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Article 2
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With respect to shares of a common stock that has been listed on the stock exchange for 6 months, if the net worth per share of the stock is not less than par value (or in the case of shares issued by a primary exchange listed company with no par value or a par value other than NT$10 per share, if the issuer has no accumulated deficit in the most recent fiscal year), the securities exchange shall publicly announce them as shares eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis.<br/>With respect to shares of a common stock, other than an OTC-managed stock or an emerging stock, that has been listed on the OTC market for 6 months, if the net worth per share of the stock is not less than par value (or in the case of shares issued by an OTC primary listed company with no par value or a par value other than NT$10 per share, if the issuer has posted no accumulated deficit in the most recent fiscal year), and the issuer meets the following requirements, the OTC market shall publicly announce the shares as eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis:<br/>1. The issuer has been incorporated and registered for at least 3 years. If the issuer is a transferee company of a demerger from a listed company or an OTC company, the time of incorporation may be calculated from the date of establishment of the demerged division as shown in the financial data of the demerged company. If the issuer is an investment holding company or financial holding company, the time of incorporation may be calculated from the time of incorporation of the operating entity.<br/>2. The issuer's paid in capital is NT$300 million or more. However, in the case of shares issued by an OTC primary listed company with no par value or a par value other than NT$10 per share, the issuer's shareholders equity shall be NT$600 million or more.<br/>3. Profitability:<br/>A. There shall be no accumulated deficit in the most recent fiscal year, and the issuer's operating income and income before tax, as reported in the individual or consolidated financial statements, shall account for 3 percent or more of the year-end paid-in capital. However, a company with paid-in capital of NT$600 million or more may be exempted from the above requirement regarding operating income and net income before tax.<br/>B. In the case of shares issued by an OTC primary listed company with no par value or a par value other than NT$10 per share, the issuer's operating income and income before tax, as reported in the consolidated financial statements, shall account for 3 percent or more of the year-end shareholders equity.<br/>For Taiwan depositary receipts that have been listed on an exchange for 6 months, if the foreign issuer did not post an accumulated deficit in either the CPA-audited and certified consolidated financial report for the most recent fiscal year or the CPA-reviewed half-year consolidated financial report (either report shall have been prepared in compliance with the laws and regulations of the issuer's home country), and if the number of units listed on the exchange is 60 million units or more, the securities exchange shall publicly announce the units as eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis.<br/>If any of the following conditions obtain with respect to the shares or Taiwan depositary receipts referred to in the preceding three paragraphs, they may not be approved for margin purchase and short sale:<br/>A. Share price is too volatile.<br/>B. Equity ownership is overly concentrated.<br/>C. Trading volume is excessively abnormal.<br/>The specific standards and procedures required in the preceding four paragraphs shall be prescribed separately by securities exchanges and OTC markets and reported to the competent authority for approval.<br/>Where the issuer of Taiwan Innovation Board listed shares that are eligible for margin purchase and short sale applies for reclassification?as an exchange listing or the issuer of OTC-listed shares that are eligible for margin purchase and short sale applies to switch to an exchange listing, unless equity ownership is overly concentrated, the shares shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 1 regarding the 6-month exchange listing requirement will not be applicable, nor will the provisions of paragraph 4, subparagraphs 1 and 3. The aforementioned procedures shall be drafted by the securities exchanges and reported to the competent authority for approval.<br/>The provisions of the preceding paragraph also apply to shares that are switched to an exchange listing less than 6 months before this amendment enters into force.<br/>When a company with an exchange (or OTC) listing is to be converted into a financial holding company in accordance with the Financial Holding Company Act, if the shares of a financial institution to be converted into the financial holding company are eligible for margin purchase and short sale, where the financial holding company thus created is an exchange-listed company, unless equity ownership is overly concentrated, its shares shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 1 regarding the 6-month exchange listing requirement will not be applicable, nor will the provisions of subparagraphs 1 and 3 of paragraph 4.<br/>When a company with an exchange (or OTC) listing is to be converted into a financial holding company in accordance with the Financial Holding Company Act, if the shares of a financial institution to be converted into the financial holding company are eligible for margin purchase and short sale, where the financial holding company thus created is an OTC-listed company, unless equity ownership is overly concentrated, its shares shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 2 regarding the 6-month OTC listing requirement will not be applicable, nor will the provisions of subparagraphs 1 and 3, or paragraph 4, subparagraphs 1 and 3.<br/>When a company with an exchange (or OTC) listing is to be converted into an investment holding company through a 100 percent share conversion in accordance with the Business Mergers and Acquisitions Act, if the shares of the company to be converted into the investment holding company are eligible for margin purchase and short sale, where the investment holding company thus created is an exchange-listed company, unless equity ownership is overly concentrated, its shares shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 1 regarding the 6-month exchange listing requirement will not be applicable, nor will the provisions of paragraph 4, subparagraphs 1 and 3.<br/>When a company with an exchange (or OTC) listing is to be converted into an investment holding company through a 100 percent share conversion in accordance with the Business Mergers and Acquisitions Act, if the shares of the company to be converted into the investment holding company are eligible for margin purchase and short sale, where the investment holding company thus created is an OTC-listed company, unless equity ownership is overly concentrated, its shares shall be immediately eligible for margin purchase and short sale, and the provision in paragraph 2 regarding the 6-month OTC listing requirement will not be applicable, nor will the provisions of subparagraphs 1 and 3, or paragraph 4, subparagraphs 1 and 3.<br/>The procedures required in the preceding four paragraphs shall be prescribed separately by securities exchanges and OTC markets and reported to the competent authority for approval.<br/>In the case of shares issued by an OTC primary listed company with no par value or a par value other than NT$10 per share, the shareholders equity computed in accordance with this article shall refer to equity attributable to owners of the parent as stated in the balance sheet.
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