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IX.Provisions governing initial listing, suspension of trading, change of trading method, and termination of listing of securities of a listed company
- Listing and trading of securities (Securities and Exchange Act §140-143)
- To create a fair stock exchange market and ensure the quality of listed securities, the FSC has laid down stringent listing regulations for supervisory purposes. To regulate the rights and obligations of listed companies and the TWSE, the Securities and Exchange Act therefore stipulates in Article 140 that the TWSE shall adopt rules governing review of securities listings and contracts for public listing and file such rules with the competent authority for its approval. The TWSE shall also review an application by an issuer for listing and trading of the latter's securities to ascertain whether such application satisfies the listing conditions, and shall enter into a contact for public listing of securities with said company; the content of such contract shall not contradict the rules on contracts for public listing, and such contract shall be filed with the competent authority for recordation (Securities and Exchange Act §141). The charges and fee for the listing of securities shall be specified in the contract for public listing, with the rates to be filed by the TWSE with the competent authority for approval (Securities and Exchange Act §143).
- An issuer becomes a listed company after the TWSE approves its application for listing of its securities and the contract for listing is signed and takes effect (Operating Rules §43I), and it may then listed and trade its securities on the exchange. After the contract takes effect, the company shall pay a listing fee of the securities to the TWSE upon their initial listing and within a month of the commencement of each year thereafter, pursuant to the listing fee schedule of securities set forth in the TWSE Securities Listing Fee Schedule.
- Upon notice of the TWSE, a listed company shall upload an electronic file of its prospectus onto the website of the Securities and Futures Institute, deliver 2,000 copies of the prospectus to the TWSE to be distributed to securities firms, report information related to the listing to the Internet information reporting system designated by the TWSE one day prior to the day agreed with the TWSE for the listing of such securities, and send the downloaded information to the TWSE (Operating Rules §43I and §47).
- The public announcement referred to in the preceding paragraph shall include the name of the company, type of listed securities, volume, rights, obligations, date of listing, date, and document reference number of the issuance approval letter issued by the Competent Authority, name of the agency handling share transfer matters, name of the underwriter, underwriting period, price, volume, and other matters to be publicly announced (Operating Rules §43II). The listed securities shall be assigned by the TWSE a code number and an abbreviated name for uniform use (Operating Rules §43V).
- If, after the contract for listing takes effect, the issuing company applying for initial listing fails to list its stock for trading within three months from the date of the written notice of the TWSE, its listing case shall be voided, and the matter shall be reported to the competent authority for recordation, provided the above-mentioned period may be extended for a single term of three months if the TWSE considers the extension justified by good cause, and the extension shall be reported to the competent authority for recordation. However, the TWSE may proceed to provisionally postpone the listing and trading of the stocks if a circumstance under any subparagraph of the TWSE Rules Governing the Review of Securities Listings that renders listing inappropriate occurs (Operating Rules §43III).
- Placing listed securities under an altered trading method
The TWSE may place the listed securities of a listed company under an altered trading method if any of the following circumstances applies to the listed company, and shall make a filing with the competent authority for recordation within a month of the action taken (Operating Rules §49):
- The latest financial reports as published according to law (including annual, semiannual and quarterly reports show that its net worth is less than one-half of its paid-in capital.
- A shareholders meeting is not held within six months of the end of the business year, except where one is held within the extended time limit granted by the Ministry of Economic Affairs.
- The attesting CPA issues an audit report with qualified opinion on the company's annual or semiannual financial reports which have been published and filed according to law, for the reason that the audit is restricted or the CPA deems the management's choice of accounting policies or disclosure in the financial statements inappropriate.
- Violation of relevant bylaws or rules concerning the material information of a listed company, and failure to rectify the situation within the specified time after being notified to proceed with disclosure process, and such violation is material.
- Two-thirds or more of the directors or supervisors are provisionally ordered to suspend performance of their authorities and duties.
- An application for reorganization is filed with court according to law.
- Half or more of the directors have changed such that the shareholding is too concentrated to meet the shareholding dispersion criteria, or any of the incumbent directors, supervisors or president has been in violation of the principle of good faith in the last five years, and no cure is made within the specified time period ordered by the TWSE.
- The company is unable to punctually pay for the common corporate bonds or convertible corporate bonds which have matured or which the creditors requested it to redeem.
- Dishonor of a negotiable instrument by a financial institution because of insufficient funds on deposit, where the TWSE is aware of such dishonor.
- After a demerger, the paid-in capital of an ordinary company or a technology company fails to comply with Article 4, Paragraph 1, Subparagraph 2 or Article 5, Subparagraph 1, respectively, of the Rules Governing the Review of Securities Listings.
- The number of companies held by an investment holding company falls below two; provided this shall not apply within one year from the date of listing for trading in the event of investment holding companies created as a result of share conversion, general assignment or transfer of business.
- Failure to abide by an undertaking to purchase the shares held by minority shareholders of a TWSE listed (or GTSM listed) subsidiary in which it has shareholding of more than 70%.
- In the handling of stock affairs, Article 44, Paragraph 3 of the Securities and Exchange Act is not observed, or the Taiwan Depository and Clearing Corporation discovers upon audit a material irregularity and the company fails to correct the irregularity within the prescribed time limit.
- Explanations given in a press conference concerning material information fail to clarify points in question, and the TWSE deems it necessary to protect the rights and interests of investors.
- As deemed necessary by the TWSE for other reasons.
- Suspension of trading of listed securities
- In the event an issuer of listed securities on the TWSE is found to be in violation of the Securities and Exchange Act or orders thereunder, the FSC may, for the purpose of protecting the public interest and the interest of investors, order the TWSE to suspend the trading (Securities and Exchange Act §148).
- If any of the following occurs in respect of TWSE-listed securities, the FSC may issue an order suspending their trading completely or partially, or restricting the trade by brokers and dealers in such securities, when there is a likelihood that the event will affect the market trading order or be prejudicial to public interest (Securities and Exchange Act §156):
- The company issuing the securities becomes involved in litigation or other non-litigious matters which is sufficient to result in its dissolution, or changes in its corporate organization, capital, business plan, financial condition, or suspension of production.
- The company issuing the securities becomes involved in major disasters, signed major agreements, confronted with special circumstances, initiated major changes in its business plan, or had its checks dishonored, the result of which is sufficient to result in a significant material change in the financial condition of the company.
- The company issuing the securities engages in deceptive, dishonest, or illegal practices, the result of which is sufficient to affect the prices of its securities.
- The market price of the securities has undergone continuous, major rises or declines, resulting in abnormal fluctuations in the prices of other securities.
- Other events of material significance
- If any of the following circumstances applies to a listed company, the TWSE shall, in accordance with Article 147 of the Securities and Exchange Act, suspend the trading of such securities and report to the competent authority for recordation, or the listed company may apply for delisting pursuant to Article 50-1, Paragraph 5 of the Operating Rules (Operating Rules §50):
- Failure to produce and file and publicly announce financial reports or financial forecasts by the deadlines provided in laws and regulations.
- The company petitions to court for reorganization and the court rules to prohibit the transfer of its shares.
- Any document or information that has been submitted is suspected to be untrue, and upon the request of the TWSE to explain the matter, no explanation is provided within the prescribed time period
- The securities transfer institution established at the location of the TWSE is withdrawn, or a dummy transfer institution is established such that no transfers are processed, and upon the order of the TWSE to correct the situation within a time period, no correction is made.
- The financial reports publicly announced and registered as required are not produced pursuant to relevant laws and regulations and generally accepted accounting principles, and such violation is material and corrections or rewrites are not made within the specified time period; or the CPA attesting the annual or semiannual financial reports as publicly announced and registered issues a disclaimer of opinion or an adverse opinion in the audit report, or issues an adverse opinion or disclaimer of opinion in the review report.
- Violation of relevant bylaws or rules concerning the material information of a listed company, such violation is material and it is necessary to suspend trading in its securities.
- The listed company breaches an undertaking it gives when applying for listing
- The listed company, a major enterprise engaging in national economic infrastructure projects, materially delays its construction work or materially violates the concession contract.
- The company is unable to punctually pay for the common corporate bonds or convertible corporate bonds which have matured or which the creditors requests it to redeem, and still fails to repay the debt or reach a settlement agreement with the creditors within three months after its listed securities are placed under an altered trading method.
- The listed company has a negotiable instrument dishonored because of insufficient funds on deposit and is still unable to settle the debt under the negotiable instrument and produce a direct or indirect note in evidence of settlement from the clearing house within three months of the trading day following the change of the trading method.
- The listed company loses controlling interest, as defined in Article 4, Subparagraph 1 of the Financial Holding Company Act, in a subsidiary, and is ordered by the competent authority of the Financial Holding Company Act to make corrections within a certain period.
- Violation of Article 49, Paragraph 1, Subparagraph 10, 11, 12 or 13 of the Operating Rules and inability to achieve compliance with Paragraph 2, Subparagraph 10, 11, or 12 of the same article within three months from the trading day following the change of the trading method.
- Other events warranting a need to suspend trading in the securities.
- Delisting:
- The TWSE may, pursuant to acts and regulations, or the provisions of the contact for public listing, terminate the public listing of securities, and such termination shall be filed with the competent authority for recordation (Securities and Exchange Act §144).
- The TWSE shall draft procedures for the handling of delisting applications and submit the procedures, and any subsequent amendments thereto, to the competent authority for approval (Securities and Exchange Act §145).
- In the event an issuer of listed securities on the TWSE is found to be in violation of the Securities and Exchange Act or rules and regulations promulgated under said act, the competent authority may, for the purpose of protecting public interest and the interest of investors, order the TWSE to suspend the trading or terminate the listing of said securities (Securities and Exchange Act §148).
- If any of the following circumstances applies to a listed company, the TWSE shall delist its securities in accordance with Article 144 of the Securities and Exchange Act and report to the competent authority for recordation (Operating Rules §50-1):
- Any circumstance specified in Article 9, 10, 11, 17, Paragraph 2, Article 315, Paragraph 1, Subparagraphs 1 through 8, or Article 397 of the Company Act or Article 21 or 54 of the Financial Holding Company Act occurs, and the relevant competent authority revokes its company license, orders its dissolution, or voids its approval.
- The relevant authority revokes its approval due to the occurance of any circumstance specified in Article 251 or 271 of the Company Act or other reasons.
- Confirmation of bankruptcy by court.
- Court's confirmation of reorganization or denial of reorganization motion.
- The TWSE considers the continuation of listing of the securities for trading inadvisable due to a material change in the scope of business of the company.
- The total amount of its listed preferred shares is less than NT$200 million.
- Any of the circumstances under which the TWSE requires trading of the listed securities be suspended still persists six months after the suspension.
- The company has a record of being discredited by the clearing house and is still unable to settle the debt under the negotiable instrument and produce a direct or indirect note in evidence of settlement from the clearing house within six months of the trading day following the suspension of trading.
- Where the last financial reports of the company, or the individual financial reports in the event of a non-holding company or the consolidated financial reports in the event of a holding company, as publicly announced and registered according to law, shows a negative net worth.
- The business of the company has completely stopped and is unable to commence quickly or has no business revenue, except where the company is a major enterprise engaging in national economic infrastructure projects and has no business revenue during the period of construction under the concession contract.
- Any circumstance specified in Article 156 of the Securities and Exchange Act exists and the FSC orders the suspension of trading of all its securities for at least three months.
- A merger with another company does not satisfy, the requirements for continued listing under Article 51 of the Operating Rules.
- Material breach of the contract for listing.
- Final confirmation by a judicial authority that any of the following circumstances applies to the listed company:
- The financial reports, accounting books, etc. provided by the company during the application for listing contain false and concealed items, and upon discounting for such false and concealed items, its profitability does not conform to the listing requirements; provided, the above shall not be applicable if five years have passed between the listing date and the date of confirmation by a judicial authority.
- The proviso of Sub-item a above is satisfied, and the false and concealed accounting items still exists at the time of the final confirmation of judgment, and upon discounting for such false and concealed items, its current revenue generating ability does not conform to the listing requirements.
- Over 70% of its total issued shares or total capital is held by another financial holding company.
- Circumstance set forth in Article 50, Paragraph 1, Subparagraph 12 of the Operating Rules and inability to achieve compliance with Paragraph 2, Subparagraph 12 of the same article within six months from the trading day following the suspension of trading.
- The competent authority for the target industry duly appoints a receiver for the financial institution.
- Other circumstances requiring delisting.
- Irregularty (Articles 3 and 4 of the TWSE Rules Governing Implementation of the Stock Market Surveillance System)
Upon discovery that abnormal trading in securities has occurred and reached a certain level in the centralized securities exchange market, the TWSE may publicly announce the names of the securities and trading information to the market to alert investors and further take the following measures:
- Conducting trade matching for the securities with manually controlled trade matching terminals.
- Restricting the amount of the securities that securities firms can buy and sell
- Instructing securities brokers to precollect buy-side payment or sell-side securities up to a certain percentage from all principals or from those who place large numbers of orders with securities brokers for securities that are being traded abnormally.
- Notifying all securities firms to make an additional submission to the Clearing and Settlement Fund when trading the security involved in irregular trading.
- Temporarily suspending margin purchases and short sales of the given security.
- Reporting to and obtain the permission of the Competent Authority to suspend the trading of such securities for a prescribed period.
When the TWSE considers the irregularity in the trading of securities is likely to affect the security of market settlement, or under other necessary circumstances, the measures listed in Paragraph 1 or other measures adopted by the resolution of the Surveillance Operations Oversight Committee may prevail.
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