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A domestic issuer or foreign issuer engaging in private placement of securities shall not apply for initial listing of privately placed securities at the TIB during the period when transfers of these securities are restricted under Article 43-8 of the Securities and Exchange Act. At the end of the period of restrictions, if the issuer wishes to apply for listing and trading at the TIB, it may complete the issue review procedure retrospectively with the competent authority before making the application.
No privately placed securities of a TIB listed company or a TIB primary listed company, as well as securities allotted, converted or subscribed thereafter, shall be listed during the period when transfers of these securities are restricted under Article 43-8 of the Securities and Exchange Act. At the end of the period of restrictions, if the company wishes to apply for listing, it shall obtain an approval letter from the TWSE and then use the letter to complete the issue review procedure retrospectively with the competent authority before making the application, in which case the prelisting public sale required under Article 36 may be waived.
A TIB listed or a TIB primary listed company must meet the following criteria when requesting an approval letter from the TWSE in accordance with the preceding paragraph:
- No accumulated losses are indicated in the financial reports for the most recent quarter and the most recent fiscal year.
- Profits before tax in the financial report meet one of the following standards:
- Ratio of profits before tax to share capital listed in the financial report for annual account has been above 4 percent in the most recent two fiscal years.
- Average ratio of profits before tax to share capital listed in the financial report for annual account in the most recent two fiscal years is above 4 percent, and profitability in the most recent fiscal year is better than the previous fiscal year.
- The financial reports for the most recent two fiscal years have been audited by CPA who has issued an audit report with unqualified opinion. If an audit report other than one with unqualified opinion is issued, there is no circumstance that would prevent financial report from presenting fairly.
- There are no circumstances under Article 31, paragraph 1, subparagraphs 1, 3, 4, 5, 7 or 11.
- Total number of registered shares held by all the directors is higher than the shareholding set forth under the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies.
- Funds from private placement of securities have been fully utilized in accordance with the fund implementation plan and reasonable effects have been created, except when there is a legitimate reason.
- Where there are profits after tax and there are no accumulated losses in the fiscal year before the shareholders’ meeting has resolved for private placement of securities to take place, in one of the following circumstances, profitability should meet the requirements under subparagraph 2 and the ratio of profits before tax to share capital listed in the financial report for annual account in the most recent fiscal year is better than the fiscal year before the resolution of the shareholders’ meeting for private placement of securities, provided that due to changes in conditions of the relevant industry, the above profitability requirement does not apply if the average ratio for the three fiscal years prior to the application is better than the ratio for the fiscal year or the average ratio for the three fiscal years before the resolution of the shareholders’ meeting for private placement of securities, and the average is above 4 percent:
- The sole purpose of the private placement is to introduce strategic investors, and when an approval letter is requested, privately placed shares have not been transferred, or have been transferred to parties other than insiders or related parties for holding.
- When the circumstances under Articles 7 and 8 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers are likely to happen, public offering is not possible because no reasonable improvement can be made for a legitimate cause, funds are desperately needed, private placement is to take place upon the approval of the TWSE, and when an approval letter is requested, privately placed shares have not been transferred, or have been transferred to parties other than insiders or related parties for holding.
- Where there are profits after tax and there are no accumulated losses in the fiscal year before the shareholders’ meeting has resolved for private placement of securities to take place, in one of the following circumstances, profitability should meet the requirements under subparagraph 2 and the ratio of profits before tax to share capital listed in the financial report for annual account in the most recent fiscal year should not be lower than 200 percent of the ratio the fiscal year before the resolution of the shareholders’ meeting for private placement of securities, provided that due to changes in conditions of the relevant industry, the above profitability requirement does not apply if the average ratio for the three fiscal years prior to the application is not lower than 200 percent of ratio of the fiscal year or the average ratio for the three fiscal years before the resolution of the shareholders’ meeting for private placement of securities, and the average is above 4 percent:
- The sole purpose of the private placement is to introduce strategic investors, and when an approval letter is requested, part or all privately placed shares have been transferred to insiders or related parties for holding.
- The purpose of the private placement is not to introduce strategic investors.
- When the circumstances under Articles 7 and 8 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers are likely to happen, public offering is not possible because no reasonable improvement can be made for a legitimate cause, funds are desperately needed, private placement is to take place upon the approval of the TWSE, and when an approval letter is requested, part or all privately placed shares have been transferred to insiders or related parties for holding.
- Private placement of securities is not compliant with the requirements under the directions for private placement and it is a material violation.
- Where there are losses after tax or accumulated losses in the fiscal year before the shareholders’ meeting has resolved for private placement of securities to take place, in one of the following circumstances, profitability should meet the requirements under subparagraph 2 and the ratio of profits before tax to share capital listed in the financial report for annual account in the most recent fiscal year should be over 6 percent:
- Insiders or related parties participate in the private placement and the subscription price fails to meet the percentage requirement set forth by the competent authority.
- Private placement of securities is not compliant with the requirements under the directions for private placement and it is a material violation.
- It has otherwise satisfied the requirements of the competent authority.
Where a TIB listed company or a TIB primary listed company has never obtained the approval letter from the TWSE in accordance with the preceding paragraph and the a special resolution for filing the retrospective public issuance with respect to a private placement of securities has been approved at the shareholders’ meeting, when the company requests an approval in accordance with paragraph 2, it may not be subject to the circumstances under subparagraph 2 of the preceding paragraph and Article 12-1, paragraph 4 or Article 28-13, paragraph 4 may respectively apply mutatis mutandis.
Parties other than strategic investors, insiders and related parties under paragraph 3, subparagraphs 8 and 9 shall deposit the privately placed securities they hold under centralized custody at the centralized securities depository enterprise established upon approval of the competent authority before the listing of these securities. One half of these securities may be withdrawn only after full six months from the first day of listing and trading. The remaining securities may be withdrawn only after a full year from the first day of listing and trading. No rescission of contract prior to expiry of the term of custody is allowed. No shares or certificates under custody may be transferred or mortgaged. Change of status of a holder will not affect the validity of the custody.
Where the competent authority restricts the listing and trading of the securities issued by a listed company, the privately placed securities shall not be listed before these restrictions have been removed despite that the period when transfers of these privately placed securities are restricted has expired.
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