Chapter 1 General Principles
These Procedures are prescribed in accordance with Article 2, Paragraph 3 of the Taiwan Stock Exchange Corporation Regulations for Review of Securities Listings.
Except where otherwise provided by rules and regulations, the Taiwan Stock Exchange Corporation (TWSE) shall follow these Procedures when reviewing applications for securities listing. Where provisions applying to review procedures have been amended, applications shall be reviewed in accordance with the amended provisions.
Chapter 2 Receipt of Applications and Delegation of Review Cases
When applying for a listing, the issuer shall fill out an application for the listing of shares and assemble a complete set of the necessary documents listed in the attachments column; with respect to other documents to be made available for inspection, the TWSE will request them as needed for review purposes. After the administering department has ascertained that all required documents are included, the application shall be submitted through the general receiving and dispatch office of the TWSE for signed acceptance, after which it will be assigned a serial number and delegated to the appropriate case handler of the administering department for the respective reviews pursuant to procedural order.
Companies applying for securities listing pursuant to Article 5 of the TWSE's Regulations for Review of Securities Listings may not file its application for securities listing until it has received the assessment opinion of the central competent authority in charge of the respective industry by following the procedure as described in one of the subparagraphs below:
- File an application with the TWSE in conformity with the laws and regulations adopted by the central competent authority in charge of the respective industry. At the same time, the applicant company shall pay to the TWSE the assessment fee payable to the central competent authority in charge of the respective industry and file a copy of the application and supporting documents with the central competent authority in charge of the respective industry. After receiving the documents, the administering department shall submit a written request for an opinion to the central competent authority in charge of the respective industry. After having obtained the assessment opinion, indicating an approval, of the central competent authority in charge of the respective industry in a letter, the TWSE has notified the applicant company of the opinion.
- Have obtained the assessment opinion of the central competent authority in charge of the respective industry in accordance with Article 3, paragraph 2 of the Taipei Exchange Procedures for Review of Securities Listings.
An applicant company shall file its application within 1 year from the date of the assessment opinion granted by the central competent authority in charge of the respective industry as in the preceding paragraph. An applicant company that fails to file an application within this period shall re-apply to the TWSE for an assessment opinion.
The TWSE will prescribe provisions pertaining to the reporting by a lead securities underwriter, when serving as advisor for the listing of shares, of basic identifying information on the advisory client.
For initial stock listing applications, after receiving the application and supporting documents, the administering department shall form a task force consisting of two or more persons (depending on the overall current status of the human resources of the department) to assess each application. For applications by already-listed companies for issuance of new shares for capital increase, or for corporate bonds or other securities listings, the administering department shall designate a person to handle such applications. In addition to keeping the application and supporting documents in safe custody, for initial stock listing applications, the designated person shall also submit one copy each of the prospectus and the draft underwriter assessment report for public display.
After accepting the application for processing, the managing department shall retain an outside reviewer with field-specific expertise to give a consulting opinion on the matters provided in the Table of Consultation Matters. If questions arise relating to financial, accounting, or legal matters, the case-handling unit may also retain outside financial, accounting, and/or legal professionals to give a written opinion. Solicitation of written opinions shall be handled in accordance with the TWSE "Rules for Solicitation of Opinions in Reviews of Initial Applications for TWSE Listing by Public Companies." The aforesaid Rules will be separately adopted. The above regulations in regard to outside reviewers shall not apply to cases that, pursuant to Article 7-1, are exempt from review by the Review Committee. A company referred to in Articles 53-8, 53-18, 53-21 and 53-24 of the TWSE Operating Rules, when applying for stock listing, may be exempt from the above provisions regarding solicitation of opinions.
The consulting opinions of the outside reviewers referred to in the preceding paragraph shall be delivered to the TWSE 25 days before the Review Committee meets.
Chapter 3 Review Process for Initial Stock Listing Applications
For an application for an initial listing of a company's stock, the TWSE shall review the financial statements for the most recent 2 fiscal years approved by the company's board of directors, audited and attested by a certified public accountant (CPA), and recognized by the supervisor(s) or audit committee. If any irregular adjustments to accounting items are found, those items shall be reviewed in the financial report of the preceding year. In cases where the financial report approved by a regular shareholders meeting does not agree with that report, the financial report approved by the regular shareholders meeting shall also be submitted. For reference of the TWSE reviewers, an applicant company whose review period crosses over the time limit for submission of interim financial reports as provided in Article 36 of the Securities and Exchange Act will be notified to additionally submit the financial statements, already submitted to the board of directors and reviewed by the CPAs, for the most recent period of the year of application; where the review period crosses over the fiscal year of the application, the unaudited four major financial statements of the fiscal year of the application shall be additionally submitted. If an applicant company fails to provide the required documents within the specified periods, the TWSE shall return its application.
For an application for an initial listing of a state-owned enterprise's stock, if the listing contract has been approved by the TWSE, and the scheduled commencement date for conducting public underwriting falls after the deadline for public disclosure and filing of financial reports for relevant periods as provided in Article 36 of the Securities and Exchange Act, the state-owned enterprise shall submit to the TWSE the CPA-reviewed quarterly financial reports following the time limit set by the competent authority for listed companies, and transmit the electronic version of the quarterly financial reports to the Internet-based information reporting system designated by the TWSE.
The provisions of this Article apply to all reviews of applications for initial stock listings. Personnel assigned to handle an application for securities listing shall, after receiving the application, review the application, the supporting documents, and all information provided by the applicant company, underwriter, or CPAs, and take the particulars listed below into consideration:
- CPA Audit or Review Report:
- If there is a change of CPAs in the year of the application or the most recent 3 fiscal years preceding the application, the issuing company, the original CPAs, and the succeeding CPAs shall submit a written report explaining the change of accountants, and the case handlers shall ascertain the facts and reasons underlying the change.
- Where the review report issued by a CPAs on the interim financial report for the most recent period of the year of application contains anything other than an unqualified conclusion, the reviewers shall take note of the facts and reasons underlying the report, and the extent to which such report affects the financial report.
- The accounting firms that audit the financial reports for the year of application and the most recent 3 fiscal years shall be the joint accounting firms approved by the competent authority.
- The audit report shall state that it is prepared in accordance with the regulations prescribed by the competent authority governing the preparation of financial reports by each enterprise.
- The CPAs of the applicant company for the most recent 2 fiscal years shall issue an audit report with an unqualified opinion and without reference to any other accountant's audit. If a major subsidiary of the applicant company is included in the CPA-reviewed financial report for the most recent period of the year of application, the CPAs shall issue a conclusion on the major subsidiary without reference to any other accountant's review.
- None of the following circumstances may apply to the CPAs engaged by the applicant company, but this restriction does not apply if the disciplinary action or disposition is a warning or reprimand, or a disposition of rejecting the CPA-attested financial reports of the listing applicant company for a certain period by TWSE or TPEx, and the cause in fact for such disciplinary action or disposition occurred five or more years before the date of application for listing:
- In the preceding three years, the CPAs have been subject to disciplinary action or disposition in the form of a warning or above.
- The CPAs have been subject at least twice to a public announcement by the TWSE or TPEx in the most recent year under the TWSE Regulations Governing the Handling of Errors by Certified Public Accountants in Auditing of Initial Applications for TWSE Listing or the GreTai Securities Market Regulations for Handling Deficiencies in Certified Public Accountants' Reviews of GTSM Listing Applications that the financial reports of TWSE or TPEx listing applicants that have been attested by the CPAs are rejected for a certain period.
- Content of financial reports:
- Whether the kind, format, and content comply with the regulations prescribed by the competent authority governing the preparation of financial reports by each enterprise.
- Overall analysis of the report by comparing it with those from other companies in the same industry, to ascertain emerging trends and possible irregularities in the applicant company's financial condition and its profitability.
- If unusual accounting items are found in the financial report and a large sum of money is involved, the item in question shall be audited to ascertain its composition and categorization.
- Status of adjustments or improvements required to be made to the financial statements as instructed in writing by the competent authority.
- If any special or irregular circumstances are found with respect to the following items, the case handler shall examine the matter in depth by reviewing the CPAs' working papers.
- Transactions between major related parties: any irregular financial arrangements or profits changing hands in large transactions between related parties.
- Any improper or irregular transactions with respect to the categorization, transfer, or accounting treatment of financial assets. Case handlers shall further determine whether there have been any irregularities pertaining to loss allowances set aside for receivables, and allowance for inventory valuation losses by the company's important subsidiaries, loans of funds to others, or endorsements or guarantees extended for others, and whether any financial statements must be adjusted.
- The status of application for loss allowance and the assessment of the auditing CPAs.
- Method of appraisal and basis of entering into the account books of inventory: where there are large surpluses or inventory losses, the reasons shall be investigated.
- Any irregular changes to property, plant and equipment involving transactions among related parties.
- The accounting treatment of capitalization of interest.
- Leasing: The accounting treatment and categorization of business leasing or financial leasing.
- Deferred assets: Those that shall be listed as expenses or losses for the current month, such as loss of profit due to suspension of work, start-up expenses, employee benefits, etc., may not be listed as amortization of deferred assets.
- Monetary transactions: The interest rates, terms, and payment status on large interest-free and low interest loans obtained from affiliates, shareholders, or related parties, and high-interest loans to affiliates, shareholders or related parties.
- Retirement rules and pension expense withholding status.
- Accounting treatment of income tax and off-settings of assets and liabilities with respect to deferred income tax.
- Circumstances of disclosure of contingent liabilities and status of lines of credit obtained jointly from banks by the applicant company and its affiliates.
- Assets obtained on installment plans and accounting treatment of sales.
- Gross profit margin on sales of inventory, inventory turnover rate, and accounts receivable turnover rate for the most recent 2 fiscal years.
- Reasons for any large non-operating revenue or expenses.
- Whether in the most recent fiscal year there have been any irregularities in the process of capital formation, or sources or use of funds.
- Whether the party billed for each account receivable is the party to whom the item in question was sold. If any mismatch is found, the case handler shall determine the reason and make a judgment as to whether the mismatch is legitimate.
- If any new client taken on by the applicant in the most recent 2 years is a related party or ranks among the applicant's ten largest clients, the case handler shall audit the applicant's transactions with said client, ascertain whether the client is a related party, check for any differences and similarities between the terms of transaction contracts with the new client and terms offered to regular clients, and determine whether there were any major or irregular transactions around the date of the balance sheet, and whether there have been any subsequent recurring or material returns of shipments or any irregular subsequent receipt of funds, so as to verify that sums accounted for as sales revenue conform to the principle of realized revenue.
- Whether any of the enterprise's receivables are overdue. If they are, the case handler shall determine the reason and make a judgment as to whether there is any irregularity..
- Financial forecast information:
Gain an understanding of the applicant company's production of financial forecast data, and when necessary require the applicant company to provide financial forecast data for each quarter during the review period. The data shall be provided only for use as a reference in the review of the given case, and may not be made public or otherwise disclosed.
- Internal control mechanisms and declarations thereof, and project audit reports:
- Ascertain the status of the prescription and implementation of internal control systems.
- Inspect whether the applicant company has performed a self-inspection of the effectiveness of the design and implementation of its internal control system and produced an Internal Control System Declaration in compliance with the Regulations for the Establishment of Internal Control Systems by Public Companies, and obtained a CPA project audit report with an unqualified opinion.
- Self-inspection of internal control systems and performance of project audits by CPAs shall cover the following periods: For applications submitted from February through April, the period covered shall be 1 January through 31 December of the previous year; for applications submitted from May through July, the period covered for shall be from 1 April of the previous year until 31 March of the year of application; for applications submitted from August through October, the period covered shall be from 1 July of the previous year until 30 June of the year of application; for applications submitted from November through January of the following year, the period covered shall be from 1 October of the previous year until 30 September of the year of application. Two or more practicing CPAs of a joint accounting firm shall jointly perform the inspections or audits and issue a report. The TWSE shall separately adopt the Operating Procedures for Review of Internal Control Systems Inspection Reports Issued by CPAs.
- During the review process, the case handlers shall note whether the CPAs have complied with Generally Accepted Accounting Principles, the Regulations for the Establishment of Internal Control Systems by Public Companies and all other applicable laws and regulations and shall, through scrutiny of the CPAs' working papers for the relevant fiscal year, fully ascertain the tests applied, scope, time frame, characteristics, whether there has been full factual disclosure, whether the accountant has omitted any procedural requirements (e.g. monitoring of remaining inventory, certification and reconciliation of bank account balances) and failed to adopt other substitute procedures. If it is determined that the auditing procedures executed by the CPAs are insufficient to reach the necessary conclusions, the case handlers shall request that the accountant provide supplementary explanations.
- The case handlers shall inspect the format and content of the underwriter's assessment report:
- Whether the report has been compiled in accordance with the requirements of the TWSE Directions Governing the Particulars to be Recorded in the Securities Underwriter's Assessment Report for Initial Listing of Securities and signed by the lead underwriter and sponsoring underwriter. The TWSE Directions Governing the Particulars to be Recorded in the Securities Underwriter's Assessment Report for Initial Listing of Securities shall be separately promulgated by the TWSE.
- Whether working papers have been prepared in accordance with applicable regulations of the TWSE.
- Whether a Declaration has been produced testifying that the assessment report is free of any misrepresentations or nondisclosures.
The case handlers shall examine the format and content of the prospectus to ensure that it has been compiled in accordance with the TWSE Regulations Governing the Particulars to be Recorded in Prospectuses for Initial Listing of Securities and other relevant regulations.
- Checklist of legal issues of issuers applying for a listing:
The case handler shall ascertain whether the lawyer filling out the checklist has compiled the working paper in accordance with the instructions on the preparation of the checklist and, if the contents of the comments section or results of review indicated in the checklist are not adequately confirmed by the lawyer’s working paper, shall request the lawyer to provide a supplementary explanation.
- The case handlers shall ascertain whether any of the negative criteria detailed in the TWSE Regulations for Review of Securities Listings applies to the applicant company, whether it has complied with instructions contained in official notifications by the competent authority, and whether there were significant changes in the applicant company's most recent capital increase plan or any failure to carry out those plans. Such information shall be provided in detail in the review report and working paper. If any nonconformance with regulations is found, the case handlers shall attach their opinions on treatment, and submit them for further review by higher levels.
- The case handlers shall visit the sites of the applicant company's offices and factories and ascertain the operational experience and philosophy of the applicant company's responsible person. If irregularities are found during the documentary review, the case handlers shall examine the working papers prepared by the CPAs or other documentation provided by the applicant company, the CPA, lawyer and the underwriters. If after due examination of the above, the case handlers are still unable to gain a complete picture of the applicant company's operations, they shall gain an understanding during an on-site audit of the applicant company. If the applicant company is an investment holding company or a financial holding company, all above procedures shall be conducted for companies controlled by the applicant or for subsidiaries of such controlled companies. However, where the controlled companies or subsidiaries are located offshore, a documentary review shall suffice.
- After they have been delegated a securities listing case, the case handlers shall complete the following review procedures:
- Application Documents: Check all application documents received and complete a "Stock Listing Application Receipt Record." (Attachment 1).
- Prospectus: Examine each item detailed in the content of the prospectus according to the TWSE Regulations Governing the Particulars to be Recorded in Prospectuses for Initial Listing of Securities and other relevant regulations, and re-examine a Checklist of Legal Issues to be Examined upon Application by Issuers for Exchange Listings of Stock (Attachment 2) provided by a lawyer to ascertain whether such checklist adequately supports the conclusions of the legal opinion contained in the prospectus.
- Underwriter's Assessment Report:
The above-mentioned Regulations for Handling Deficiencies in Evaluation Reports or Other Related Information Submitted by a Securities Underwriter shall be separately prescribed by the TWSE.
Review the underwriter's assessment report and check whether each item is assessed in accordance with the rules and regulations of the TWSE and whether it draws clear and definitive conclusions. Any matters relating to the provisions of the TWSE Regulations for Handling Deficiencies in Evaluation Reports or Other Related Information Submitted by a Securities Underwriter shall be handled, after obtaining signed approval by the TWSE's president, pursuant to Article 9 of the same Regulations.
- Internal Control Systems
- Gain an understanding of the results and attached assessment opinion from the CPAs' internal control system investigation, and of the CPAs' recommendations regarding internal control systems as stated in the recommendation report, in compiling the Record of the Internal Control System Documentary Review (Attachment 3).
- Carry out the review in accordance with the TWSE Procedures for Reviewing Internal Control System Audit Reports Issued by Certified Public Accountants, and complete Attachment 2 of said Procedures, the Opinion Form for Review of the Internal Control System Audit Reports Issued by Certified Public Accountants.
- Comprehensive Analysis of Financial Information:
Review the annexed survey report for related industries, explanations of major changes in accounting items published in the prospectus, analytical data from the CPAs' permanent records, and the underwriter's assessment report to ascertain and assess the financial condition and trends of the applicant company and excerpt important items or irregularities to compile the Comprehensive Analysis of Financial Data (Attachment 4).
- CPA auditing procedures and financial report: Review the CPAs' permanent files, the working papers for the internal accounting control system for the most recent fiscal year and the audit working papers for the most recent 3 years preceding the date of application and re-examine the Certified Public Accountant Auditing Procedure Checklist (Attachment 5) completed by the CPAs to ensure compliance with Statement on Auditing Standards No. 3 ("Audit Working Paper Standards"), Statement on Auditing Standards No. 5 ("Investigation and Assessment of Internal Accounting Control Systems"), the Regulations for Auditing and Attestation of Financial Statements by Certified Public Accountants, and all other applicable regulations. Include excerpts or photocopies of important or irregular items in the report. Examine the CPA audit reports for the most recent 3 fiscal years and the notes and statements of major accounting items therein to ensure that the applicant company's financial reports is prepared in compliance with the regulations prescribed by the competent authority governing the preparation of financial reports by each enterprise. [After completion of the above] the case handlers shall note their opinion in the opinion column of the Certified Public Accountant Auditing Procedure Checklist. If the applicant company is found in violation of any of the requirements of the TWSE Regulations Governing the Handling of Errors by Certified Public Accountants in Auditing of Initial Applications for Market Listing, the case handlers shall refer the matter to the administering department or Review Committee and execute the resolution passed by the department or committee.
- Dispersion of Shareholding and Custodial Undertaking:
Examine the following items:
- Whether the ratio of shares to be publicly offered is in compliance with the regulations of the TWSE.
- Whether shareholding dispersion after public offering is in compliance with the provisions of the TWSE's Regulations for Review of Securities Listings.
- Whether the ratio of shares held by directors is in compliance with the regulations of the competent authority.
- Whether the undertaking regarding the ratio of shares in centralized custody to total issued shares complies with regulations.
- Examine whether the applicant company is in compliance with each of the items listed in Article 9, Paragraph 1 of the TWSE's Regulations for Review of Securities Listings and complete the "Regulations for Review of Securities Listings Article 9, Paragraph 1 Itemized Checklist" (Attachment 6).
- The case handlers shall consolidate all the above review data and relevant documentation (Attachments 1 through 9) into a binder.
- To ascertain the actual status of the financial and business operations of the applicant company, the case handlers shall carry out an on-site audit and conduct the following procedures:
- Seek briefings to ascertain the following:
‧ The past business achievement and philosophy of the applicant company's responsible person.
‧ Changes in the shareholdings of directors, and shareholders with a greater than 10 percent share of the company's total issued equity during the most recent 3 fiscal years and random checks of actual shareholdings when necessary.
‧ Management and operational objectives of the company.
‧ Financial structure and management policies.
‧ Production processes.
‧ Production status.
‧ Analysis of sales income and costs and the state of competition in the industry.
‧ The system for taking stock of and valuating inventory, and warehousing management.
‧ Dealings among affiliates.
‧ Salary and benefit regime.
- Inspect factories, paying particular attention to the operational status of machinery and equipment.
- For other significant irregularities discovered in the documentary review, the case handlers may draft an inspection plan and then conduct an audit of the irregularities.
- Findings of on-site audits shall be recorded in detail in the "On-Site Audit Record" (Attachment 7).
- In order to clarify other major issues in relation to the current status and future development of the industry to which the company belongs, as well as financial accounting, taxes, legal issues, and other material issues arising from operations in that industry, the case handler may duly engage an expert as an external Review Committee member, and in addition to obtaining the opinion of that expert, may also seek the opinions of other experts on related questions with approval by the president of the TWSE of a written request for permission.
- Compilation of working papers: The case handlers shall consolidate and record in detail all review items and findings of the review, together with all relevant information and number them in order for cross-referencing. Upon completion of the review, the case handlers shall compile all review information (Attachments 1 through 7) and supporting documentation into a binder to serve as the working papers and file it together with other public issuance approval information and keep it in the custody of the Listing Department (for a minimum of 5 years) for future reference and case management.
- After completion of the working papers, the case handlers shall set forth the key findings, and may as necessary solicit the opinions of relevant experts and examine other relevant information. The case handler shall then compile this information into a"" proposal for reference during the review and deliberation of the case.
- Review Period: Applications for initial stock listing shall be submitted for deliberation by the Review Committee within six weeks after their receipt. Under extraordinary circumstances, however, the Listing Department may, based upon review requirements or at the request of the applicant company and no less than 10 days prior to the Review Committee meeting, extend the deadline for submission to the Review Committee, subject to the signed approval of the president of the TWSE. Extensions granted at the request of the applicant company shall be limited to a maximum period of a month.
- Force of the Securities Listing Review: The findings of the review of an application for securities listing reflect the financial and business condition of the applicant company during a specified period of time only, and should not be taken as a reflection of the overall or future performance of the applicant company. The results also depend largely on whether the applicant company has made full disclosure of information relating to its financial and business condition. The review results do not provide a guarantee of the quality of the applicant company and shall not be taken as a substitute for the functions and status of securities underwriters, CPAs and lawyers. Therefore, case handlers reviewing applications filed by first-time applicants shall:
- Carry out the review work with a positive service attitude and full rely on all information and opinions provided by the applicant company, securities underwriters, CPAs and lawyers, unless any nondisclosure, fraud, falsehood, or error is discovered.
- Where information or statements of opinion provided by the applicant company, securities underwriter, CPAs and lawyers are found to contain any nondisclosure, fraud, error, falsehood, or otherwise seriously violate applicable laws or the rules and regulations of the TWSE, those responsible shall be held fully liable under the law, and the matter shall be duly reported to the competent authority after handling by the TWSE pursuant to relevant regulations. The TWSE undertakes only the review and deliberation of applications. Case handlers shall, at the time of processing applications, act in accordance with the provisions of the TWSE's Disciplinary Standards for Securities Listing Review Personnel and Matters for Mutual Compliance by Securities Listing Review Committee Members, and remain detached, impartial, and objective to ensure compliance with all the procedural requirements of these Procedures and other applicable regulations. In the event of any violation or negligence, where verified through investigation, personnel shall be responsible for matters that fall within the scope of their duties.
- Where any concerns arise during the review period, the case handlers shall contact the applicant company, securities underwriter, CPAs and lawyers and request that they take the initiative to collect relevant information in timely fashion and provide explanations.
- Prior to the submission of the listing case for the review of the Review Committee, if the administering department has resolved to deny approval for listing, the TWSE's senior executive vice president shall convene relevant personnel to review the listing case again, and when necessary, invite the applicant company and the securities underwriter to provide explanations; if they resolve to deny approval for listing, the signed approval of the TWSE's president may be obtained and the application then rejected outright.
The following applications for TWSE listing of stocks will be handled by document review and exempted from review by the Review Committee. The administering department, however, as it deems necessary, may undertake an on-site audit and submit the case for review by the Review Committee, subject to prior signed authorization by the president of the TWSE:
- Where a company whose stock is already listed and traded on the GTSM pursuant to Article 3 of the GreTai Securities Market Rules Governing the Review of Securities for Trading on the GTSM applies for TWSE listing of its stock.
- Where a company applies for TWSE listing of its stock pursuant to Article 53-8, 53-18, 53-21, or 53-24 of the TWSE Operating Rules.
With respect to an application case exempt from review by the Review Committee pursuant to the preceding paragraph, except for a review of the underwriter's working papers for assessment of items under Article 9 of the TWSE Rules Governing Review of Securities Listings, Articles 6 and 7 herein regarding the working papers of the CPAs, underwriter and lawyers need not apply.
In cases where an application is exempt from review by the review committee pursuant to the preceding Article 7-1, and where the administering department has passed a resolution within a month following receipt of application documents but where exceptional circumstances are present, it may extend the review period, based either on the requirements of the review or at the request of the applicant company, subject to receiving prior signed authorization by the president of the TWSE. Any extension of a review period granted pursuant to a request by the applicant company shall be for a month only.
Where the administering department has resolved to approve listing under the preceding paragraph, the case shall be submitted to the Board of Directors for consideration; where it has resolved to deny approval for listing, the TWSE's senior executive vice president shall convene relevant personnel to review the listing case again, and when necessary, invite the applicant company and the securities underwriter to provide explanations; if they resolve to deny approval for listing, the signed approval of the TWSE's president may be obtained and the application then rejected outright.
When a company that has been delisted by an exchange and applied for managed trading of its stock on the GTSM then subsequently reapplies for listing on an exchange, unless the provisions of Article 2-1, paragraph 1 of the TWSE's Regulations for Review of Securities Listings are not applicable, the matter shall be handled in accordance with the provisions of the TWSE's procedures for the review of an initial stock exchange listing.
Chapter 4 Listing of Same-Class Capital-Increase Shares, Certificates of Entitlement to New Shares, Certificates of Payment for Stock, and Certificates of Entitlement to Shares from Redemption of Convertible Corporate Bonds, Issued by Listed Companies
Where a listed company applies for listing of new shares issued for capital increase where the shares are of the same class already listed, the case handlers shall verify the relevant documents reported and uploaded are all in order, and publicly announce the listing in accordance with Article 139 of the Securities and Exchange Act.
When a listed company issues new shares for capital increase and applies to list certificates of entitlement to new shares, t within 15 days of the date of the competent authority's effective registration of the capital increase; where the company applies to list certificates of payment for stock, within 15 days of the competent authority's effective registration of, and full receipt of payment for, the new shares, a report shall be made on the Internet information reporting system designated by the TWSE. Following verification that the relevant documents reported and uploaded are in order, the administering department shall publicly announce the listing, report the listing to the TWSE's board of directors, and report to the competent authority for recordation. With respect to the listing of certificates of entitlement to shares from redemption of convertible corporate bonds, the responsible unit shall announce the listing according to the date stated on the "Application to List Global Depositary Receipts Representing Certificates of Entitlement to Stock Redeemed from Bonds" or "Declaration of Conversion of Domestic (Overseas) Securities" initially reported by the applicant company and shall publish monthly public announcements of the conversion status.
Chapter 5 Listing Review of Shares of Different Classes From Those Already Listed (Including Various Preferred Shares With Different Rights and Obligations) Issued by Listed Companies for Capital Increase
After examining all documents duly submitted by the listed company to ensure completeness, the case handler shall complete a "New Stock Listing Preliminary Review Chart" to examine whether Article 14, Paragraphs 2 and 3 of the TWSE's Regulations for Review of Securities Listings and Article 53-4 of the TWSE's Operating Rules are applicable to the company Upon approval being granted in writing, a listing contract shall be executed, notice shall be given to the company advising it to proceed with public offering accordingly, and the listing contract shall be presented to the competent authority for recordation. The listing will be publicly announced upon the preferred shared issued by the company conforming to provisions governing the total number of issued shares, public offering and share ownership dispersion standards as set forth in Article 14 of TWSE's Regulations for Review of Securities Listings.
Chapter 6 Review of Applications By Listed Companies for Listing of Unlisted Shares by Conversion into Shares of the Same Class as Already-Listed Shares
Chapter 7 Bonds Issued by the Republic of China Government, Foreign Governments, and International Organizations Shall be Listed by Public Announcement Following Written Notification by the Competent Authority
Chapter 8 Review of Listing Applications for Corporate Bonds Issued by Domestic Listed Companies and Foreign Companies
Where listed companies or foreign companies apply to list corporate bonds they have issued, the case handlers shall examine whether the documentation submitted by the applicant company is complete; if the foreign company has not previously issued Taiwan Depositary Receipts for trading on the Taiwan Stock Exchange, the case handlers shall assess compliance with the listing conditions set forth in Article 26, Paragraph 1 of the TWSE's Regulations for Review of Securities Listings based on the applicant company's listing application and supporting documentation, and upon finding it compliant, shall proceed to publicly announce the listing, and submit the listing contract with the applicant company and other documentation to the competent authority for recordation and report to the TWSE's board of directors.
Chapter 9 Review of Listing of Beneficiary Certificates
When an application is filed to list beneficiary certificates already approved for issuance, the case handlers shall inspect the submitted application documents for completeness and compliance with the provisions of Article 23 of the TWSE's Regulations for Review of Securities Listings. After the certification and issuance of the beneficiary certificates or registration of scripless issuance have been completed in accordance with the regulations of the competent authority, the case handlers shall publicly announce the listing, and submit the beneficiary certificate listing contract and other application documents to the competent authority for recordation and report to the TWSE's board of directors.
Chapter 10 Review of Listing of Other Securities
A listed company issuing securities with detachable warrants shall, following the effective registration with the competent authority, apply with the TWSE for the listing of the detached company warrants. The management shall inspect that the documents submitted are complete, and after signing of the listing contract, will notify the company thereupon to handle the follow-up procedures for public sale and listing, and will report the listing contract to the competent authority for recordation.
The various procedures set out hereinabove for the review of listing of various kinds of securities shall apply mutatis mutandis to reviews of listing of other kinds of securities already approved for issue, depending on the nature of the specific securities under review.
Chapter 11 Review and Deliberation by the Securities Listing Review Committee
- The case handlers shall draft a proposal with respect to the complete review findings and submit it to the Review Committee for reference during the review and deliberation of the case.
- Where the administering department's inspection finds an applicant company to fall under any of the conditions set forth in Article 9, Paragraph 1 of the TWSE's Regulations for Review of Securities Listings or to violate any other applicable provisions of the same Regulations, it shall give an explicit review opinion in the review report that either disagrees to listing or, except in cases where the applicant company falls under any of the conditions set forth in Article 9, Paragraph 1, Subparagraphs 8, 10, and 11 of the said Regulations or is in violation of the provisions of Article 18 or Article 19 of the said Regulations, may agree to listing after overall consideration of the totality of factors.
- The review findings report, proposal information, applicant company's CPAs' audit report (including financial report), and outside reviewer's consulting opinion prepared in accordance with regulations shall be sealed by chop as confidential and submitted to each Review Committee member for evaluation no less than five days prior to the convening of the Review Committee. Each Review Committee member shall complete a review opinion chart listing their opinions regarding each item and specifying any questions they may have and submit the review opinion chart to the Listing Department two days before the Review Committee convenes. The Listing Department shall designate a person to be responsible for compiling the all materials and maintaining appropriate confidentiality, and the materials shall be reviewed when the Review Committee convenes.
- The TWSE shall, beginning three days prior to the convening of the Review Committee and at a specified location, make available for inspection by any member of the Review Committee the applicant company's relevant listing information, the case handler's audit report working papers, the CPAs' audit report working papers, the underwriter's assessment working papers and the working papers of the lawyers’ legal opinions etc. Review committee members that so require shall appear in person to inspect the documents.
Convening of Review Committee Meetings
- When the Review Committee convenes, in addition to the presence of Review Committee members, relevant review personnel from the administering department shall also attend.
- When the Review Committee convenes, the TWSE may request representatives of the applicant company, the lead securities underwriter, the CPAs and lawyers issuing legal opinions to first submit reports and may request those same individuals to appear for questioning and supplementary explanation. When necessary, upon signed approval by the TWSE's president, experts in related fields may be asked to provide written consultation or appear for oral consultation.
- Rules relating to the TWSE's securities listings Review Committee shall be separately promulgated by the TWSE.
When the Review Committee convenes, reviews shall conducted for the following in accordance with the TWSE's Regulations for Review of Securities Listings and other relevant laws, regulations, and materials:
- Initial stock listing applications free of any of the conditions provided in Article 9, paragraph 1 of the Regulations for Review of Securities Listings and violating no relevant provisions of the same Regulations shall require approval of a simple majority of the Review Committee members present.
- Initial stock listing applications that meet any of the conditions provided in the subparagraphs of Article 9, paragraph 1 of the TWSE's Regulations for Review of Securities Listings, except for subparagraphs 8, 9, and 10, or that violate any applicable provision of the same Regulations, except for Articles 18 and 19, and re-applications for initial stock listing, shall require approval of a two-thirds majority (inclusive) of Review Committee members present; however, the committee shall specify their overall considerations and concrete reasons for granting listing approval.
- Where approval for listing has been granted by resolution of the Review Committee, the case shall be recorded and submitted to the Board of Directors. Where a decision is made to submit the application to the Board of Directors following submission of supplementary materials, the applicant company shall be notified in writing of a deadline by which the supplementation shall be completed, at which time the application shall be submitted to the Board of Directors. Where listing approval is denied by a resolution, signed approval of the TWSE's president shall be obtained and the application rejected outright.
Applications submitted for reconsideration after rejection by the Board of Directors shall be handled in accordance with the preceding paragraph.
Where an applicant company is required to supplement application materials pursuant to the preceding Article, and the supplementation remains incomplete beyond the deadline and after due notice, the case handlers shall submit a written report for handling.
Chapter 12 Ratification by the Board of Directors
In cases where the Review Committee has resolved to approve applications or re-applications for initial stock listing, but a dissenting opinion is issued by the Board of Directors, the Review Committee shall carry out a re-review.
Where a resolution for listing approval is still adopted following the re-review, the case shall be submitted again to the Board of Directors for consideration. Where the Board of Directors then still resolves to deny listing, the written consent of the TWSE's president shall be obtained and the application rejected.
For applications which, pursuant to Article 7-1, are exempt from review by the Review Committee and on which, following the application's submission to it for review, the Board of Directors has issued a dissenting opinion and which are then referred to the administering department for re-review, the provisions of the preceding paragraph shall apply mutatis mutandis. As it deems necessary, however, the administering department may apply the provisions of the Article 7-1 paragraph 1 proviso.
Chapter 13 Reporting to the Competent Authority
For initial stock listing application cases in which the Board of Directors resolves to approve listing, upon completion of recording of the case, the case handlers shall first notify the applicant company via mail to supplement relevant materials, and except in cases which, pursuant to Article 7-1, are exempt from review by the Review Committee, shall closely examine the reasonableness of the applicant's responses to the securities listings Review Committee, after which it shall request the lead underwriter to supplement its assessment or request an opinion from CPAs or lawyers issuing legal opinions. Thereafter, the case handlers shall have the securities listing contract signed with the applicant company, and pursuant to Article 141 of the Securities Exchange Act, submit the securities listing contract to the competent authority for recordation.
To streamline listing procedures for corporate bonds, beneficiary certificates, and other securities, the case handlers shall immediately submit the securities listing contract entered into between the TWSE and the applicant company and other related application documents to the competent authority for recordation.
The case handlers shall examine the draft prospectus included in the application documents to ensure it has been supplemented as requested by the TWSE before submitting it to the competent authority for recordation.
(This article is deleted.)
Chapter 14 Rejection of Initial Stock Listing Applications and Reconsiderations
Where an initial stock listing applications has been rejected by the Review Committee, or has been rejected by a resolution of the administering department pursuant to Article 7, paragraph 6 or Article 7-2, or where the applicant company has failed to process or supplement relevant items within the time period specified in official notices from the TWSE or in the provisions of these Procedures, the applicant company shall, upon signed approval, be notified in writing and the listing application and all relevant documents returned.
Reconsideration of Initial Stock Listing Applications
- In cases where the Review Committee has decided to reject the application or in cases where the application has been rejected by a resolution of the administering department pursuant to Article 7, paragraph 6 or Article 7-2, the applicant company may, within 20 days of the date of receipt of the TWSE's rejection notice, submit its reasons for requesting reconsideration and relevant materials to the TWSE for reconsideration.
- An applicant company's reasons for requesting reconsideration shall be limited to whether the grounds for the original rejection decision were erroneous.
- After the administering department has rendered a specific opinion on the application for reconsideration, the application shall be resubmitted to the Review Committee for review. During the review, the administering department shall compile the items discussed during the previous review's question and answer session for the reference of committee members. Following the Review Committee's review of the application for reconsideration, where there are determined to be no grounds for reconsideration or where according to relevant information the applicant is still unsuitable for listing, the signed consent of the TWSE's president shall be obtained and the application returned. Where there are determined to be grounds for reconsideration, the application shall be re-submitted to the TWSE's board of directors for ratification. In cases where the application was rejected in accordance with Article 7(6) or 7-2, the case shall be reviewed again by the administering department. If it holds that there are no grounds for reconsideration of the application or that relevant materials indicate there are still circumstances making listing unsuitable, it shall reject the application subject to signed approval from the president of the TWSE. Only where it deems there are grounds for reconsideration shall it submit the listing case for the review of the Review Committee based on the nature of the case, or submit the application for ratification by the board of directors.
- Where the Review Committee or the administering department has resolved that there are no grounds for reconsideration or that based upon the relevant materials the applicant is still unsuitable for listing, the applicant company may not make another application for reconsideration.
- Where an application for reconsideration is ratified by the board of directors, the company's stock shall be approved for listing.
- Where an applicant company withdraws its application for reconsideration during the reconsideration process, it shall be deemed not to have applied for reconsideration.
- The content to be reviewed in applications for reconsideration shall be strictly limited to whether the grounds for the original rejection decision were erroneous and whether any other conditions have subsequently arisen rendering the applicant unsuitable for listing. Apart from the provisions regarding solicitation of opinions in the listing review, the provisions of these Procedures shall apply mutatis mutandis to the reconsideration process and the period for reconsideration.
Where the applicant company's initial stock listing application is voluntarily withdrawn by the applicant or rejected by the TWSE after resolution, if the reasons for the voluntary withdrawal or rejection the have been rectified or extinguished, and the recommending securities firm finds no impediment to listing after a thorough assessment, the company may apply for listing again only after filing with the TWSE a complete underwriter's assessment report and a financial report. Notwithstanding the above, if the company's application is voluntarily withdrawn or rejected by a resolution of the TWSE due to the circumstances under Article 8, paragraph 1, subparagraphs 8 or 9, then after the reason for the voluntary withdrawal or rejection has been rectified or extinguished, the company may immediately re-apply for listing without being subject to the restrictions of paragraph 2.
The financial report referred to in the preceding paragraph shall mean, if the voluntary withdrawal or rejection by the TWSE occurs in the first half of the fiscal year, the financial report for the second-quarter of that fiscal year that has been submitted to the board of directors and reviewed by the CPAs, or, if the voluntary withdrawal or rejection by the TWSE occurs in the latter half of the fiscal year, the financial report for that fiscal year that has been passed by the board of directors, audited and attested by the CPAs, and recognized by the audit committee.
Chapter 15 Listing of Stocks for Trading
Following the effective registration of the listing contract for an initial stock listing application, the case handlers shall notify the applicant company in writing to complete public offering of the stock and carry out centralized custody procedures (except where custody is not required) according to regulations and set a listing date with the TWSE. Only after these procedures are complete may the stocks be traded on a stock exchange.
Chapter 16 Supplementary Provisions
These Procedures shall take effect after having been submitted to and approved by the competent authority; relevant appendices to these Procedures shall take effect after having been submitted to and approved by the president of the TWSE. Subsequent amendments thereto shall be effected in the same manner.