Taiwan Stock Exchange - Rules & Regulations Directory

Amendments

Title:
Operating Rules of the Taiwan Stock Exchange Corporation(2010.03.01)

Article 50-3
If any of the circumstances listed below applies to a primary listed company, trading of its listed shares shall be suspended by the TWSE after it reports to and obtains the approval of the Competent Authority pursuant to Article 147 Securities and Exchange Act:
1. Failure to publicly announce and file its financial report by the prescribed deadline.
2. Any suspected misrepresentation is discovered in a document or information submitted by it, and it fails to provide an explanation by a specified deadline as requested by the TWSE.
3. Failing to appoint a professional shareholder services agent in the Republic of China to handle stock affairs, and then failing to take corrective action by the specified deadline, as confirmed by the TWSE.
4. Failure to prepare its duly announced and filed financial report according to the relevant regulations and to the accounting principles of the Republic of China, the United States of America, or international financial accounting principles, as the case may be, and the circumstances are serious, and the company is notified to correct or make a restatement of the financial report but fails to do so by the specified deadline; or its certifying CPA has issued an audit report containing a disclaimer of opinion or adverse opinion, or issued a review report with an adverse opinion or disclaimer of opinion, in connection with the annual or semi-annual financial report that it announced and filed.
5. Violation of any rule or regulation regarding the disclosure of material information on a listed foreign company, in which the circumstances of the case are serious and necessitate the suspension of the trading of its securities.
6. Violation of an undertaking issued at the time it applied for listing; provided that this subparagraph does not apply to an amendment to any provision of the articles of incorporation or organizational documents involving any important matter in connection with the protection of shareholders equity.
7. Violation of Article 49-1, paragraph 1, subparagraph 7, and inability to meet the requirements of paragraph 2, subparagraph 7 of that same Article within 3 months.
8. Violation of Article 49-1, paragraph 1, subparagraph 8, and inability to complete the supplementation procedures specified in paragraph 2, subparagraph 8 of that same Article within 3 months from the next business day after its shares are placed under an altered trading method.
9. Violation of Article 49-1, paragraph 5, and failure to amend the articles of incorporation or organizational documents within 3 months from the next business day following placement of the stock under an altered trading method.
10. Any other circumstance requiring that the trading of listed securities be suspended.
When trading of the listed securities of a primary listed company is suspended due to any circumstance in a subparagraph of the preceding paragraph, if the company meets the respective requirements listed below and is free of any other circumstances in the subparagraphs of the preceding paragraph, then after filing with the Competent Authority and obtaining its approval pursuant to Article 147 of the Securities and Exchange Act the TWSE may publicly announce restoration of the trading of its listed securities:
1. After suspension of trading pursuant to subparagraph 1 of the preceding paragraph, has duly made a supplementary announcement and filing of its financial report.
2. After suspension of trading pursuant to subparagraph 2 of the preceding paragraph, has duly made corrections, or provided explanations as requested by the TWSE, with solid evidence.
3. After suspension of trading pursuant to subparagraph 3 of the preceding paragraph, has duly taken corrective action with solid evidence.
4. After suspension of trading pursuant to subparagraph 4 of the preceding paragraph, has made corrections to or a restatement of its financial report as required by the TWSE; or its CPA conducts a re-audit and issues an audit report free of the original disclaimer of opinion or adverse opinion, or a review report free of the original adverse opinion or disclaimer of opinion; or there is no audit report containing a qualified opinion or review report containing a qualified opinion in connection with Article 49-1, paragraph 1, subparagraph 3.
5. After suspension of trading pursuant to subparagraph 5 of the preceding paragraph, has made supplementation or taken corrective action pursuant to rules or regulations regarding disclosure of material information on listed foreign companies.
6. After suspension of trading pursuant to subparagraph 6 of the preceding paragraph, has made supplementation or taken corrective action pursuant to regulations and is in compliance with the undertaking it issued.
7. After suspension of trading pursuant to subparagraph 7 of the preceding paragraph, it makes supplementation or takes corrective action pursuant to regulations.
8. After suspension of trading pursuant to subparagraph 8 of the preceding paragraph, completed the supplementation procedures under Article 49-1, paragraph 2, subparagraph 8 within 6 months after the next business day after trading was suspended and presented the relevant evidentiary document to verify that it has done so.
9. After suspension of trading pursuant to subparagraph 9 of the preceding paragraph, has amended the articles of incorporation or organizational documents, and there is no longer any likelihood of impairment to shareholders equity.
10. After suspension of trading pursuant to subparagraph 10 of the preceding paragraph, it makes supplementation or takes corrective action pursuant to the relevant rules and regulations.
If any of the circumstances listed below applies to a primary listed company, the TWSE shall file with the Competent Authority for approval to delist its listed securities pursuant to Article 144 of the Securities and Exchange Act:
1. Dissolution upon cancellation of its organizational registration in its home country.
2. Declaration of bankruptcy by a final and unappealable court ruling in its home country.
3. A ruling of the court in its home country approving reorganization, or dismissing a petition for reorganization, becomes final and unappealable.
4. There is a material change in the company's scope of business such that the TWSE deems it unsuitable to continue listed trading.
5. Six months after trading of its listed shares is suspended pursuant to any subparagraph of paragraph 1, any circumstance in any subparagraph of paragraph 1 still exists.
6. The most recent duly announced and filed consolidated financial report, or a consolidated financial report announced and filed on a supplementary basis, shows a negative net worth.
7. The Competent Authority has ordered suspension of the trading of all of its securities due to a circumstance under Article 156 of the Securities and Exchange Act and the suspension has for been effective for 3 months or longer.
8. Serious breach of the listing contract.
9. The shareholding in it by another exchange- (or OTC-) listed company (including another primary listed or primary-OTC-listed company) accounts for 70 percent or more of its total issued shares or authorized capital.
10. Any other circumstance that necessitates the suspension of the listing of securities.
When trading of the listed shares of a primary listed company has been suspended by the TWSE due to any circumstance in paragraph 1, subparagraph 1, 4, or 8 and the suspension has lasted for a full 6 months during which the company has not taken corrective action, and the TWSE has announced but not yet implemented the delisting of the company's listed shares, if the company then meets the respective requirements listed below, is free of any other circumstance in any subparagraph of the preceding paragraph, and submits relevant substantiating evidence to apply to the TWSE at least 8 working days before the implementation date, then after obtaining the approval of the Competent Authority, the TWSE may announce an exemption from implementation of the company's delisting:
1. If trading of its listed shares was suspended by the TWSE, due to a circumstance in subparagraph 1 or 4 of the preceding paragraph, for a full 6 months during which it failed to take corrective action, and it submits the regularly scheduled financial report that it previously failed to submit before the original deadline, or it duly makes corrections or restates the relevant financial report.
2. After announcement of its delisting due to a circumstance in paragraph 1, subparagraph 8, it completes the supplementary procedures listed under Article 49-1, paragraph 2, subparagraph 8, and submits the relevant documents as evidence.
After the announcement of the delisting of a primary listed company's listed shares, if that company completes supplementation before the delisting implementation date, it shall be eligible to have delisting implementation waived on those grounds only if the company has not previously been given an exemption of implementation of delisting of its listed shares for the same reason.
The Procedures for Handling Applications by Listed Companies for the Delisting of Securities shall apply mutatis mutandis to a primary listed company that applies to delist its listed shares.
If any of the following conditions applies to any foreign stock, Taiwan Depositary Receipt, or foreign bond that is listed with the TWSE by a secondary listed company, the TWSE may suspend the trading of, or delist, that stock, depositary receipt, or bond after reporting to and obtaining the approval of the Competent Authority:
1. The listed shares, or foreign securities represented by Taiwan Depositary Receipts, of a secondary listed company have already been suspended from trading or delisted by the securities exchange on which they are listed.
2. There has been a ruling by a court of the issuer's home country that duly prohibits transfer of the listed shares, foreign securities represented by Taiwan Depositary Receipts, or foreign bonds, of a secondary listed company.
3. A secondary listed company, depositary institution, or issue agent violates government laws or regulations, or the bylaws, rules, or public announcements of the TWSE, or refuses to pay the listing fee, or fails to perform the obligations required by the listing contract.
4. If, for 3 consecutive months the number of units of listed Taiwan Depositary Receipts outstanding and in circulation has been less than 10 million units, and additional issuance has not been completed within 3 months from the date of written notification from the TWSE to do so, the Taiwan Depositary Receipts may be delisted after reporting to and obtaining the approval of the Competent Authority.
5. The TWSEs deems it necessary to delist the listed shares, Taiwan Depositary Receipts, or foreign bonds, of a secondary listed company, based on any other reason sufficient to affect market order or investor rights and interests.
If due to the expiration of the issuing period, or if in accordance with the provisions of Article 145 of the Securities and Exchange Act the foreign issuer and its depositary institution, or the agent of the foreign issuer applies for the delisting of the listed shares, foreign securities, Taiwan Depositary Receipts, or foreign bonds, of a secondary listed company, such application shall be made to the TWSE for inclusion of its opinion, and then reported to and approved by the Competent Authority before the delisting becomes effective.
If delisting of listed Taiwan Depositary Receipts has been announced because of circumstances in paragraph 7, subparagraph 4, and corrective action is completed before the delisting is implemented, and none of the other circumstances in the subparagraphs of paragraph 7 exist, the issuer may submit relevant substantiating evidence to apply to the TWSE at least 8 working days before the implementation date, and the TWSE, after obtaining the approval of the Competent Authority, may announce an exemption from implementation of the delisting. However, this shall apply only insofar as no exemption from delisting has previously been granted for the same reason.
In cases of delisting under paragraphs 7 and 8, the foreign issuer and its responsible person shall undertake to unconditionally purchase the remaining outstanding shares or Taiwan Depositary Receipts of the company, and the Application Procedures for Terminating the Listing of Securities by Listed Companies shall apply mutatis mutandis.

Article 51
Upon a merger between listed companies or between a listed company and an OTC company, if the surviving company remains a listed company, the securities of the non-surviving company shall be delisted. 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 securities of the non-surviving company shall be suspended eight trading days before the record date of the merger (and non-inclusive of that date), and a delisting application shall be completed and filed with the TWSE, annexing the relevant documents, at least 13 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 follow-on 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 by the unlisted or non-OTC company:
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 Rules Governing the 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 the TWSE, 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 is free of the circumstances specified in subparagraphs 1, 3, 4, 6, 7, 8, and 12 of paragraph 1 of Article 9 of the Rules Governing the 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 the TWSE's Rules Governing the 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 Rules Governing the Review of Securities Listings.
Where a listed company undertakes a merger pursuant to paragraph 2, and the additional common shares or overseas depositary receipts issued (whether by public offering or private placement) due to the merger will account for 10 percent or more of the aggregate shares already issued and anticipated to be issued by the listed companies, 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 into centralized custody with the central securities depository approved for establishment by the competent authority all of the common shares publicly offered and issued due to the merger that they hold, and in aggregate not less than the number of shares calculated under paragraph 2 of Article 10 of the TWSE's Rules Governing the Review of Securities Listings for the total amount of common shares offered and issued as a result of the merger. 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 shares placed in central custody, one-half may be withdrawn after a full six months has elapsed from the date that listed trading thereof commences. The remaining portion of shares may be withdrawn in full only after one full year has elapsed from the date that listed trading commences.
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.” The total ratio of privately placed common shares subject to the undertaking regarding restriction of transfer referred to above and the period of the restriction of transfer 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 subparagraph 1.
Where a listed company will undergo, as a non-surviving company, a statutory merger with an unlisted company, or will undergo, as a non-surviving company, a statutory consolidation with any other company, the listed company shall submit an application, with relevant documentation, to the TWSE no later than 30 business days before the record date of the merger or consolidation. After the TWSE has filed for and received approval from the Competent Authority, trading of the listed company's securities shall be suspended beginning two business days prior to (and non-inclusive of) the book closure date, and its securities shall be delisted from the record date 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 that unlisted/non-OTC company 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 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 reach 10 percent or more of the aggregate shares already issued and anticipated to be issued by the listed companies.
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 demerged 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, paragraph 2, or the preceding paragraph, it shall fill in the application form and submit relevant documents (attachments). After the TWSE 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 filing for registration with the Competent Authority for capital increase and issuance of new shares as a result of merger (or acquisition). If the registration filing fails to become effective, this approval letter shall become void."
If an unlisted/non-OTC company that is acquired or transfers business operations as set out in paragraph 6 is a foreign company, the provisions of paragraph 2, subparagraph 4 shall apply mutatis mutandis.

Data Source:Taiwan Stock Exchange - Rules & Regulations Directory
twse-regulation.twse.com.tw