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Amended Article

Title:

Taiwan Stock Exchange Corporation Directions Governing the Particulars to be Recorded in the Securities Underwriter's Assessment Report  CH

Amended Date: 2020.03.02 
Categories: Primary Market > Review
6     Financial circumstances:
  1. Explain in tabular form the analysis of the financial ratio and comparison with the financial ratios of listed companies and unlisted companies in the same sector of business for the last period and the last three fiscal years, including financial structure, solvency, operational capability and profitability.
  2. If the listing application is filed in accordance with Article 4, paragraph 2 or 3, or Article 28-1, paragraph 5 or 6 of the Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings or if the applicant for listing of shares is a technology-based enterprise, cultural and creative enterprise or information software enterprise, the equity belonging to the owner of the parent company for the last financial year and the last period as in the financial statement shall be specified. The underwriter shall also evaluate the possibility that the equity belonging to the owner of the parent company in the year of application and the following year continues to exceed two-thirds of its paid-in capital. For issuers of shares with no par value or a par value per share that is not NT$ 10, the underwriter shall evaluate the possibility that the equity belonging to the owner of the parent company in the following year drops below two-thirds of the sum of stock capital and capital reserve - share premium.
  3. Description of endorsements and guarantees, major undertakings and lendings to others, trading of derivatives and major assets transactions of the issuing company and all its subsidiaries (including transactions between parent company and subsidiaries) for the last period and the last three fiscal years, and assessment of their impact on the financial position of the issuing company.
  4. List the plant expansion plans as of the last period of the application year and the funding sources, progress of work, and expected benefits, and evaluate the feasibility.
  5. Reinvested enterprise of the issuing company and all its subsidiaries (including transactions between parent company and subsidiaries):
    1. Provide an outline as of the latest financial report of the application year and assess the operation and profitability of the major reinvested enterprises (holding 20% or more shares or whose book value or original investment amount is at least NT$ 50 million) for the last period and the last fiscal year, and the share of profits and losses and distribution of share dividends of the subsidiaries, affiliates and joint ventures recognized by the equity method for the last period and the last three fiscal years (for offshore reinvested enterprises, the amount of profits remitted back should also be specified). In case of use of the resources and technologies of the issuing company, the fairness of consideration and technology compensation should also be assessed. If the reinvested enterprise experiences difficulties in operation or funding, the impact on the issuing company should also be evaluated.
    2. For applicants already investing or planning to invest in the Mainland Area, the underwriter shall describe their investments, and the share of profits and losses and amount of profits remitted back of the subsidiaries, affiliates and joint ventures recognized by equity method for the last period and the last three fiscal years, and evaluate the impact on the financial position of the issuer.
    3. For ongoing investment projects as of the latest financial report of the application year with the projected total investment amount accounting for at least 20% of the paid-in capital for the last fiscal year or exceeding NT$ 500 million, assessment and description of the following are required: in case of issuers of shares with no par value or a par value per share that is not NT$ 10, the above 20% of the paid-in capital shall be replaced with 10% of the equity belonging to the owner of the parent company:
      1. purpose, starting time and expected completion date of the investment;
      2. funding sources of the investment: in case of loans, the underwriter shall evaluate the impact on the future operation of the issuing company; in case of own funds, the underwriter shall calculate the lost interest income or returns on reinvestment;
      3. benefits of investment: including projected market supplies and demands after completion of investment, annual returns on investment, and expected period for recovery of costs;
      4. current business and financial positions of the invested enterprise or project; and
      5. business experts' or technology experts' assessment and opinions on the investment project.
  6. If the underwriter is counseling the major subsidiaries of the issuing company in accordance with Article 6 of the TWSE "Assessment and Auditing Procedures for Securities Underwriters Handling Initial Listing", the underwriter shall provide the assessment and opinions stating whether there are any major operational risks or other significant irregularities.
  7. Based on the offer price and the average listed price of the issuing company on the Emerging Stock Market for the last month, the underwriter shall calculate, using the intrinsic value, the possible impact of the issued employee subscription warrants, for which the last day of stock-based payment transaction has not arrived, on the financial statement after listing of shares of the issuing company.
  8. If a state-owned enterprise applies for listing of shares and the financial reports it submits have not been certified by a CPA, the underwriter shall contact and ask the CPA to comment on the difference between certification according to the generally accepted accounting principles and certification by an auditing agency, and its impact on the financial report.
  9. If a financial enterprise applies for listing of shares, the underwriter shall clearly describe its provision of allowance and assess if the amount is adequate.
  10. The underwriter shall evaluate the fairness of the regulations governing issue of employee subscription warrants and equity securities established by the issuing company that is a foreign company as required according to the law of the jurisdiction where it was incorporated, and the impact on the shareholders' equity.
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9     Provide the assessment opinion describing if the local issuer has any of the circumstances where listing of shares is advised against as described under Article 9, paragraph 1 of the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings (the "Rules"), or if the foreign issuer or a subordinate company thereof has any of the circumstances where listing of shares is advised against as described under Article 20-8 of the Rules. Assess if the circumstance in Article 9, paragraph 1, subparagraph 11, item 2 or Article 28-8, subparagraph 7, item 2 of the Rules applies. Also list and describe the following:
  1. In regard to each of the reductions of shareholding in the issuing company by the TWSE/TPEx-listed company over the last three years, whether the cause, ratio, stock assignees or specific persons negotiated with, price and impact on the equity of the shareholders of the TWSE/TPEx-listed company have been reviewed by the audit committee of the TWSE/TPEx-listed company, resolved on by its board of directors and reported at its shareholders’ meeting and, in the absence of an audit committee, have been consented to by two-thirds or more of the directors.
  2. Where over the last three years the TWSE/TPEx-listed company has reduced its shareholding in the issuing company on account of a forfeiture of its subscription rights to shares issued by the issuing company for cash capital increase, in regard to the pricing basis and standards for identifying specific persons to negotiate with in each cash capital increase undertaken by the issuing company, whether an assessment opinion by an independent expert on the fairness of the price of the new shares issued for cash capital increase has been obtained, whether such basis and standards have been reviewed by the audit committee or special committee and resolved on by the board of directors of the issuing company, and whether the relevant stock release procedures have been adhered to; and whether the composition, qualification, method of review, and other matters pertaining to the special committee are governed mutatis mutandis by the Regulations Governing the Establishment and Related Matters of Special Committees of Public Companies for Merger/Consolidation and Acquisition and, in the absence of an audit committee or special committee, whether consent of two-thirds or more of the directors has been procured.
    Provide the assessment opinion describing if the professional qualifications of and exercise of duties by the independent directors and members of the remuneration committee established by the issuing company and relevant matters are consistent with what is prescribed under the securities laws and regulations of the R.O.C.
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13-1     If the applicant for primary stock listing is an overseas subsidiary of a local TWSE/TPEx-listed company, the underwriter shall assess the legality of the policy-making procedure of the local TWSE/TPEx-listed company, whether the listing of shares may have a major adverse impact on its operation and financial position, and the proposed action plans.