Taiwan Stock Exchange - Rules & Regulations Directory

Amendments

Title:
Operating Rules of the Taiwan Stock Exchange Corporation(2005.10.27)

Article 50-1
Where any listed company satisfies any of the following conditions, this Corporation shall, in accordance with Article 144 of the Securities and Exchange Act, report to and obtain the approval of the Competent Authority to de-list such securities:
1. Any conditions specified in Article 9, Article 10, Article 11, Paragraph 2 of Article 17, Subparagraphs 1 through 8 of Paragraph 1 of Article 315, or Article 397 of the Company Act or Article 21 or Article 54 of the Financial Holding Company and a relevant competent authority has revoked its company license, ordered its dissolution, or voided its approval.
2. Any conditions specified in Article 251 or Article 271 of the Company Act or the relevant authority has revoked its approval for other reasons.
3. Confirmation of bankruptcy by any court.
4. Confirmation of reorganization by any court, or denial of reorganization motion issued in accordance with Subparagraph 2 of Paragraph 3 of Article 285-1 of the Company Act.
5. The scope of the business of the company has changed substantially, and this Corporation believes that it is no longer appropriate for listing.
6. The total amount of its listed preferred shares is less than 200 million New Taiwan Dollars.
7. The trading of its securities has been suspended pursuant to any subparagraph of Paragraph 1 of the preceding Article, and after six months, conditions described in any subparagraph of Paragraph 1 of the preceding Article still exists; or, where trading of the securities is resumed after having been suspended pursuant to Subparagraph 2 of Paragraph 1 of the preceding article for less than six months, and, within six months from the resumption of trading, trading is again suspended pursuant to Subparagraph 2 of Paragraph 1 of the preceding article, and the aggregate period of suspension of trading exceeds six months.
8. Record of refusal of financial institutions to transact with the company or of the circumstances referred to in Subparagraph 9 of Paragraph 1 of the preceding Article where the company has failed to carry out remedial procedures as set forth in Subparagraph 9 of Paragraph 2 of Article 49 and submit relevant evidentiary documentation within six months of the trading day next following the date of suspension of trading. However, if the negotiable instrument is retrieved by means of a settlement, an application may be filed with this Corporation for re-calculation of the duration of the period of suspension of trading as from a date approved by this Corporation. Such application shall be accompanied by the settlement document, a photocopy of the negotiable instrument, and other relevant materials. Only one such extension may be granted.
9. Where the latest individual financial report of a non-holding company or consolidated financial report of a holding company as publicly announced and registered in accordance with Article 36 of the Securities and Exchange Act shows a negative net worth. Likewise, where a subsequently publicly announced and registered individual financial report of a non-holding company or consolidated financial report of a holding company shows a negative net worth.
10. The business of the company has completely stopped and cannot commence quickly, or there is no business revenue; provided such provisions shall not be applicable to a company, listed in accordance with Article 6-1 of Criteria for Review of Securities Listings, which has no business income during the period of construction under the concession contract.
11. Any conditions specified in Article 156 of the Securities and Exchange Act exists and the Competent Authority has ordered the suspension of trading of all of its securities for at least three months.
12. Upon merger with another company, and the resultant combination does not satisfy the continual listing requirements of Article 51.
13. Material breach of the Agreement for Listing.
14. Final confirmation by a judicial authority that the listed company satisfies any of the following:
i. The financial reports, accounting books, etc. provided by the company during the application for listing contain false and concealed items, and upon discounting for such false and concealed items, its profitability does not conform to the listing requirements; provided, the above shall not be applicable if five years have passed between the listing date and the date of confirmation by a judicial authority.
ii. Satisfies the proviso of the preceding sub-item, and the false and concealed items still exists at the time of the final confirmation of judgment, and upon discounting for such false and concealed items, its current revenue generating ability does not conform to the listing requirements.
15. Over 70 percent of its total issued shares or total capital is held by another listed (or OTC) company.
16. Circumstances set forth in Paragraph 1, Subparagraph 12 of the preceding article and inability to achieve compliance with Paragraph 2, Subparagraph 12 of the same article within six months from the trading day next following the suspension of trading.
17. Other events requiring de-listing.
Where de-listing of a listed company's listed securities has been publicly announced by this Corporation for reason of circumstances specified in Subparagraphs 7 or 8 of the Preceding Paragraph but the de-listing has not yet been implemented, this Corporation may waive the de-listing, following approval by the Competent Authority, where all of the following conditions are met and no circumstances specified in any other Subparagraphs of the preceding paragraph exist, and where the application for such waiver, accompanied by relevant facts and evidence, has been submitted to this Corporation at least eight trading days prior to the implementation date:
1. Where, after public announcement of de-listing for reasons in Subparagraph 7 of the Preceding Paragraph, regular financial reports that had not been submitted on time are submitted, or relevant financial reports are corrected or rewritten in compliance with regulations.
2. Where, after public announcement of de-listing for reasons in Subparagraph 8 above, the record of refusal of transaction by a financial institution or the dishonor of a negotiable instrument because of insufficient funds on deposit has been resolved by carrying out remedial procedures as set forth in Subparagraph 9 of Paragraph 2 of Article 49 and submitting relevant evidentiary documentation.
A listed company that makes full supplementations or corrections before the implementation date after its listed securities have been publicly announced for de-listing shall be eligible for a waiver of implementation of de-listing only if such listed company has never previously been granted a waiver of de-listing based on the same reasons.
A listed company applying for de-listing of its securities in accordance with Article 145 of the Securities and Exchange Act shall process the application in accordance with "Procedures for Handling Applications for De-Listing by Listed Companies."
Where a listed company de-lists in accordance with Paragraph 1, Subparagraph 15 herein, or terminates OTC trading of its securities in accordance with Article 12-2, paragraph 1, subparagraph 17 of the GreTai Securities Market Rules Governing Securities Trading on Over-the-Counter Markets, the listed parent company shall undertake to unconditionally purchase the remaining outstanding shares of the listed (or OTC) subsidiary to de-list.

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).
Where a listed company merges with an unlisted or non-OTC company by using as consideration an additional issue (whether by public offering and issuance or private placement) of shares or securities that may be converted into or may be used to subscribe shares, and the surviving company after the merger remains 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, all 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 certifying 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, 3, 4, 6, 8, and 12 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. Where 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 submit the following documents for reference. Provided, that subparagraphs 1 and 2 and paragraph 4 shall not apply where the foreign company complies with Article 27, paragraph 1, subparagraphs 2 and 4 of this Corporation's Criteria for Review of Securities Listings:
(1) documentation of foreign investment approval by the Ministry of Economic Affairs Investment Commission.
(2) financial report for the unlisted or non-OTC company being merged, and an audit report with an unqualified opinion issued by the certifying CPA.
(3) an opinion by a Taiwan CPA regarding the differences in accounting principles applied in the Republic of China (Taiwan) and in the foreign company's home country and the resultant effects on the financial report.
(4) a written 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, issued by a CPA other than the original certifying CPA who is approved by the Competent Authority to perform financial certification for public companies.
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 additional common shares (including those publicly offered and issued or privately placed) or overseas depositary receipts issued 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 common shares publicly offered and issued 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 common shares publicly offered and issued 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 be 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 privately placed common shares due to the merger shall issue a written undertaking not to transfer the shares within a certain period. The written undertaking shall furthermore state: “The Taiwan Stock Exchange Corporation may from time to time send personnel to carry out spot checks to ascertain whether I have faithfully abided by my undertaking not to transfer the common shares I have obtained through private placement due to the merger. After expiration of the period in which I have undertaken restricted transfer, for those shares I obtained due to the merger that are still classified as privately placed common shares, I shall continue to abide by the restrictions on transfer under Article 43-8 of the Securities and Exchange Act.” If public issuance procedures for the shares are subsequently duly carried out during the restricted transfer period, the shareholder shall place its shareholding in centralized custody and withdraw it in periodic installments in accordance with
regulations. The total ratio of privately placed common shares subject to restriction of transfer and the period of the restriction shall accord with the provisions of the preceding subparagraph.
3. 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 newly established 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 or securities that may be converted into or may be used to subscribe shares as consideration, 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 common shares (including those publicly offered and issued or privately placed) or overseas depositary receipts 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 the shares or securities that may be converted into or may be used to subscribe shares that are 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 the shares or securities that may be converted into or may be used to subscribe shares that are 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 this Corporation has examined and approved the application, a written opinion approving the merger (or acquisition) shall be sent to the company. The said written opinion shall state "This approval letter is provided only for purposes of the applicant company registering with (applying to) the Competent Authority for capital increase and issuance of new shares as a result of merger (or acquisition). 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.

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 the Competent Authority has given approval, 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, 3, 4, 6, 8, or 12 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 listed company shall submit the following documents for reference. Provided, that subparagraphs 1 and 2 of the preceding paragraph, and paragraph 7, shall not apply where the foreign company complies with Article 27, paragraph 1, subparagraphs 2 and 4 of this Corporation's Criteria for Review of Securities Listings:
(1) documentation of foreign investment approval by the Ministry of Economic Affairs Investment Commission.
(2) the submitted financial report, and an audit report with an unqualified opinion issued by the certifying CPA.
(3) an opinion by a Taiwan CPA regarding the differences in accounting principles applied in the Republic of China (Taiwan) and in the foreign company's home country and the resultant effects on the financial report.
(4) a written 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, issued by a CPA other than the original certifying CPA who is approved by the Competent Authority to perform financial certification for public companies.
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; provided, where shares of a single or multiple listed or OTC companies are converted into a newly established company to form an
investment holding company, the securities of the investment holding company may be listed and traded from the record date of the share conversion, but trading of the originally listed securities shall be suspended beginning eight days before the record date of the share conversion (counting non-inclusively of that date).
1. An Application for Listing of Shares of a Newly Established Company or Listed Company Receiving Assignment 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 undergoes 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 it holds 100 percent of the assignee company's shares, it 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.
When a listed company carries out a case under Paragraphs 1 or 2, after this Corporation has examined and approved the application, a written opinion approving the share conversion shall be sent to the company, stating "This approval letter is provided only for purposes of the applicant company registering with (applying to) the Competent Authority for capital increase and issuance of new shares as a result of share conversion. If the application is not approved by the Competent Authority, this approval letter shall become void." Provided, where shares of a single or multiple listed or OTC companies are converted into a newly established company to form an investment holding company, the case shall be submitted directly to the Competent Authority after examination and approval by this Corporation.

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