/non-OTC company through assignment by split, if such transaction reaches any of the following standards, such unlisted/non-OTC company shall additionally comply with all of the conditions set out in paragraph 2, and any director, supervisor, or shareholder holding 10 percent or more of the shares thereof who has holdings of the new capitalization shares or overseas depositary certificates issued by the listed company for such capital increase shall also deposit the share certificates into central custody in accordance with the provisions of paragraph 4:
1. If the book entry amount of shares, cash, or assets obtained by the unlisted/non-OTC company as a result of being acquired reaches 70 percent or more of its book net asset value, or the book entry amount of shares, cash, or assets paid by the listed company for the acquisition reaches 10 percent or more of its book net asset value.
2. If the total number of shares acquired from shareholders of the unlisted/non-OTC company reaches 70 percent or more of its issued shares.
3. If the operating revenue or operating profit or book net asset value of a division being spun off from the unlisted/non-OTC company to the listed company reaches 70 percent or more of its entire operating revenue or operating profit or book net asset value, or reaches 10 percent or more of the entire operating revenue or operating profit or book net asset value on the listed company's pro forma financial statements.
 When a listed company files an application under Paragraph 1 and Paragraph 2, it shall fill in the application form and submit relevant documents (attachments). After the personnel of this Corporation makes examination and provides examination comments for approval, a written opinion approving the merger shall be sent to the company. The said written opinion shall state "This approval letter is provided for the applicant company to register (apply for) the issuance of new shares as a result of merger with the competent authority only. If the application is not approved by the competent authority, this approval letter shall become void."
If an unlisted/non-OTC company that is acquired or assigns business operations as set out in paragraph 6 is a foreign company, the provisions of paragraph 2, subparagraph 4 shall apply mutatis mutandis to its financial information and the matters required to be analyzed and explained.

Article 51-1
 Where a single listed company is converted into a financial holding company pursuant to Article 29 of the Financial Holding Company Act, and after this Corporation has reported to and obtained approval from the Competent Authority, the securities of the financial holding company shall be listed for trading from the record date of the share conversion, and the securities of the originally listed company shall be de-listed on the same date.
 The provisions of the preceding paragraph shall also apply in cases where multiple listed or OTC companies, at least one of which is a listed company, are converted into a single financial holding company. However, if an unlisted/non-OTC company(ies) are converted together with other listed or OTC companies, such unlisted/non-OTC company(ies) shall conform to the following conditions:
 1. It shall be free of any of the circumstances specified in Subparagraphs 1, 4, 5, 8, 10, or 14 of Paragraph 1 of Article 9 of this Corporation's Criteria for Review of Securities Listings.
 2. Its most financial report for the most recent fiscal year shall have been audited by a CPA approved by the Competent Authority to audit public companies and have received an unqualified opinion from such CPA.
 Where circumstances in Paragraph 1 or Paragraph 2 apply to a listed company(ies), the listed company whose converted shares are anticipated to account for the greatest proportion of the anticipated issued shares of the financial holding company shall carry out with this Corporation the various procedures set forth in the subparagraphs hereinbelow on behalf of all the companies whose shares are being converted, and, after this Corporation has obtained approval from the Competent Authority, the trading of such company's(ies') original listed securities shall be suspended eight trading days prior to (and non-inclusive of) the record date of the share conversion:
 1. An Application for Listing of Shares of a Listed Company Converted into a Financial Holding Company shall be completed and filed, along with all specified attachments, with this Corporation at least fifteen trading days prior to (and non-inclusive of) the record date of the share conversion.
 2. A Declaration of Suspension of Share Transfer Registrations shall be completed and filed by (inclusive of) the application date in the preceding subparagraph. This Corporation shall directly make an announcement to the market of suspension of amendments to entries in the shareholder rosters of the listed companies participating in the conversion into a financial holding company.
 Where a financial holding company is established by means of assignment of operations by a listed company pursuant to Article 24 of the Financial Holding Company Act and the financial holding company holds 100 percent of the shares of the assigned company, an application for amendments to listed securities, accompanied by relevant documentation, shall be filed with this Corporation pursuant to Article 45; however, the provisions of Subparagraph 5 of Paragraph 1 of Article 50-1 shall not apply to the change in business scope.
 Where shares of a single or multiple company(ies) limited by shares are converted into shares of a listed financial holding company pursuant to Article 29 of the Financial Holding Company Act, the financial holding company shall complete the relevant documentation and submit an application to this Corporation according to the procedures in Paragraph 3 hereof. After this Corporation has obtained approval from the Competent Authority, the listed securities shall be de-listed on the record date of the share conversion and the shares of the financial holding company into which they are converted shall be listed on the same day; provided, any unlisted/non-OTC company(ies) limited by shares participating in the share conversion shall conform to the requirements set forth in Subparagraphs 1 and 2 of Paragraph 2
 Where circumstances set forth in Paragraphs 1, 2, or 5 apply to a company limited by shares participating in the share conversion and the company was a listed (or OTC) company before conversion, shares that prior to conversion were already duly placed in centralized custody by the company's directors, supervisors, and major shareholders at the time of initial listing (or OTC listing) shall remain in centralized custody after the conversion until the expiry of the custody period. If a converted company was an unlisted/non-OTC company prior to conversion and it is anticipated that the company's converted shares will account for 10 percent or more of the financial holding company's issued shares and shares anticipated to be issued by it, the directors, supervisors, and major shareholders of such unlisted/non-OTC company shall place their shares in the Financial Holding Company in centralized custody pursuant to the relevant provisions of this Corporation's Criteria for Review of Securities Listings. However, th is restriction shall not apply where the circumstances set forth in Paragraph 2 of Article 31 of the Financial Holding Company Act exist as a result of the share conversion.
 A financial holding company established after conversion and meeting the requirements of Article 13 of this Corporation's Criteria Governing Information to be Published in Prospectuses for Initial Applications for Securities Listing, or a financial holding company converted from a single listed company or multiple listed or OTC companies, may prepare a simplified prospectus.

Article 51-2
 If a listed company that has carried out a split of one or more departments capable of operating independently pursuant to applicable law wishes to continue listed trading of its listed securities, or if the existing company or newly incorporated company that acquired the business of the aforesaid department(s) after the split (the "assignee company of the split") wishes to list its securities for trading, the company shall without exception comply with the provisions of this Article, and shall carry out applicable procedures for a company split and for listing.
 The provisions of the preceding paragraph shall also apply where a single listed company splits simultaneously into multiple assignee companies of the split, or multiple listed companies split simultaneously into a single assignee company of the split.
 Any listed company to which any circumstance set forth in Paragraph 1 or Paragraph 2 applies may continue to be listed if it submits the applicable documents prescribed by this Corporation at least 15 trading days before the record date of the split. Except under any of the following circumstances, trading of listed securities of a listed company shall be suspended 10 trading days prior to the record date of the split and such suspension shall continue until the day prior to the record date of the split:
 1. Where a listed company splits but does not carry out a capital reduction, and issue of replacement shares is unnecessary.
 2. Where the split of the listed company does not involve subsequent confirmation of the shareholder roster, or there is no difference in shareholder equity before and after the record date of the suspension of share transfer, and suspension of margin purchase and short sale or compulsory covering of short sale positions are unnecessary.
 Where a listed company carries out capital reduction due to a split referred to in Paragraph 1 or 2, and the newly incorporated company that acquires its business issues new shares for which the acquired business is the consideration, and issues them in full to the original shareholders of the split company on a pro-rata basis, approval may be given for listing and trading of the securities of the newly incorporated assignee company if it complies with all of the conditions listed below; provided, simultaneous application may not be made of related conditions such as those concerning lesser capital amount or profitability in Article 5, Article 6, or Article 6-1 of this Corporation's Criteria for the Review of Securities Listings:
 1. Capitalization: the paid-in capital on the pro forma financial statement for the most recent period at the time of application complies with the provisions of Article 4, Paragraph 1, Subparagraph 2 of this Corporation's Criteria for the Review of Securities Listings.
 2. Profitability: complies with the provisions of Article 4, Paragraph 1, Subparagraph 3 of this Corporation's Criteria for the Review of Securities Listings, according to the pro-forma financial statement.
 3. No circumstance in Article 9, Paragraph 1, Subparagraphs 1, 4, 5, 8, 10, 12, or 14 of this Corporation's Criteria for the Review of Securities Listings applies.
 4. The pro forma financial statements for the most recent fiscal year shall be audited and certified by a CPA approved by the Competent Authority to perform financial certification for public companies, and an audit report containing an unqualified opinion issued.
 5. Centralized custody of shares and pre-listing public sale shall be carried out pursuant to Article 10 or Article 10-1, and Article 11, of this Corporation's Criteria for the Review of Securities Listings.
 If in a split referred to in the preceding paragraph the split company does not carry out capital reduction or carries out only a partial reduction, the newly formed assignee company of the split, when applying to this Corporation for listing, shall comply with all of the below-listed conditions, in addition to complying with the requirements of the preceding paragraph:
 1. Incorporation period: the time of incorporation of the split department, as shown in the financial data of the split company, shall comply with Article 4, Paragraph 1, Subparagraph 1 of this Corporation's Criteria for Review of Securities Listings.
 2. Shareholding dispersion: shall comply with Article 4, Paragraph 1, Subparagraph 4 of this Corporation's Criteria for Review of Securities Listings.
 3. There shall exist none of the circumstances set forth in Articles 18 or 19 of the Criteria for Review of Securities Listings under which listing is undesirable.
 If the assignee company of a split is an existing company and the operating revenue or operating income of a single listed company of which it is the assignee accounts for 50 percent or more of the total operating revenue or operating income on its pro forma consolidated financial statements, and accounts for 10 percent or more of the overall operating revenue or discernible assets of the split company, it shall comply with all the subparagraphs of Paragraphs 4 and 5, but its pro forma financial statements shall be prepared as consolidated statements with those of the single or multiple independently operating departments of the listed company of which it is the assignee.
 If more than one listed company splits and makes an assignment to a single assignee on the same record date, the calculation of the incorporation period under Paragraph 5 or 6 shall be based upon the listed company that assigned the business of which the operating revenue or operating income accounts for 50 percent or more of the total operating revenue of the assignee company and accounts for 10 percent or more of the overall operating revenue or discernible assets of such listed company. If more than one independently operating department was split, that with the longer period of incorporation may be selected as the basis for calculation.
 In a split referred to in Paragraphs 4, 5, or 6, where the period of listing, or combined period of listing and OTC-listing, of the securities of the split listed company is no less than three years and the assignee company of the split submits an application accompanied by the relevant documents to this Corporation in accordance with prescribed procedures within one year of the day of completion of amendment registration of the split, all of the below-listed provisions shall be complied with:
 1. A newly formed assignee company of a split according to Paragraph 4 whose listing application has passed review for completeness of the submitted application documents and passed review by the management department for compliance with regulations may apply to the Competent Authority for approval and announcement of listing.
 2. For a newly formed assignee company of a split according to Paragraph 5, the listing application shall be handled in accordance with the preceding subparagraph, and shall additionally be submitted to this Corporation's board of directors for ratification.
 3. For an existing assignee company of a split according to Paragraph 6, the listing application shall be handled in accordance with the preceding subparagraph, and shall additionally be submitted for deliberation by this Corporation's Securities Listings Review Committee.
 If an assignee company of a split referred to in the preceding paragraph is unable to apply to this Corporation for listing in accordance with prescribed procedures, annexing relevant documents, within one year of the day of completion of amendment registration of the split, it may separately do so in compliance with the relevant provisions of this Corporation's Criteria for Review of Securities Listings, but the provisions of Paragraph 5, Subparagraph 1, Paragraph 6, or Paragraph 7 may respectively be applied mutatis mutandis to the calculation of the incorporation period thereof.
 Within two years of the date of listed (or OTC) trading of securities of an assignee company of a split of a listed company pursuant to Paragraphs 4, 5, or 6 herein, or to Article 16-3 of the ROC Over-the-Counter Securities Exchange Rules Governing Securities Trading on Over-the-Counter Markets, any further assignee company of a split of such listed company may not apply for listing of its securities pursuant to this article.
 An OTC company that carries out a split, and whose assignee company of the split complies with the provisions of Paragraph 4, 5, or 6, may apply for listing through the application, mutatis mutandis, of Paragraph 8 or 10.
If a listed company, after carrying out a split, wishes to apply for termination of listed trading of its securities, or such company is extinguished due to the split of its entire operations or assets, this Corporation shall terminate the listing of its listed securities after applying and obtaining approval from the Competent Authority pursuant to Article 144 of the Securities and Exchange Act.

Article 51-3
 Where a single listed company, pursuant to Article 31 of the Business Mergers and Acquisitions Act, converts its shares to another newly established or already-listed existing company, and becomes a 100 percent held subsidiary of such newly established or already-listed existing company, after this Corporation has reported and obtained approval from the Competent Authority, the securities of the newly established or already-listed existing company shall be listed after completion of applicable listing procedures, and the listing of the securities of the original listed company shall be terminated on the record date of the share conversion.
The provisions of the preceding paragraph shall also apply in cases where a single or multiple company(ies) limited by shares convert shares into a newly established or already-listed existing company; provided that if an unlisted (non-OTC) company(ies) converts shares together therewith, the operating revenue or operating income from said unlisted (non-OTC) company(ies) shall not exceed 50 percent of the total operating revenue or operating income on the pro-forma post-conversion consolidated financial statements of said newly established or already-listed existing company for the most recent fiscal year, and said unlisted (non-OTC) company(ies) limited by shares shall conform to the provisions of all the following subparagraphs:
 1. Profitability shall conform to Subparagraph 3 of Paragraph 1 of Article 4 of this Corporation's Criteria for Review of Securities Listings.
 2. There shall not exist any circumstance specified in Subparagraphs 1, 4, 5, 8, 10, or 14 of Paragraph 1 of Article 9 of this Corporation's Criteria for Review of Securities Listing.
 3. The financial report for the most recent fiscal year shall have been audited by a CPA approved by the Competent Authority to audit public companies and issued an unqualified opinion from such CPA.
 If any unlisted (non-OTC) company included in a conversion as set out in the preceding paragraph is a foreign company, the provisions of Article 51, Paragraph 2, Subparagraph 4 shall apply mutatis mutandis to its financial information and matters requiring analysis and explanation.Where an investment holding company is established by means of share conversion in accordance with Paragraph 1 or Paragraph 2, such investment holding company shall comply with the provisions of Subparagraphs 1, 2, 4, 5, 7, 8, and 9 of Paragraph 1 of Article 4 of this Corporation's Criteria for Review of Listing Applications by Investment Holding Companies before it may be listed.
 Where circumstances in Paragraph 1 or 2 apply to a company limited by shares, the listed company whose converted shares are anticipated to account for the greatest proportion of the anticipated issued shares of the newly established or already-listed existing company shall carry out with this Corporation the various procedures set forth in the subparagraphs hereinbelow on behalf of all the companies whose shares are being converted, and, where this Corporation has inspected all the documents submitted by the company for completeness and its Administration Department has examined them and found them in compliance with regulations, after approval has been applied for and obtained from the Competent Authority, the trading of such company's(ies') originally listed securities shall be suspended two trading days prior to (and non-inclusive of) the record date of the share conversion.
 1. An Application for Listing of Shares of a Newly Established Company or Listed Company Receiving a Conversion of Shares shall be completed and filed, along with all specified attachments, with this Corporation no later than 15 trading days prior to (and non-inclusive of) the record date of the share conversion.
 2. An Application for Suspension of Share Transfers shall be completed and this Corporation shall directly make an announcement to the market of suspension of amendments to entries in the shareholder rosters of the listed company(ies) among the companies participating in the share conversion.
 Where pursuant to Article 27 of the Business Merger and Acquisition Act a listed company makes a general assignment to an investment holding company incorporated under Article 185, Paragraph 1, Subparagraph 2 of the Company Act and such investment holding company complies with Subparagraphs 1, 2, 4, 5, 7, 8, and 9 of Paragraph 1 of Article 4 of this Corporation's Criteria for Review of Listing Applications by Investment Holding Companies, and [the listed company] holds 100 percent of the assignee company's shares, [the listed company] shall apply to this Corporation for amendment of content of listed securities pursuant to Article 45. However, the provisions of Subparagraph 5 of Paragraph 1 of Article 50-1 shall not apply to any change in business scope.
 Under the circumstances set forth in Paragraphs 1, 2, or the preceding paragraph, where before the conversion the company is a listed (or OTC-listed) company, those shares already duly placed in centralized custody by directors, supervisors, and major shareholders thereof at the time of initial listing (or OTC listing) shall remain in centralized custody after the conversion until the expiration of the custody period; if before the conversion the company was an unlisted (non-OTC) company, and it is anticipated that the converted shares will account for 10 percent or more of the shares anticipated to be issued by the company that is the assignee of the shares, the directors, supervisors, and major shareholders of such unlisted (non-OTC) company shall still place in centralized custody the shares they hold in the company that is the assignee of the shares pursuant to applicable provisions of this Corporation's Criteria for Review of Securities Listings.

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