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Relevant Laws

Title：Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings (2023.09.05)
Article 28-4     A foreign issuer that applies for a TWSE primary listing of its stock may not have less than five directors or same-sex directors on its board, among them a majority of directors shall be domiciled in the Republic of China; where a corporate shareholder is elected as shareholder, the above requirement shall apply to its beneficial owner; and shall also appoint independent directors numbering not less than two persons and not less than one-third of the number of directors, and at least one of the independent directors shall be domiciled in the Republic of China.
    A foreign issuer shall install an audit committee. That audit committee shall comprise all the independent directors; it may not have less than three members, one of whom shall be the convener.
    ROC laws and regulations regarding securities shall apply mutatis mutandis to the professional qualifications, restrictions on shareholding and the holding of concurrent posts, and the determination of independence, of the independent directors of the two preceding paragraphs.
    A foreign issuer shall appoint a remuneration committee. ROC securities laws and regulations shall apply mutatis mutandis to the professional qualifications of and the exercise of powers by the committee members and related matters.
Article 28-5     If a foreign issuer that applies for a TWSE primary listing of its stock is part of a consortium and complies with the provisions of this chapter, but does not meet all of the conditions below such that the TWSE deems the listing inappropriate, the TWSE shall not approve its stock listing:
  1. There is no mutual competition between the primary businesses or primary products of the applicant company and the companies in the same consortium However, this requirement shall not apply if the applicant company has independent operational decision-making ability.
  2. The products that the applicant company sells to other companies within the same group enterprise shall have the potential for the development of independent marketing.
  3. If the applicant company and a company in the same group enterprise have financial business dealings or transactions, they shall each adopt concrete, written systems of operational guidelines for their mutual finances and business, and after having those guidelines approved by the board of directors, shall declare or undertake in writing that there are no non-arms-length transactions. If they do not have a business relationship, the applicant company shall undertake in writing that in the event of any subsequent business relationship, there will be no non-arms-length transactions.
  4. There shall be no material irregularities in its financial or business condition or in its above-cited operational guidelines.
  5. The purchase amount in the most recent period or most recent fiscal year from the time of the application for listing from companies within the same group enterprise does not exceed 70 percent, provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
  6. The amount of its operating revenue or operating profit derived from companies within the same group enterprise in the most recent period and most recent fiscal year from the time of its application for listing does not exceed 50 percent, or the operating revenue derived from the use of a critical technology or asset provided by the companies mentioned above does not exceed 50 percent, provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes, which situation accounts for not more than 70 percent.
    Subparagraph 5 of the preceding paragraph need not be applied if circumstances under that subparagraph are due to special industry characteristics, conditions of supply and demand in the market, or another legitimate reason.
Article 28-6     If a foreign issuer that is a subsidiary of a parent company applies for TWSE primary listing of its stock, and complies with the provisions of this Chapter but cannot meet all of the following requirements, the TWSE shall not approve its stock listing:
  1. It shall submit the consolidated financial statement of the parent company and all of its subsidiaries. If that statement is not prepared in accordance with the applicable regulations governing the preparation of financial reports adopted by the competent authority for the relevant industry, the foreign issuer shall disclose any items with material discrepancies and the amount of any monetary impact of those discrepancies, and an opinion expressed by an ROC-licensed CPA regarding those items, unless the applicant company is applying for listing pursuant to Article 28-1, paragraph 2, 5 or 6, or in the fiscal year of the application for listing and the most recent fiscal year the amount of purchase/sales transactions between it and its parent company is less than 10 percent of its total purchase/sales amount.
  2. As calculated based on the consolidated financial statement submitted pursuant to the preceding subparagraph, the profitability shall meet the requirement in Article 28-1, paragraph 1, subparagraph 4, provided that the aforesaid profitability requirement need not apply where such event is the product of business nature, market demand and supply condition, government policy, or any other reasonable cause.
  3. The total holdings of its shares by the parent company and all of its subsidiaries, and by those companies' directors, supervisors, representatives, and greater than 10 percent shareholders, and by related parties thereof, may not be more than 70 percent of the total number of its shares. If those total holdings exceed 70 percent, the foreign issuer shall reduce that percentage to 70 or lower when it conducts the pre-listing public sale of its shares. The same does not apply, however, where one or more persons, other than those subject to the shareholding restriction in terms of the total number of shares as set out in this subparagraph, hold 300 million shares or more; in the case of a foreign issuer whose shares have no par value or a par value other than NT$10, the same shall apply where one or more persons, other than those subject to the shareholding restriction in terms of the total number of shares as set out in this subparagraph, hold a total of such shares with a net value of not less than NT$6 billion in the applicant company.
  6. 6.If the stock of the parent company is already traded on the TWSE (or the TPEx), at the time of its application for TWSE listing, the pro forma operating revenue or net operating income as stated in the pro forma consolidated financial statements for each of the most recent 4 quarters, excluding the financial data for the applicant company, and reviewed by a CPA, was not down by 50 percent or more from the operating revenue or operating income stated in the consolidated financial statements for the same period, and the parent company has not transferred any material customers or business within the most recent two fiscal years. However, this need not apply if the parent company and the subsidiary have different business types, industrial classifications, or product types, and moreover are not mutually competitive, or if it resulted from another reasonable cause.
    When a subsidiary applies for TWSE listing pursuant to the proviso of subparagraph 6 of the preceding paragraph, any transfer of shares within the three years prior to the application for TWSE listing for purposes of reducing the parent company's shareholding in the subsidiary shall have been conducted in a manner in which the pre-emptive subscription right is given to the original shareholders of the parent company or another manner not detrimental to the rights and interests of the shareholders of the parent.
    The proviso of the sixth subparagraph of paragraph 1 shall not apply where the parent company of the applicant company is a TWSE- or TPEx-listed investment holding company.
Article 28-8     If a foreign issuer that applies for a TWSE primary stock listing complies with all listing requirements specified in Article 28-1, but any of the circumstances listed below exists at that foreign issuer or any controlled company thereof, and the TWSE deems the listing inappropriate, the TWSE need not approve its stock listing:
  1. Any circumstance having a serious impact on the company's financial or business condition, or sufficient to cause its dissolution or changes to its organization or capital, or it acts deceptively or illegally such that the post-listing price of its securities is affected, with a likelihood of affecting market order or harming the public interest.
  2. Its finances or operations cannot be independently and clearly distinguished from those of another person.
  3. Any material non arms-length transaction has occurred and has not been corrected.
  4. The applicant company or any controlled company thereof, or any incumbent director, supervisor, general manager or de facto responsible person of any of those companies, has acted in violation of the principle of good faith in the most recent three years.
  5. There has been serious deterioration in the applicant company's business operation.
  6. Any of the applicant company's board of directors are unable to independently exercise their functions.
  8. The TWSE deems listing inappropriate for any other reason related to the scope or nature of the enterprise or any other special circumstance.
Article 29     A domestic issuer that applies for the listing of stocks at the TIB must comply with the government’s industrial development strategies, have key core technologies and the ability to innovate or have an innovative operational model, and should meet the following qualifications:
  1. Years of establishment: Has been around for at least two years since its incorporation under the Company Act at the time of application for listing.
  2. Has issued 10 million or more shares at the time of application for listing.
  3. Market value and financial standards: Must meet one the following standards at the time of application for listing:
    1. Market value is NT$1 billion or more, total operating revenue as stated in the financial reports for the most recent four quarters is not less than NT$100 million and the applicant must prove it has the working capital sufficient for 12 months after listing in the market.
    2. For an applicant doing business in the biotechnology and pharmaceutical industry, its market value is NT$2 billion or more, and it must prove it has not less than 125 percent of the working capital required for 12 months after listing in the market. If an applicant is developing new medicine, its core products must have passed stage 1 of a clinical trial.
    3. Market value is NT$4 billion or more, and the applicant must prove it has not less than 125 percent of the working capital required for 12 months after listing in the market.
  4. Dispersion of share ownership: The number of registered shareholders is 50 or more. Excluding company insiders and any juristic persons in which such insiders hold more than 50 percent of the shares, registered shareholders hold 5 percent or more of the total issued shares, or at least 5 million shares.
  5. An applicant listed in the food industry or with income from dining and beverage services exceeding 50 percent of its total operating revenues in the most recent fiscal year must meet the requirements in the following items:
    1. Establish a laboratory to engage in self-inspection.
    2. Deliver the raw materials, semi-finished products and finished products whose inspection is outsourced, to a laboratory or inspection institution certified or accredited by the Ministry of Health and Welfare, Taiwan Accreditation Foundation or an institution engaged by the Ministry of Health and Welfare, for inspection.
    3. Request a reasonable opinion from an independent specialist on its food safety monitoring plan, inspection cycle, items for inspection etc.
  6. Recommended by 2 or more securities underwriters.
    A foreign issuer that applies for the listing of stocks at the TIB must meet, in addition to the requirements in the subparagraphs 2 to 6 of the preceding paragraph, the following qualifications:
  1. Meet the application regulations under the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, provided that if the people, juristic persons, group or other institutions directly or indirectly own shares or invest in the issuer for more than 30 percent of its value, or have control over the issuer, it must obtain an approval from the competent authority on a case-by-case basis.
  2. Years of establishment: The applicant or any of its subordinate companies must have 2 or more years of business records.
  3. The inspection institution under item B of subparagraph 5 of the preceding paragraph may be replaced by a laboratory or inspection institution certified by the local competent authority, international certification institution or an institution appointed by its competent authority.
    The TWSE will agree to list its stock of a domestic issuer or a foreign issuer applying for the listing of its stock at the TIB in the preceding two paragraphs only if the value of the number of the securities to be listed and available for trading multiplied by the offering price for the price at which the security opens on its first day in the initial public offering has met the minimum requirement on the market value applicable to its application.
    A recommending securities underwriter should issue an evaluation opinion on the requirements on application for listing, i.e. compliance with the government’s industrial development strategies, key core technologies and the ability to innovate or an innovative operational model, in the first paragraph.
    The core products in item B of subparagraph 3 of paragraph 1 means the biotechnological and pharmaceutical products that are the focus of a domestic issuer or foreign issuer in its engagement in development, application and commercialization of new drugs at the time of application for listing.
    Article 28-2, paragraph 1 applies mutatis mutandis to the definition of securities underwriter in subparagraph 6 of paragraph 1.
    Financial reports as referred to in this chapter shall be governed mutatis mutandis by Article 7, paragraphs 1 and 2 in the case of a domestic issuer, or by Article 28-3, paragraphs 3 and 4 in the case of a foreign issuer.
Article 30     A foreign issuer applying for the listing of its stock at the TIB shall have five or more members in its board of directors, and a majority of these members should have a registered household in the Republic of China. Where a corporate shareholder is elected as director, the above shall apply to its beneficial owner. There should also be three or more independent directors who shall take no less than one fifth of the seats in the board. Among them, at least two independent directors should have a registered household in the Republic of China.
    Professional qualifications, restrictions on shareholding and outside employment, and determination of independence for the independent directors in the preceding paragraph shall be governed by the securities laws and regulations of the Republic of China mutatis mutandis.
    A foreign issuer applying for the primary listing of stocks at the TIB must establish an audit committee and a compensation committee. Professional qualifications, exercise of powers and duties and matters relating to these committee members shall be governed by the securities laws and regulations of the Republic of China mutatis mutandis.
Article 31     In addition that the TWSE must reject the application of a domestic issuer, foreign issuer or its subordinate company for the listing of its stock in any of the circumstances under subparagraphs 7, 8 and 9, the TWSE may also reject the application of a domestic issuer or a foreign issuer for the listing of stocks at the TIB if any of the following circumstances exists and the TWSE decides against listing, despite that it meets the requirements on listing set forth in Article 29:
  1. Has the circumstances described in Article 156, paragraph 1, subparagraphs 1 and 2 of the Securities and Exchange At, or its act is false, fraudulent or illegal to such an extent the price of the securities after listing may be affected which is therefore likely to jeopardize the market order or public interest.
  2. Fails to have its finance or business independently separated from another person’s.
  3. Is involved in a major labor and management dispute or environmental pollution incident that would affect the company’s normal finance and business operation, and no improvement has been made.
  4. Is found to have major irregular transactions, and no improvement has been made.
  5. Has failed to effectively implement its written accounting system, internal control system or internal audit system, or failed to prepare its financial reports in accordance with applicable laws and the general accepted accounting principle, and the failure is significant.
  6. It is experiencing a serious decline in the business activities it engages in.
  7. The director, general manager or real responsible person of the applicant or its incumbent director, general manager or real responsible person has been in breach of the principle of honesty and good faith in the most recent years.
  8. The board of directors of the applicant comprises less than five members, only same-sex members, or less than three independent directors, or its independent directors take less than one-third of the seats of the board; its board of directors is unable to perform its duties independently; or it fails to establish the compensation committee in accordance with Article 14-6 of the Securities and Exchange Act and its applicable rules. Further, at least one of its elected independent directors must be a professional in accounting or finance. The above shall, however, not apply if a domestic issuer, prior to application for the listing of stocks and its stocks have not been registered with the TPEx for trading, has undertaken to complete the election of its independent directors and establish its functional committees no later than commencement of listing and trading of its stocks.
  9. Where the applicant has registered its stocks at the TPEx for trading during the fiscal year of its application for the listing and its most recent fiscal year, since its listing date, its incumbent directors and shareholders holding more than 10 percent of its total issued shares have not traded any stocks issued by the applicant at the TPEx market. The above shall, however, not apply if it engages in prelisting public sale in accordance with Article 36 or has other legitimate reasons.
  10. Where the shares of the applicant are held by a TWSE/TPEx listed company and it meets one of the following conditions, the shares transfer by the TWSE/TPEx listed company for purpose of reducing its shareholding in the applicant in the most recent three years was not done by having the company’s existing shareholders to subscribe the shares on a priority basis or otherwise in a manner not detrimental to the shareholders’ equity of the company:
    1. The applicant is an existing or newly incorporated company to which business or assets will be transferred by a TWSE/TPEx listed company after split.
    2. The applicant is a subsidiary of a TWSE/TPEx listed company in which the TWSE/TPEx listed company has reduced its direct or indirect shareholding by a total of 20 percent or more within the three years prior to the application for listing.
  11. Is otherwise deemed by the TWSE as inappropriate for listing due to business cope, nature or special circumstances.
    The provisions under all the subparagraphs of the preceding paragraph shall apply until the day before the day when its listing contract takes effect.
Article 32     An application for listing of its stock at the TIB by a domestic issuer or foreign issuer of the group enterprise shall be rejected if it fails to meet the following requirements, despite that it has complied with the applicable provisions of these Rules:
  1. The major business or products of the applicant and those of the other companies within the same group enterprise are not competing with each other, except where the applicant has the ability to make independent operation decisions.
  2. Where the applicant has financial business dealings or transactions with the other companies within the same group enterprise, each entity shall establish a specific written system for operating policies on finance and business between them, for approval by their respective board of directors, and shall issue a written undertaking or guarantee on the absence of irregular transactions. If there is no business dealings between them, the applicant shall issue a written statement, undertaking they will never have irregular transactions if there are business dealings between them in the future.
  3. There shall be no material irregularities in Its financial and business conditions or in its above-cited operational guidelines.
  4. It should have the development potential for independent marketing of the products to be sold to the other companies within the same group enterprise.
  5. The purchase amount in the most recent period or most recent fiscal year from the time of the application for listing from a company within the same group enterprise does not exceed 70 percent, provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
  6. The operating revenue or operating profit derived from other companies within the same group enterprise in the most recent period, and in the most recent fiscal year the time of application for listing does not exceed 50 percent, or the operating revenue derived from the use of a critical technology or asset provided by the companies mentioned above does not exceed 50 percent; provided that this provision may be waived in situations resulting from unique characteristics of its business, market demand and supply conditions, government policy, or any other reasonable causes.
    Subparagraph 5 of the preceding paragraph may be waived if the circumstance under this subparagraph is due to characteristics of the trade, market supplies and demands, government policies or other reasonable cause.
Article 33     An application for listing of stocks at the TIB by a subsidiary that maintains the parent and subsidiary relationship at the time of the application shall be rejected if it fails to meet the following requirements, despite that it has complied with the applicable provisions of these Rules:
  1. The parents company and all its subsidiaries and their directors, supervisors and representatives, and shareholders holding more than 10 percent of the company’s total shares, and their related parties all together shall not hold more than 80 percent of the total issued shares of the applicant. Where the above shareholding exceeds 70 percent, there should be prelisting public sales of shares to reduce the shareholding to less than 80 percent. However, the same does not apply where persons, other than those restricted by this subparagraph with respect to the total amount of shareholdings, hold a total of no less than 50 million shares; or, in the case the share has no par value or the par value per share is not NT$10, where persons, other than those restricted by this subparagraph with respect to the total amount of shareholdings, hold a total of such shares with a net value of not less than NT$1 billion in the applicant company.
  2. Where the stocks of its parent company are traded at the TWSE/TPEx centralized securities exchange market, the pro forma operating revenues or operating income shown in the pro forma consolidated financial statements that excludes the applicant’s financial data, audited by CPA, for the most recent four quarters at the time of the application indicate no decline of over 50 percent compared to the consolidated financial statements for the current term, and no transfer of business of any major client of the parent company has occurred during the most recent two fiscal years. The above, however, may be waived if the parent company and the subsidiary engage in different types of business, conduct business in different industries or have different types of products and are not competing with each other, or it is due to other reasonable cause.
    Where a subsidiary applies for listing at the TIB in accordance with the proviso of subparagraph 3 of the preceding paragraph, when the parent company transfer shares to reduce its shareholding in the subsidiary during the three years prior to the application for listing, the shares to be transferred should be offered for subscription by existing shareholders on a priority basis or the transfer should be made in a way that will not injure the equity of the shareholders’ of the parent company.
    The proviso of the third subparagraph of paragraph 1 shall not apply where the parent company of the applicant company is a TWSE- or TPEx-listed investment holding company.