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Article 18
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If the number of registered shareholders holding 1,000 shares or more of a company whose shares are neither listed on an exchange nor traded in the business places of securities firms does not reach 300, or the company fails to reach the shareholding dispersion standard prescribed by the competent authorities, upon conducting cash offering of new shares, the company shall allocate 10 percent of the new shares for public offering and is exempted from paragraph 3 of Article 267 of the Company Act which prescribes that the current shareholders shall be entitled to subscribe the new shares in proportion to their respective shareholding percentage, unless any one of the following events occurs. However, if the shareholders meeting decides to set a higher percentage, its resolution shall be applicable:
- It conducts the initial public offering.
- It has been incorporated for less than 2 complete fiscal years.
- Both the company's final operating income and the pre-tax income as ratios of the equity attributable to owners of the parent as reported in the financial reports fail to meet any of the below conditions. However, the profitability as reported in the financial reports does not take into account the effects on the company brought about by the net profit (or net loss) attributable to its non-controlling interests.
- The said ratios for the most recent fiscal year reach 2 percent or more, and the company has no accumulated losses for the most recent fiscal year.
- The said ratios for the most recent 2 fiscal years reach 1 percent or more.
- The average of the said ratios for the most recent 2 fiscal years reaches 1 percent or more, and the profitability of the company for the most recent fiscal year is more favorable than that for the previous fiscal year.
- The number of shares allocated for public offering in accordance with the 10 percent requirement or the percentage set by the resolution of the shareholders meeting does not reach 500,000.
- Preferred stocks with warrants are issued.
- Any situation where the FSC deems the public offering unnecessary or inappropriate.
Where a company is a major national economic enterprise as determined and certified by the competent authority for the enterprise, the provisions of subparagraphs 1 through 3 of the preceding paragraph shall not be applicable.
Where an issuer publicly offers its securities in accordance with paragraph 1, the prices for the employees of the issuer or the original shareholders to pay for the new shares in the same issuance shall be the same as the price set for public offering, and it shall be noted in the prospectus and subscription form that its shares are neither listed on the Stock Exchange nor listed and traded on any OTC market.
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