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Article NO. Content

Title:

Taiwan Stock Exchange Corporation Assessment and Auditing Procedures for Securities Underwriter Handling Initial Listing Applications  CH

Amended Date: 2021.03.31 (Articles 1, 4, 5, 6, 9, 10 amended,English version coming soon)
Current English version amended on 2020.03.02 
Categories: Primary Market > Review
9     When performing evaluations according to the provisions under Article 9, Paragraph 1 of the Rules Governing Review of Securities Listings, the underwriter shall conduct random checks on relevant evidence and documents, except for Subparagraphs 1, 3 and 8 which require opinion provided by lawyer, and Subparagraph 6 which requires opinion provided by CPA, to evaluate if the domestic issuer has failed to comply with the requirements.
    When performing evaluations according to the provisions under the subparagraphs of Article 28-8 of the Rules Governing Review of Securities Listings, the underwriter shall conduct random checks on relevant evidence and documents, except for Subparagraphs 1 to 4 which require opinion provided by lawyer, to find out if the foreign issuer applying for initial listing or its subordinate companies have failed to comply with the requirements.
    For evaluations of lawyers under the first two paragraphs, the lawyers to be contacted may not be the same as the regular legal adviser to the issuing company or the lawyer or CPA appointed by the issuing company to complete the "Legal Matter Checklist for Share Listing Applied for by Issuer" and may not work for the firm that maintains a substantial cooperation relationship with such adviser, lawyer or CPA, so as to ensure independence of the lawyers' opinions.
    When evaluating if directors may independently perform their duties under Article 9, Paragraph 1, Subparagraph 9 and Article 28-4, Paragraph 3 of the Rules Governing Review of Securities Listings, the underwriter shall conduct an advanced evaluation on the independence of the independent directors. It shall further obtain the lists of directors and supervisors and minutes of meetings of the board of directors for the year of application and the most recent three years, and perform on-site observation to see if the formation is healthy, if the meetings convened are working effectively, if the important decisions or changes are well considered before they are made, if the procedures for submitting a proposal are reasonable, and describe its evaluation and results in a "securities underwriter’s assessment report."
    When evaluating the establishment of the compensation committee under Article 9, Paragraph 1, Subparagraph 9 and Article 28-4, Paragraph 4 of the Rules Governing Review of Securities Listings, the underwriter shall obtain the organizational regulations of the compensation committee created by the issuing company, ascertain the professional qualifications of its members and obtain the meeting minutes of the committee, to assess if its formation is regular and compliant with requirements, if the members of the committee are independent, if the meetings convened are working effectively, if the proposals submitted are reasonable, and the discussions of the above proposals at the meetings of the board of directors, and describe its evaluation and results in a "securities underwriter’s assessment report."
    When evaluating the circumstances in Article 9, Paragraph 1, Subparagraph 11, Item 2 and Article 28-8, Paragraph 7, Item 2 of the Rules Governing Review of Securities Listings, the underwriter shall obtain the following information and describe its evaluation and results in a “securities underwriter's assessment report:”
  1. With regard to the reduction of shareholding in the issuing company over the last three years, inspect the minutes of meetings of the audit committee, board of directors or shareholders of the TWSE/TPEx-listed company for the cause, expected reduction ratio, stock assignees or specific persons negotiated with, price and impact on the equity of the shareholders of the TWSE/TPEx-listed company; in the absence of an audit committee, examine whether consent of two-thirds or more of the directors has been procured.
  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, inspect the minutes of meetings of the audit committee, special committee of board of directors of the issuing company on each such reduction for the assessment opinion by an independent expert on the fairness of the price of the new shares issued for each cash capital increase and reasonableness of the pricing and specific persons negotiated with etc. in each capital increase. The stock release procedures obtained of the issuing company that have been approved by the board of directors shall include specific person negotiated with and pricing basis etc. and information. Whether such procedures have been effectively implemented shall be assessed. 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, shall also be assessed.