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Article NO. Content

Title:

Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings  CH

Amended Date: 2018.07.09 
Categories: Primary Market > Review
Article 28-13     A foreign issuer 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, applied mutatis mutandis under Article 165-1, of the Securities and Exchange Act. If, once the period of restriction of transfer has elapsed, the issuer intends to apply for listed trading of the securities, it may file such application only after first supplementally completing public issuance examination and approval procedures with the Competent Authority.
    Securities that are privately placed by a primary 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, applied mutatis mutandis under Article 165-1, 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, supplementarily completing issuance examination and approval procedures with the Competent Authority. However, the company may be exempted from the requirement of carrying out public sale prior to listing under Article 28-10.
    When applying to the TWSE for a letter of approval under the preceding paragraph, a primary listed company shall meet the standards in each of the following subparagraphs:
  1. The financial reports for the most recent period and the most recent fiscal year show an absence of accumulated deficit.
  2. Its cumulative net income before tax for the most recent 3 fiscal years is NT$160 million or higher, and its net income before tax for the most recent fiscal year is NT$80 million or higher.
  3. A CPA has audited the consolidated financial reports for the most recent 2 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.
  4. None of the events set out in Article 28-8, subparagraphs 1, 3, 4, or 7 is present.
  5. 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.
  6. For an applicant company that had net income 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 net income before tax to year-end share capital 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, providedsuch restriction on profitability does not apply where theaverage 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% or above:
    1. 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 non-insider(s) or non related party(ies) of the applicant company.
    2. There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Foreign 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 non-insider(s) or non related party(ies) of the applicant company.
  7. For an applicant company that had net income 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 net income before tax to year-end share capital 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, providedsuch restriction on profitability does not apply where theaverage 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% or above:
    1. 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 insider(s) or related party(ies) of the applicant company.
    2. The private placement did not introduce strategic investors.
    3. There is a likelihood of an event under Article 7 or 8 of the Regulations Governing the Offering and Issuance of Securities by Foreign 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 insider(s) or related party(ies) of the applicant company.
    4. The conducting of the private placement of securities was not done in accordance with the Directions for Private Placements, where the circumstances were serious.
  8. For an applicant company that had net loss 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 net income before tax for the most recent fiscal year shall be NT$120 million or higher:
    1. 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.
    2. The private placement of securities is not carried out in accordance with the Directions for Private Placements, and the circumstances are serious.
  9. Others consistent with the provisions of the Competent Authority.
    In the provisions regarding the ratio of net income before tax to year-end share capital in paragraph 3, subparagraphs 6 and 7, if the stock of a primary listed company has no par value or a par value per share other than NT$10, the calculation shall be of the ratio of net income before tax to the sum of the share capital plus capital reserves minus the original issue premium.
    Prior to the listing, all privately placed shares held by non-strategic investors, insiders, and related parties as referred to in paragraph 3, subparagraph 7 or 8, 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 primary 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.