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12-1
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An issuing company that privately places securities may not apply for initial listing of such privately placed securities during the period of restriction of transfer as set forth in Article 43-8 of the Securities and Exchange Act. If, once the period of restriction of transfer has elapsed, the company intends to apply for listed trading of the securities, it may file such application only after first completing public issuance examination and approval procedures with the Competent Authority.
Securities that are privately placed by a listed company and securities subsequently distributed, converted, or subscribed may not be listed during the period of restriction of transfer as set forth in Article 43-8 of the Securities and Exchange Act. Once the period of restriction of transfer has elapsed, the company may file a listing application only after first applying to the TWSE for a letter of approval and, on the basis of that letter, completing issuance examination and approval procedures with the Competent Authority. However, it may be exempted from the requirement of carrying out public offering prior to listing under Article 11.
When applying to the TWSE for a letter of approval under the preceding paragraph, a listed company shall meet the standards in each of the following subparagraphs:
- The financial reports for the most recent period and the most recent fiscal year show an absence of accumulated deficit.
- The profit before tax in the financial reports meets one of the following standards:
- The profit before tax for each of the most recent two fiscal years represents 4 percent or greater of the share capital stated on the financial report for the annual final accounts.
- The average profit before tax for the most recent two fiscal years represents 4 percent or greater of the share capital stated on the financial report for the annual final accounts, and the profitability for the most recent fiscal year is greater than that for the immediately preceding fiscal year.
- A CPA has audited the financial reports for the most recent two fiscal years and has signed and issued an audit report containing an unqualified opinion. If an audit report containing other than an unqualified opinion is issued, it does not affect the fairness of presentation of the financial reports.
- None of the events set out in Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, 8, or 12 is present.
- The total amount of registered shares held by the directors and supervisors as a whole is higher than the share ownership ratio prescribed by the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies.
- The fund utilization plan has been completely executed for the funds obtained from the private placement of securities, and has yielded reasonable benefits; provided, this restriction shall not apply if there is legitimate reason.
- For an applicant company that had profit after tax and no accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the ratio of profit before tax to the share capital stated on the financial report for the annual final accounts for the most recent fiscal year shall be better than that for the fiscal year before the shareholders meeting resolved on the private placement of securities, provided such restriction on profitability does not apply where the average of the three fiscal years prior to the application is, due to a change in the business cycle of the industry concerned, better than that of the fiscal year or three fiscal years before the shareholders meeting resolved on the private placement of securities and reaches 4 percent or above:
- The private placement solely introduced strategic investors, and at the time the company applies for the letter of approval, the privately placed shares have not been transferred, or have been transferred to the holding of any non-insider(s) or non related party(ies) of the applicant company.
- There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, but the applicant company for a legitimate reason is unable to reasonably correct the situation and unable to conduct the public offering, and is urgently in need of capital, and is granted permission for the private placement by the TWSE, and at the time the company applies for the letter of approval for listing of the privately placed securities, the securities have not been transferred, or have been transferred to the holding of any non-insider(s) or non related party(ies) of the applicant company.
- For an applicant company that had profit after tax and no accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the ratio of profit before tax to the share capital stated on the financial report for the annual final accounts for the most recent fiscal year may not be lower than 200 percent of that for the fiscal year before the shareholders meeting resolved on private placement of securities, provided such restriction on profitability does not apply where the average of the three fiscal years prior to the application is, due to a change in the business cycle of the industry concerned, not lower than 200 percent of that of the fiscal year or three fiscal years before the shareholders meeting resolved on the private placement of securities and reaches 4 percent or above:
- The private placement solely introduced strategic investors, and at the time the company applies for the letter of approval, part or all of the privately placed shares have been transferred to the holding of any insider(s) or related party(ies) of the applicant company.
- The private placement did not introduce strategic investors.
- There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, but the applicant company for a legitimate reason is unable to reasonably correct the situation and unable to conduct the public offering, and is urgently in need of capital, and is granted permission for the private placement by the TWSE, and at the time the company applies for the letter of approval for listing of the privately placed securities, part or all of the securities have been transferred to the holding of any insider(s) or related party(ies) of the applicant company.
- The conducting of the private placement of securities was not done in accordance with the Directions for Public Companies Conducting Private Placements of Securities ("the Directions for Private Placements"), where the circumstances were serious.
- For an applicant company that had net loss after tax or accumulated deficit for the fiscal year before the shareholders meeting resolved on the private placement of securities, if any of the circumstances listed below exists, then in addition to meeting the profitability requirements of subparagraph 2, the ratio of profit before tax to the share capital stated on the financial report for the annual final accounts for the most recent fiscal year shall be 6 percent or higher:
- Any insider or related party of the company participates in the private placement, and the subscription price does not comply with the percentage requirements set out by the Competent Authority.
- The private placement of securities is not carried out in accordance with the Directions for Private Placements, and the circumstances are serious.
- Others consistent with the provisions of the Competent Authority.
A company applying for listing in accordance with Article 4, paragraph 2 or 3, and Article 5, Article 6, or Article 6-1 may waive the application of subparagraph 2 of the preceding paragraph if the company, which has never obtained a letter of approval from the TWSE in accordance with the preceding paragraph, applies for said letter in accordance with paragraph 2 upon the adoption of a special resolution in a shareholders’ meeting on the registration of the retroactive handling of public issuance procedures of privately placed securities, subject to compliance with the following subparagraphs:
- No assignment is conducted within six years from the date of delivery of the privately placed securities, except transfers taking effect in accordance with the law.
- The price of the privately placed securities is not lower than 80 percent of the reference price or theoretical price.
- No placee of the privately placed securities is an insider or related party of the company.
- In the last three years, the sum of the number of privately placed securities in respect of which an application for a letter of approval is made in accordance with this paragraph and the number of securities with equity characteristics that may exercise or be converted into common shares has not exceeded 20 percent of the total number of listed shares at the time of the application, except where, in the event of excess shares, the holder has undertaken through coordination that such shares would all be placed in central custody before listing. The withdrawal period and withdrawn number of shares placed in central custody are governed by the proviso in paragraph 4 of Article 10 mutatis mutandis.
- No material change in the scope of business as in Article 50, paragraph 1, subparagraph 14 of the Operating Rules of the TWSE has occurred since the listing date, except as caused by the special characteristics of the industry or other reasonable causes.
Prior to the listing, all privately placed shares held by non-strategic investors, insiders, and related parties as referred to in paragraph 3, subparagraph 8 or 9 shall be placed in central custody with a central securities depository enterprise incorporated with the approval of the Competent Authority. One half of the shares placed in central custody may be withdrawn only after the end of a 6-month period starting from the date of commencement of listed trading; the remaining shares may be withdrawn in full only after the end of a 1-year period starting from the date of commencement of listed trading. The custodial agreement may not be rescinded during the custody period, and the shares in central custody may 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.
Where the Competent Authority has restricted the listed trading of securities issued by a listed company, privately placed securities of the company may not be listed until such restriction has been lifted, even if the period of restriction of transfer of the privately placed shares has elapsed.
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