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Article 26
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As used in Article 28-8, paragraph 1, subparagraph 3 of the Rules, " material non arms-length transaction" means that any of the following circumstances applies to a foreign issuer or a company controlled by it that is applying for a primary listing:
- The purpose, price, terms and conditions, or the handling procedures for a purchase or sale of goods are at variance with those of an ordinary transaction or are obviously unreasonable.
- When, for various trades with related parties and transactions of financial business, there is no verification of reasonable necessity for the trade, or of the legality of the decision-making process for the trade, or the reasonableness of the price or the payment or receipt of funds.
With respect to “has not been rectified” in the same subparagraph, rectification as so determined means one of the following subparagraphs has been met:
- Where a person other than the applicant company profits from non-arms-length transactions, the person receiving the profits has returned the profits to another person who should have received the profits.
- The non-arms-length transactions have been found as not involving criminal activities by the prosecutors, investigators or judicial authorities of the jurisdiction where the company is incorporated, the jurisdiction where its main business activities are taking place, and the Republic of China.
- The non-arms-length transactions have terminated and the legal relationship has been restored to status quo ante.
The term “related party” as referred to in the first paragraph shall have the same definition of the term in Article 18 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and shall cover what is described in the following subparagraph, except where an applicant company can prove it has no control, joint control or material impact:
- A shareholder holding more than 10% shares in the applicant company and a company having a controlling or subordinate relationship with the applicant company or a company between which the applicant company has cross-investment.
- An individual related to the director, supervisor or manager of the applicant company in any of the following ways:
- A relative within the second degree of kinship with the aforementioned persons or their spouse (including domestic partner treated as spouse, which shall apply hereinafter in this paragraph).
- Where the aforementioned persons are legal entities, their parent company, subsidiary or a company controlled by the same company or individual shareholder having control over these corporations.
- An individual related to a shareholder holding more than 10% shares in the applicant company or the director, supervisor and manager of and a shareholder holding more than 10% shares in a company having a controlling or subordinate relationship with the applicant company or a company between which the applicant company has cross-investment in any of the following ways:
- Spouses.
- Relatives within the second degree of kindship with the aforementioned persons or their spouse.
- Where the aforementioned persons are legal entities, their parent company, subsidiary or a company controlled by the same company or individual shareholder having control over these corporations.
- An invested company or its subsidiary in which the director, supervisor and manager of and a shareholder holding more than 10% shares in the applicant company, its parent company and key subsidiary, individually holds, or together with their spouse or a person related in the ways as described in the above two subparagraphs hold, directly or indirectly, more than one-half of the total number of voting shares or the total capital.
Where an applicant company profits from any of the circumstance set forth under paragraph 1, it shall meet the listing criteria for profitability after deduction of those profits.
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