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Relevant Laws

Title：Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings (2023.09.05)
Article 2-1     Unless it is a state-owned enterprise, any domestic issuer applying for listing of shares in accordance with Chapter II shall first have applied for registration of its stock as emerging stock and have had it traded on the TPEx for not less than 6 months, and have remained on the TPEx general board for at least 2 months after completing registration with TPEx, before the TWSE will accept its listing application for processing.
    The TWSE will accept for processing an initial application by a foreign issuer for a first-time listing of stock issued by the foreign issuer that is not listed on any overseas securities exchange or securities market ("a TWSE primary listing") only after that foreign issuer has first been under listing advisory guidance by the lead securities underwriter, or has applied for registration of its stock as emerging stock and had it traded on the TPEx, for not less than 6 months, and has remained on the TPEx general board for at least 2 months when it is trading on the TPEx. Notwithstanding the foregoing, if there is any change of the lead securities underwriter during the period of listing advisory guidance, the period shall start to run again for a full 6 months, beginning with the date on which the new lead securities underwriter files for the listing advisory guidance.
    A foreign issuer whose stock or depositary receipts already are or have been listed on any major overseas securities exchange or securities market and that is applying for a TWSE primary listing of its issued stock, or a TPEx primary listed company applying for a TWSE primary listing of its issued stock, may be exempted from the requirement in paragraph 2 that the foreign issuer shall first undergo listing advisory guidance by the lead securities underwriter or apply for registration of its stock as emerging stock and have it traded on the TPEx for not less than 6 months; provided that this paragraph shall not apply if the foreign issuer has been delisted from a major overseas securities exchange or securities market for over 6 months.
    A foreign issuer that has passed the review of stock or depositary receipt listing at any major overseas securities exchange or securities market and that, within the period of validity following the passing of such review, applies for a TWSE primary listing of its issued stock may apply on a case-by-case basis to the TWSE to reduce the time period specified in paragraph 2 for which the foreign issuer must first undergo listing advisory guidance by the lead securities underwriter or apply for registration of its stock as emerging stock and have it traded on the TPEx, provided that the time period may be not less than 2 months, and the lead securities underwriter or the lead recommending securities firm may not be changed within such period.
    A domestic issuer or a foreign issuer that initially applies for the listing of stocks on the Taiwan Innovation Board (TIB) in accordance with Chapter IV “Listing of Securities on the Taiwan Innovation Board” must undergo listing advisory guidance by the lead securities underwriter or apply for registration of its stocks as emerging stocks and have them traded at the TPEx for at least 6 months before the TWSE may accept its application for listing, except where a domestic listed company or a foreign issuer is a subsidiary of a listed company and have met the conditions listed in the following paragraphs, subject to the approval of the TWSE:
  1. The listed company has had no material defects in its internal control system within the most recent year, for which the TWSE has imposed monetary penalties and a CPA has issued an internal control project audit report without qualification on the supervision and management of an applicant company for the most recent two quarters.
  2. The main securities underwriter has submitted the Material Financial and Business Incidents Checklist to the TWSE in accordance with Article 2 of the TWSE Rules Governing the Reporting of Basic Information of Advisory Client Companies by Securities Underwriters and there are no material irregularities.
    Paragraphs 3 and 4 may apply mutatis mutandis where a foreign issuer initially applies for the listing of stocks at the TIB.
Article 10     An application for initial listing of stock filed by an issuing company shall not be approved unless and until shares representing all of the number of shares held by each of the following persons of the issuing company specified in the application for listing (with the total number of such shares being not less than the ratio specified in paragraph 2 of this Article), less those offered for public sale, have been placed in central custody with a central securities depository enterprise incorporated with the approval of the Competent Authority; provided however, that if the number of shares represented by shares placed in central custody pursuant to the above is less than the ratio specifies in paragraph 2 of this Article, the shortage shall be made up by other shareholders:
  1. Where the application for listing is filed in accordance with the provisions of Article 4, 6, 16, or Article 20, paragraph 1, Article 20-1, or Article 20-2 of these Rules, its directors, and the shareholders holding 10 percent or greater of the total number of issued shares of the issuing company.
  2. Where the application for listing is filed in accordance with the provisions of Article 5 or Article 20, paragraph 3 of these Rules or where the applicant is an information software enterprise, its personnel who shall handle central custody of the stock are as listed in the items below. However, this restriction shall not apply where shareholding of a recommending securities firm during the period of registration as emerging stock exceeds 5 percent of the total issued shares of said issuing company as a result of subscription or trading of operating securities during the emerging stock trading period.
    1. Where the applicant is a creative enterprise or information software enterprise, its directors, shareholders holding 5 percent or greater of the total number of issued shares, and/or shareholders whose equity investment is made in the form of patent rights or technical know-how, and who are working for the issuing company and hold 0.5 percent or greater of the total number of shares or 100,000 or more shares as of the date on which the application for listing is filed.
    2. Where the applicant is a technology enterprise, its president, research and development supervisor, and personnel mentioned in the preceding item.
    The total number of shares with respect to the shares to be placed in central custody by the issuing company under the preceding paragraph refers to the aggregate sum of common shares that have already been publicly offered and issued, as stated on the listing application documents,; the total ratio of shares to be placed in central custody by the issuing company shall be calculated as set forth below:
  1. Where the total number of shares is 30 million or less, shares representing 25 percent thereof shall be placed in central custody.
  2. Where the total number of shares is more than 30 million but 100 million or less, shares representing 20 percent of the portion of shares in excess of 30 million shares shall be placed in central custody in addition to those required under the preceding item.
  3. Where the total number of shares is more than 100 million but 200 million or less, shares representing 10 percent of the portion of shares in excess of 100 million shall be placed in central custody in addition to those required under the preceding item.
  4. Where the total number of shares is more than 200 million, shares representing 5 percent of the portion of shares in excess of 200 million shall be placed in central custody in addition to those required under the preceding item.
    The remaining shares after deducting those required for the public offering, as referred to in paragraph 1, include the following:
  1. From the date of application for initial listing to the listing date, all new shares obtained through capital increase for which amendment registration has been completed with the Ministry of Economic Affairs, as well as any shares that have come to be held for any other reason; for any shares that have not yet been obtained by the listing date, an undertaking shall be made to place the shares in central custody after obtaining them.
  2. From among the old shares provided by directors and shareholders of the issuer for an overallotment (greenshoe) option for the securities underwriter, any shares that were not actually sold in exercise of the overallotment option and that have been returned by the securities underwriter.
    One-half of the shares placed in central custody by directors and shareholders pursuant to the provisions of paragraph 1 of this Article may be withdrawn only after the end of a 6-month period starting from the listing date thereof; all the shares may be withdrawn in full only after the end of a one-year period starting from the listing date thereof. However, a company applying for listing pursuant to Article 4, paragraphs 2 and 4, or a technology enterprise applying for listing pursuant to Article 5, and to Article 20, paragraph 3, may withdraw one-fourth of the shares only after the end of a 6-month period starting from the listing date thereof, and may further withdraw one-fourth of the shares every 6 months afterwards. All the shares in full only after the end of a two-year period starting from the listing date thereof.
    For an issuing company that applies for listing under the provisions of Article 4, where the total number of its shares required to be placed in central custody is assessed to exceed 50 percent of the issued shares of the issuing company, and the issuing company has paid-in capital of at least NT$30 billion, if the portion of the number of shares required to be placed in central custody exceeding the above-stated 50 percent of issued shares has been pledged to a financial institution by the director or shareholder of the issuing company who holds the shares for purposes of guaranteeing financing for the company or for him/herself, evidentiary documents furnished by the financial institution may be substituted for shares required to be placed in central custody; provided, if the pledge is released during the custody period, the director or major shareholder shall deposit the same amount of shares into central custody; or, if the subject of the pledge is disposed by the financial institution, the issuing company shall contact other directors or major shareholders to deposit the same amount of shares into central custody.
    Directors and shareholders shall not rescind the custodial agreement during the custody period. Shares and certificates in central custody shall not be transferred or pledged. The validity of central custody shall not be affected by a change of the identity of the holders of shares in central custody
    The provisions of paragraph 1 of this Article shall not apply to directors and shareholders of government authorities, government-owned enterprises, or which have obtained an approval from the authority in charge of the enterprise concerned for the sale of the shares held by them and have been determined to be inappropriate to place such shares in central custody.
    The total ratio of shares to be placed in central custody as specified in paragraph 2 of this Article shall not apply to government-owned enterprises.
Article 10-1     An application for initial listing of stock filed by an issuing company in accordance with Article 6-1 shall not be approved unless and until its directors, shareholders holding 3 percent or more of the total issued shares, and the shareholders whose equity investment is made in the form of technical know-how and who hold 0.5 percent or more of the total number of issued shares or 100,000 shares or more have placed all of their shares specified in the application for listing and in total not less than the ratio of shares as required in paragraph 2 of this Article, minus the shares required for public offering, with a central securities depository enterprise incorporated with the approval of the Competent Authority; provided however, that if the total number of shares held by directors is less than the total number of shares held by them at the time when they were elected as directors and supervisors, then the total number of shares at the time when they were elected shall be the basis for counting the number of shares under this Article. If the number of shares represented by shares placed in custody pursuant to the above is less than the total ratio of shares required under paragraph 2, the shortage shall be made up by other shareholders.
     The total of shares that the issuing company shall place in central custody with the central securities depository, as required under the preceding paragraph, shall mean the total ratio calculated by the method enumerated below based on the total number of issued common shares specified in the application for listing, and the shares placed in central custody shall be the offered and issued common shares only.
  1. If the total number of shares is one billion shares or less, 50 percent of the total number of shares shall be placed in custody.
  2. If the total number of shares exceeds one billion shares but not three billion shares, in addition to complying with the preceding subparagraph, 40 percent of the total number of shares shall be placed in custody for the portion exceeding one billion shares.
  3. If the total number of shares exceeds three billion shares but not five billion shares, in addition to complying with the preceding subparagraph, 30 percent of the total number of shares shall be placed in custody for the portion exceeding three billion shares.
  4. If the total number of shares exceeds five billion shares but not seven billion shares, in addition to complying with the preceding subparagraph, 20 percent of the total number of shares shall be placed in custody for the portion exceeding five billion shares.
  5. If the total number of shares exceeds seven billion shares, in addition to complying with the preceding subparagraph, 10 percent of the total number of shares shall be placed in custody for the portion exceeding seven billion shares.

    Among the shares placed in custody under paragraph 1, one-sixth of the portion thereof may be withdrawn only after the end of 3 full years from the listing date thereof; thereafter, one-sixth thereof may be withdrawn once every 6 months. If after the end of the said period, the project constructed by the company has not been fully completed and the operation has not commenced, the custody period may be extended until the project is fully completed and the operation commences; provided, however, that if partial operation has commenced before the project is fully completed, the custody period shall be extended until the company's annual financial report shows an net operating income and profit before tax. The custody agreement shall not be terminated during the custody period. Shares and certificates in custody shall not be transferred or pledged. The validity of custody shall not be affected by any change of the identity of the holders of shares in custody.
    At the time of applying for listing, the issuer shall undertake that, during the period of central custody of the stock, a shareholder that has already placed stock in central custody in accordance with paragraph 1 shall also carry out central custody placement for any shares of common stock that the shareholder may subsequently obtain through subscription or conversion of preferred shares or corporate bonds, according to the total ratio required to be placed in custody as calculated under paragraph 1 at the time of the listing application. The provisions of paragraph 3 shall apply mutatis mutandis to the time periods for custody and withdrawal thereof.    The provisions of paragraph 1 shall not apply where, during the period in which an issuing company applying for initial listing of its stock is registered as an emerging stock company, shareholding of its recommending securities firm exceeds 3 percent of the total issued shares of said issuing company as a result of subscription or trading of operating securities during the emerging stock trading period.
Article 11     Where an issuing company applies for initial listing of its common stock or any type(s) of preferred shares it shall allocate a percentage, as specified by the TWSE, of the total number of shares as stated in its listing application documents and after deducting the number of shares to be retained for subscription by employees as specified by laws and regulations in connection with the Company Act, retain a securities underwriter to offer the balance of such allocated shares in full for sale to the public before the shares are listed, by means of a cash capital increase through a new share issue in accordance with the provisions of Article 71, paragraph 1, of the Securities and Exchange Act concerning underwriting of securities on a firm commitment basis. Provided, that a state-owned enterprise or an applicant under Article 6 or Article 6-1 may carry out underwriting with stock already publicly offered and issued by the company.
    The total number of shares to be allocated by the issuing company for public sale under the preceding paragraph shall be calculated by the method specified in Article 10, paragraph 2, and shares added during the period from the listing application date until the listing date shall be included in the calculation; provided, shares allocated for public sale shall be confined to shares of publicly offered and issued common stock.
    The requirements of paragraph 1 regarding a percentage of shares to be allocated shall not apply to a company applying for TWSE listing if the company's shares are already listed for trading on the TPEx in accordance with Article 3 of the GreTai Securities Market Rules Governing Review of Securities Traded on the TPEx and the company, because of non-compliance with the share ownership dispersion standards in these Rules, must retain a securities underwriter to conduct a pre-listing public sale of shares to deal with the amount of the shortfall in share ownership dispersion. However, if the amount of the shortfall is less than 2 million shares or 1 percent of paid-in capital, the company may be exempted from the public sale requirement, as long as it achieves compliance with share ownership dispersion standards before its shares are listed on the central exchange for trading.