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Title: Taipei Exchange Procedures for the Review of Securities for TPEx Listing
Date: 2004.02.13 ( Announced )
Date: 2017.05.10 ( Amended )

Article Content

 
Chapter I General Principles
1     These Procedures are adopted pursuant to Article 2, paragraph 2 of the Taipei Exchange Rules Governing the Review of Securities for Trading on the TPEx ("the TPEx Securities Review Rules").
2     Except where otherwise provided by law or regulation, the review by the Taipei Exchange (TPEx) of applications for the listing of securities on the TPEx shall be performed in accordance with these Procedures. When there is a change in any article of law or regulation on which any provision regarding review procedure is based, the new provision shall govern.
Chapter II Receipt of Documents and Case Assignment
3     A public company applying for TPEx listing of already-issued securities shall fill out the TPEx application form, enclosing the complete set of attachments listed therein. After the TPEx case-handling department confirms that a complete set of documents has been submitted, the mail department will sign for acceptance of the application, which then will be registered, assigned a case number, and forwarded to the appropriate case-handling unit for processing in the order of its acceptance.
    A company applying for TPEx listing pursuant to Article 3, paragraph 4 of the TPEx Securities Review Rules shall prepare the documents required by the central competent authority in charge of the relevant industry, then apply to the TPEx for issuance of an assessment opinion, copying the application and relevant documents to the central competent authority in charge of the relevant industry. Upon receipt of the documents, the case-handling unit shall request an opinion from the central competent authority in charge of the relevant industry. Upon receipt of the letter of reply with the assessment opinion from the central competent authority in charge of the relevant industry, the TPEx will issue the opinion to the applicant company. The applicant company shall apply for TPEx trading of its stock within 1 year from the date of issuance of the letter with assessment opinion from the central competent authority in charge of the relevant industry; where this time limit is exceeded, reapplication to the TPEx will be required.
4     After the case-handling unit's receipt of documents in connection with an initial application for TPEx listing, the unit shall proceed with the application through an ad hoc working group of at least two persons, depending on the availability of personnel within the department; a specific staff member shall be appointed to handle the application for listing of new capital increase shares, corporate bonds, or other securities by a TPEx listed company.
    After acceptance of application documents for an initial TPEx listing application, the TPEx will solicit review opinions on the TPEx listing in accordance with the "Rules for Solicitation of Opinions in Reviews of Initial Applications for TPEx Listing by Public Companies" and the "Rules for Engaging Expert Advisors and the Provision of Advisory Opinions in Applications for TPEx Listing." The "Directions for Solicitation of Opinions in Reviews of Initial Applications for TPEx Listing by Public Companies" and the "Rules for Engaging Expert Advisors and the Provision of Advisory Opinions in Applications for TPEx Listing" will be separately adopted by the TPEx.
Chapter III Procedures for the Review of Initial TPEx Listings
5     At the time of a company's initial application for TPEx listing, case-handlers shall ascertain whether the company's financial reports for the preceding 2 years have been approved by the board of directors, CPA-audited and attested, and recognized by the supervisors or audit committee. In cases where the financial report approved by the shareholders meeting is inconsistent with the former report, the report approved by the shareholders meeting shall also be submitted, and when there are any irregularities in its individual accounting items, an analysis shall be performed of the reasons for the irregularities. In the case of applications for TPEx listing by government-operated enterprises, the financial report for the most recent fiscal year, CPA-audited and attested and approved by the board of directors and recognized by the supervisors, shall still be submitted, whereas for the previous year, an audit report from an auditing institution may alternatively be submitted.
    A company that is applying for TPEx listing shall submit the following CPA-audited and attested or CPA-reviewed financial reports:
  1. Parent company only and consolidated financial reports for the preceding 2 years.
  2. The financial reports of the most recent quarter, when the date of application is more than 45 days after the end of the quarter.
    The applicant company shall continue to submit financial reports after the date of application for TPEx listing in accordance with Article 30 of the Taipei Exchange Rules Governing the Review of Emerging Stocks for Trading on the TPEx. When the applicant company submits an annual financial report for the year of application in accordance with the aforementioned rules, it may request the attesting CPA and the recommending securities firm to make a joint submission of the CPA's audit working papers and an updated assessment report from the recommending securities firm.
6     Directions governing review:
    The provisions of this paragraph apply without exception to all reviews of initial TPEx listing applications: After receiving an application for TPEx listing, case handlers shall review the application, its attachments, and the inspection results, conclusions, or opinions included in the working papers checklists, and all information provided by the applicant company and the recommending securities firm, CPAs, or attorneys, taking into consideration the matters below, and in addition shall carry out an especially rigorous audit in any case where, after an advisory contract has been entered into, an application for TPEx listing is promptly submitted without a reasonable period of time allowed for advice or assessment:
  1. Certified Public Accountant's Audit or Review Report:
  2. Case handlers shall review the following information:
    1. If there has been a change in CPAs in the year of application or during the 2 fiscal years preceding the application date, the case handlers shall ascertain the facts and reasons underlying the change.
    2. For any CPA audit or review report issued with other than an unqualified opinion, the reviewers shall ascertain the underlying facts and reasons and assess the extent to which they will affect the company's financial statements.
    3. The certifying CPA for the year of application and the most recent 2 years shall be a practicing CPA at a joint accounting firm approved by the competent authority.
    4. The audit report shall state that the report is prepared in accordance with the regulations issued by the competent authority to govern the preparation of financial reports for the relevant industry.
    5. When the applicant's financial reports for the most recent accounting year or the most recent period during the year of application reveal that it meets any of the standards defining a major subsidiary under Article 2-1, paragraph 2 of the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, its financial report must comply with applicable regulations.
    6. In these Procedures, the above term "its financial report must comply with applicable regulations" shall mean that when the financial reports of the major subsidiary of the applicant company are audited or reviewed by other CPAs, the applicant company's CPA shall produce an audit report on the applicant company's financial statements with an unqualified opinion and without reference to any other accountant's audit. Case handlers shall inspect the materials used by the applicant company's CPA for its assessment and verification of the overseas investee's CPA and audit report, in order to determine whether the assessment and auditing procedures were comprehensive and in conformance with the relevant provisions of the ROC Statements of Financial Accounting Standards.
    7. When any of the following have been true of the applicant company's CPA, another CPA shall be engaged for auditing and attestation of the applicant company's financial reports for the preceding 2 years and the year of application for TPEx listing:
      1. The CPA has received a disciplinary action or disposition equal or greater in severity to a warning by the competent authority during the preceding 2 years or the year of application for TPEx listing, provided that this will not apply when the disciplinary action or disposition was a warning or a reprimand, and the cause of the warning or reprimand occurred over 5 years prior to the date of application for TPEx listing.
      2. The CPA has accumulated two or more demerits, during the year prior to the application for TPEx listing, from the TPEx and the TWSE in accordance with their respective Regulations for Handling Deficiencies in Certified Public Accountants' Reviews of TPEx Stock Listing Applications and Regulations Governing the Handling of Errors by Certified Public Accountants in Auditing of Initial Applications for Market Listing.
  3. Content of Financial Reports:
  4. Case handlers shall review the following information:
    1. Whether the type, format, and content of financial reports (including financial statements, notes, itemized statements of individual accounting items, and other disclosures and explanations relevant to informed judgment) comply with the regulations issued by the competent authority to govern the preparation of financial reports for the relevant industry.
    2. Case handlers shall perform an overall analysis of the report both on its own and in comparison with those from other companies in the same industry, to ascertain emerging trends and possible irregularities in the applicant company's financial condition and profitability.
    3. If unusual accounting items are found in the financial report and a large sum of money is involved, the item in question shall be audited to ascertain its composition and categorization.
    4. Case handlers shall determine the status of adjustments or improvements required in the financial reports as instructed in writing by the competent authority.
    5. In any of the following special or irregular circumstances with respect to parent company only and consolidated financial reports, case handlers shall gain a thorough understanding of the audit content of the certified public accountant (CPA)'s working papers:
      1. Transactions between major affiliated persons: any large transactions between affiliated persons indicating arrangements contrary to normal operating practice or illicit exchanges of profits or benefits.
      2. Excessive fluctuations in the applicant company's receivables turnover rate or a variance compared to the trend for other enterprises in the industry.
      3. Irregularities in the applicant company's allocation of reserve funds to offset bad debt on receivables.
      4. A counterparty for a sale by an applicant company that is different from the party paying off the receivables.
      5. Excessive fluctuations in the applicant company's inventory turnover rates or variance compared to the trend for other enterprises in the industry.
      6. Irregularities in the applicant company's inventory valuation allowances and allocation of reserves for losses on obsolete and slow-moving inventory.
      7. Large gains or losses on the applicant company's physical inventory.
      8. The accounting treatment of capitalization of interest.
      9. Case handlers shall gain a thorough understanding of the content of impairment of assets and the method of their evaluation.
      10. Case handlers shall gain a thorough understanding of the content of intangible assets and the method of recognition and measurement.
      11. The rate of interest and status of interest payments on large transfers of funds between related parties, or shareholders.
      12. Any irregularities in the loaning of funds to another party or the provision of an endorsement or guarantee for another party.
      13. The content of contingent liabilities.
      14. The amount of any lines of credit obtained jointly from banks by the applicant company and its related parties.
      15. Excessive fluctuations in the applicant company's gross profit margins on sales of goods or a variance compared to the trend for other enterprises in the industry.
      16. The content of any large non-operating income or expenditures.
      17. Any new customer acquired within the past 2 years that is a related party or among the applicant company's ten largest customers shall be included in the audit sample when the audit is carried out. It shall be further ascertained whether the customer is a related party, and how the terms of the transaction agreement with the new customer differ from those of a contract with an ordinary customer, in order to confirm whether the figures for sales revenue have been recorded in a manner consistent with the principle of realized revenue.
    6. Financial forecast information
    7. Case handlers shall acquire a general understanding of the recent operations of the applicant company and the financial forecast information that the applicant company provides, which shall only be used in connection with the review of the application at issue and may not be made known or disclosed to outside parties.

  5. The internal control system, statements of internal control, and the CPA internal control system special audit report:
  6. Case handlers shall inspect the following items:
    1. Whether the applicant company has performed a self-inspection of the effectiveness of the design and implementation of its internal control system and produced a statement of internal control in compliance with the Regulations for the Establishment of Internal Control Systems by Public Companies, and obtained a CPA's special audit report with an unqualified opinion (1).
    2. Inspect the working papers of the CPA's internal control system special audit report in relation to the purchases/payments cycle and the sales/receipts cycle to gain an understanding of the adoption and implementation of the internal control system by the applicant company and of whether the CPA used appropriate auditing procedures sufficient to support the audit conclusions of the CPA's internal control system special audit report.
    3. The applicant company's self-inspection of internal control systems and performance of internal control system special audits by CPAs shall cover the following periods: For applications submitted from February through April, the period covered shall be 1 January through 31 December of the previous year; for applications submitted from May through July, the period covered for shall be from 1 April of the previous year until 31 March of the year of application; for applications submitted from August through October, the period covered shall be from 1 July of the previous year until 30 June of the year of application; for applications submitted from November through January of the following year, the period covered shall be from 1 October of the previous year until 30 September of the year of application. The CPA performing the special audit of the applicant company's internal control system shall conform with the requirements of Article 27 of the Regulations Governing Establishment of Internal Control Systems by Public Companies.
  7. During the inspection process, the case handlers shall note whether the CPA has complied with Generally Accepted Accounting Principles, the Regulations for the Establishment of Internal Control Systems by Public Companies, and all other applicable laws and regulations, and shall gain an understanding, through scrutiny of the CPA's working papers, of the tests applied at the time of the audit and their scope, time frame, and characteristics, and whether there has been full factual disclosure, as well as whether the accountant omitted any procedural requirements (e.g. monitoring of remaining inventory, certification and reconciliation of bank account balances) while failing to adopt other substitute procedures. If it is determined that the auditing procedures executed by the CPA were insufficient to reach the necessary conclusions, the case handlers shall request that the accountant provide supplementary explanations.
  8. The recommending securities firm's assessment report:
  9. Case handlers shall inspect the format and content of the underwriter's assessment report to determine:
    1. Whether the report has been compiled in accordance with the requirements of the Directions Governing the Particulars to be Recorded in Underwriter Assessment Reports for Applications for TPEx Trading of Securities and signed by the lead underwriter and sponsoring underwriter. The Directions Governing the Particulars to be Recorded in Underwriter Assessment Reports for Applications for TPEx Listing of Securities shall be separately promulgated by the TPEx.
    2. Whether a careful assessment has been carried out in accordance with the Taipei Exchange Procedures Governing Assessment and Auditing Procedures for Recommending Securities Firms Handling Applications for Listing of Stock on the TPEx sufficient to support the conclusions of the assessment report. The Taipei Exchange Rules Governing Assessment and Auditing Procedures for Recommending Securities Firms Handling Applications for Listing of Stock on the TPEx will be separately adopted by the TPEx.
    3. Whether the working papers have been properly prepared.
    4. Whether a Declaration has been produced testifying that the assessment report is free of any misrepresentations or nondisclosures.
  10. The public prospectus:
  11. The case handlers shall examine the format and content of the prospectus to ascertain whether it has been compiled in accordance with the Directions for the Particulars to be Recorded in Prospectuses for Initial TPEx Listing of Securities and other relevant laws and regulations.
  12. Qualification for TPEx listing applications, negative listing criteria, and TPEx listing supplementary provisions:
  13. Case handlers shall inspect the following items:
    1. Whether the applicant company meets the criteria for TPEx listing under Article 3 of the TPEx Securities Review Rules.
    2. Whether it is the case that none of the specific determining criteria under any subparagraph of Article 10, paragraph 1 of the Securities Review Rules are applicable to the applicant company, and that the applicant company meets all the requirements under the supplementary provisions of the Securities Review Rules. For any instance of non-conformance with regulations, case handlers shall make a note of their opinions and submit the application for higher-level review, and provide a detailed explanation within the review report and the working papers for the review.
  14. An official letter of notification from the competent authority with instruction on points requiring special attention:
  15. Case handlers shall ascertain whether or not there is a letter of instruction from the competent authority providing points requiring special attention with respect to the applicant company. If an instance of failure to comply with provisions is found, the case handlers shall note their opinions and submit them for higher-level review.
7     Review procedures:
  1. Case handlers reviewing a TPEx listing case shall carry out the review in accordance with the following inspection procedures:
    1. Application Documents:
    2. Case handlers shall check all application documents received and complete an "Application Document Receipt Record for TPEx Trading of Securities." (Attachment 1).
    3. Preliminary prospectus:
    4. Case handlers shall check each item of the content of the preliminary prospectus against the Directions for the Particulars to be Recorded in Prospectuses for TPEx Trading of Securities and other relevant regulations, and re-examine the Checklist of Legal Issues to be Examined upon Application by Issuers for TPEx Listing of Stock (Attachment 2) completed by the securities underwriter.
    5. The recommending securities firm's assessment report:
    6. Case handlers shall review the underwriter's assessment report and check whether each item was assessed in accordance with the rules and regulations of the TPEx and whether it draws clear and definitive conclusions, and enter an opinion in the "remarks" column for the TPEx in the "Abstract of the Underwriter's Assessment Report" (Attachment 3). When any of the matters set forth in the TPEx's Regulations for Handling Deficiencies in an Assessment Report, Concluding Opinion, or Related Information Submitted by a Securities Firm are found to exist, the matter shall be referred to a meeting of the Administration Department Review Committee for Compliance, convened by the president of the TPEx and attended by TPEx-related personnel ("Administration Department Review Committee"), for passage of a resolution which shall serve as the basis for subsequent implementation. The Regulations for Handling Deficiencies in an Assessment Report, Concluding Opinion, or Related Information Submitted by a Securities Firm shall be separately promulgated by the TPEx.
    7. Internal Control Systems:
      1. Case handlers shall examine the internal audit report for the self-inspection period given in the statement of internal control and gain an understanding of internal control deficiencies and the status of corrective measures.
      2. Case handlers shall gain an understanding of comprehensive opinions expressed in the CPA's recommendations for improvement of the internal control system for the preceding 3 years and the attached internal control system data in Item 2 of the Questionnaire for TPEx Listing of Stock (Attachment 4).
      3. Case handlers shall carry out the review in accordance with the Procedures for Review of Internal Control Systems Audit Reports Issued by CPAs. The Procedures for Review of Internal Control Systems Audit Reports Issued by CPAs will be separately adopted by the TPEx.
      4. Case handlers shall fill out the "Document Review Record and CPA Review Report Inspection Form" (Attachment 5).
    8. Comprehensive Analysis of Financial Information:
    9. Case handlers shall review the Questionnaire for TPEx Listing of Stocks and the annexed survey report for related industries, explanations of major changes in accounting items published in the prospectus, financial analytical data from the CPA's permanent records, and the recommending securities firm's assessment report to ascertain and assess the financial condition and trends of the applicant company and excerpt any important items or irregularities to compile the "Comprehensive Analysis of Financial Data" (Attachment 6).
    10. Certified public accountant auditing procedures and financial report:
    11. Case handlers shall re-examine the "Certified Public Accountant Audit and Attestation Procedure Checklist" (Attachment 7) and ascertain that the CPA's audit report was prepared in accordance with the Generally Accepted Auditing Standards and the Regulations for Auditing and Attestation of Financial Statements by Certified Public Accountants, and that the content of the applicant company's financial reports is in compliance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers or the Regulations Governing the Preparation of Financial Reports by Securities Firms, Generally Accepted Accounting Principles, and all other applicable regulations. Case handlers shall then note their opinion in the opinion column of the Certified Public Accountant Auditing Procedure Checklist. If the case handlers find any circumstances in violation of the Regulations for Handling Deficiencies in Certified Public Accountants' Reviews of TPEx Stock Listing Applications, the case handlers shall refer the matter to the Review Committee and execute the resolution passed by the committee. The above-mentioned Regulations for Handling Deficiencies in Certified Public Accountants' Reviews of TPEx Stock Listing Applications shall be separately promulgated by the TPEx.
    12. Equity distribution and custodial undertaking:
    13. Case handlers shall examine the following items and complete an "Equity Distribution and Custodial Undertaking Chart" (Attachment 8):
      1. Whether, at the time of underwriting, the ratio of shares is in compliance with TPEx regulations.
      2. Whether equity distribution is in compliance, after the underwriting is finished, with the provisions of the TPEx Securities Review Rules.
      3. Whether the ratio of shares held by directors and supervisors is in compliance with the regulations of the competent authority.
      4. Whether the percentage of shares to be placed in centralized custody by the directors, supervisors, and shareholders holding 10 percent or more of outstanding shares, and their related undertakings, are in accordance with TPEx regulations.
    14. Case handlers shall examine the following:
      1. Whether the applicant company is in compliance with the requirements for TPEx listing under Article 3 of the TPEx Securities Review Rules, and whether the TPEx opinion has been noted in the applicable column in the Questionnaire for TPEx Listing of Stocks.
      2. Whether the applicant company is in compliance with each of the subparagraphs of Article 10, paragraph 1 of the TPEx Securities Review Rules, and complete the "Checklist for Matters Set Forth under Article 10, Paragraph 1, of the Rules for the Review of Securities for TPEx Listing" (Attachment 9).
      3. Whether the applicant company is in conformance with all of the supplementary provisions of the TPEx Securities Review Rules and has filled out the "Checklist for Compliance with Supplementary Provisions to the TPEx Securities Review Rules" (Attachment 9).
    15. During review, case handlers shall consolidate all the above review data and relevant documentation (Attachments 1 through 10) into a binder.
    16. To ascertain the actual status of the financial, case handlers shall conduct on-site audits and carry out the following audit procedures:
      1. Ascertaining the following matters and obtaining related information:
        1. Major products, raw materials and their main sources, and the differences in their main product's applications, product segmentation, and competitiveness in comparison with products of other enterprises in the industry.
        2. Management approach and performance.
        3. Members of the board of directors and supervisors and changes in their shareholdings over the preceding 3 years.
        4. Market overview and company positioning (including response strategies for peer competition, product substitutability, and business cycles).
        5. Operational risk for the industry and the company.
        6. Financial interactions with related parties and the group enterprise.
        7. An analysis of financial ratios in comparison with companies of the same type that are already TPEx listed or TWSE listed and that are not TPEx or TWSE listed.
        8. Research and development results and future research and development plans (including analysis of staff quality in the research and development department, direction of R&D, R&D capabilities of same-sector enterprises, the outlook for future mass production and market competitiveness, and the marketability of future products).
        9. Plans for future development, factors advantageous and disadvantageous to the company's future development, and response strategies.
        10. Staff turnover rates for the preceding 2 years and the year of application, reasons for employee separation, and concrete measures for retention of staff.
        11. Other.
      2. Inspection of factories, with particular attention to the operational status of machinery and inventory checks.
      3. Findings of on-site audits shall be recorded in detail in the "On-Site Audit Record" (Attachment 11).
      If the applicant company is a financial holding company or an investment holding company, all above procedures shall be conducted for the subsidiaries of the financial holding company or for subsidiaries of the investment holding company in which more than 80 percent of outstanding voting shares are held. However, where such a subsidiary of a financial holding company or an investment holding company is located offshore, only a formal review need be undertaken. The term "subsidiary" shall be construed in accordance with the meaning given in Article 4, subparagraph 4 of the Financial Holding Company Act.
    17. This Item is deleted.
  2. Compilation of Working Papers: Case handlers shall consolidate and record in detail all audited items and findings of the audit, together with all relevant information, and number them in order for cross-referencing. Upon completion of the audit, case handlers shall compile all review information (Attachments 1 through 11) and supporting documentation in a binder as their working papers, and retain them on file for a minimum of 5 years for future reference and case management.
  3. After completion of the working papers, case handlers shall compile the key audit findings, the opinions of relevant experts, and other relevant information into a "Review Report" (Attachment 12) for reference during the review and deliberation of the case.
  4. Review Period: Applications for initial TPEx stock listing submitted by the first day of the current month shall be submitted for deliberation by the Committee for Review of TPEx Securities Listings (hereinafter, the "Review Committee") in the following month, provided that the TPEx may, based upon review requirements, extend the deadline after having submitted a report to and obtained approval from the president of the TPEx.
  5. Effect of the TPEx Listing Review: The findings of the audit of an application for TPEx listing reflect the financial and business condition of the applicant company during only during a specific period, and should not be taken as a reflection of the overall or future performance of the applicant company. The results also depend largely on whether the applicant company has made full disclosure of information relating to its financial and business condition. The review results do not provide a guarantee of the quality of the applicant company and shall not be taken as a substitute for the functions and status of [reports of] securities underwriters, certifying CPAs, or attorneys. Therefore, in reviewing initial applications for TPEx listing:
    1. Case handlers shall carry out the review work with a positive service attitude and rely fully on all information and opinions provided by the applicant company, the recommending securities firm, the certifying CPA, and attorneys, except where any nondisclosure, fraud, falsehood, or error is discovered.
    2. Where information or statements of opinion provided by the applicant company, recommending securities firm, certifying CPA, and attorneys are found to contain any nondisclosure, fraud, error, falsehood, or otherwise seriously violate related laws or TPEx rules and regulations, those responsible shall be held fully liable under the law, and the matter shall be duly reported to the competent authority after handling by the TPEx pursuant to relevant regulations or shall be directly reported to the competent authority. The TPEx undertakes only the review and deliberation of applications. Responsible personnel shall, at the time of processing applications, act in accordance with the provisions of the TPEx's Disciplinary Standards for TPEx Listing Review Personnel or the TPEx's Directions Concerning Matters for Collective Compliance by TPEx Listing Review Committee Members, and remain detached, impartial, and objective to ensure compliance with all the procedural requirements of these Procedures and other applicable regulations. In the event of any violation or negligence, where verified by investigation, personnel shall be responsible for matters that fall within the scope of their duties.
    3. Where any concerns arise during the review period, the case handlers shall contact the applicant company, the recommending securities firm, certifying CPA, and attorneys, and request that they take the initiative to collect relevant information in a timely fashion and provide explanations.
  6. Prior to submission for review by the Review Committee, an application for TPEx listing shall first be checked by a review meeting formed by the internal review committee members under the TPEx Securities Listing Review Committee Organizational Rules ("Internal Review Meeting"). If the Internal Review Meeting resolves not to approve the TPEx listing, it may reject the application after submitting a written request for approval to the TPEx president, and by letter inform the applicant company and return the application documents for TPEx listing. The Internal Review Meeting may be convened only when two-thirds or more of the internal review members attend the meeting.
  7. During the convening of the Internal Review Meeting under the preceding paragraph, in addition to the committee members, the relevant review personnel of the case-handling departments shall also be present at the meeting, and provide reports on the important items to be reviewed and proposal information in the Review Report. In addition, the applicant company and recommending securities firm may be invited to give explanations when necessary.
Chapter IV Issues of Same-Class Capital-Increase Shares and Certificates of Entitlement to New Shares by TPEx Listed Companies
8     Where a TPEx listed company applies for TPEx listing of new shares issued for capital increase and the shares are of the same class already listed, the case handler shall first confirm that the relevant documentation submitted and uploaded is complete, and then publicly announce the TPEx trading in accordance with Article 15 of the TPEx Securities Review Rules.
9     When a TPEx listed company issues new shares for capital increase and applies to list certificates of entitlement to new shares, the application shall be made within 15 days of the date of the competent authority's effective registration of the capital increase; where the company applies to list certificates of payment for stock, application shall be made within 15 days of the competent authority's effective registration, and full receipt of payment for, the new shares, by submitting and uploading relevant documentation at the TPEx-designated information reporting website. Following confirmation that the submitted and uploaded documentation is complete, case handlers shall publicly announce the TPEx listing in accordance with Article 15 of the TPEx Securities Review Rules, report the TPEx listing to the TPEx's board of directors, and report in writing to the competent authority. With respect to the TPEx listing of certificates of entitlement to shares from redemption of convertible corporate bonds, the responsible unit shall announce the TPEx listing according to the TPEx listing date stated on the "Application for TPEx Trading of Global Depositary Receipts Representing Certificates of Entitlement to Stock Redeemed from Bonds" or "Declaration of Conversion of Domestic (Overseas) Securities" originally reported by the applicant company, and shall publish monthly public announcements of conversion status.
Chapter V Review for TPEx Listing of Issues by TPEx Listed Companies of Shares for Capital Increase in Different Classes than the Company's Previous TPEx Listings (including the various preferred shares with different rights and obligations) or Detached Company Warrants
10     The TPEx shall examine all documents submitted by the applicant company to ensure completeness, and complete a TPEx Securities Listing Preliminary Review Form (Attachments 13 and 14) after it has audited and is satisfied that the applicant company meets the TPEx listing conditions set forth in Article 15, Paragraphs 7 and 8 of the TPEx Securities Review Rules, and then notify the applicant company of the TPEx's agreement to its application for TPEx listing and submit its Contract for TPEx Trading of Securities and other relevant documentation to the competent authority for recordation. The company shall on that basis then perform the subsequent operations of public sale, TPEx listing, and other matters.
Chapter VI Review of Applications By TPEx Listed Companies for Conversion of Unlisted Shares into Shares of a Listed Category
11     After reviewing whether the applicant company meets the TPEx listing conditions set forth in Article 15, Paragraph 6 of the TPEx Securities Review Rules and examining documents submitted by the applicant company for completeness and whether the number of shares the applicant company undertakes to have underwritten conforms with the percentage requirements provided in applicable regulations, case handlers shall submit the applicant company's application and relevant documentation to the competent authority for approval, whereupon TPEx listing procedures shall be carried out and a report filed with the TPEx's board of directors.
Chapter VII For TPEx Listing of Government Issued Bonds, the Competent Authority Shall Make a Public Announcement of TPEx Listing Matters Following the Written Notice
Chapter VIII Review of TPEx Listing of Corporate Bonds, Financial Bonds, and Certificates of Payment for Bonds
12     For initial applications for TPEx trading of corporate bonds or certificates of payment for corporate bonds by issuers with TWSE or TPEx listed financial bonds or stocks, the issuers shall apply to the TPEx no later than 5 business days prior to the commencement of TPEx trading. Case handlers shall examine application documents for completeness and announce TPEx listing, with notice to the TPEx's board of directors. However, for straight corporate bonds that are sold only to professional investors as defined under the TPEx Rules Governing Management of Foreign Currency Denominated International Bonds, and where the relevant securities underwriters publish the underwriting announcements on the website of the securities dealers association, the aforementioned deadline for application may be adjusted to no later than 4 business days prior to the commencement of TPEx trading. The case handling department shall file a letter of report with the competent authority for recordation, enclosing the TPEx trading agreement for the given securities signed with the issuer.
13     For initial applications for TPEx trading of corporate bonds or certificates of payment for bonds by issuers who have no TWSE listed or TPEx listed stocks, case handlers shall, in addition to examining application documents for completeness in accordance with the preceding paragraph, review applications in accordance with Point 7, paragraph 1, subparagraph 6, applying the review guidelines under Point 6, paragraphs 1 and 2. After completion of the review, the TPEx will notify the issuer of its agreement to the application for TPEx listing of its securities and publicly announce their TPEx listing, and submit the contract for TPEx trading of the given securities to the competent authority and the TPEx board of directors for recordation, provided that when the issuer's corporate bonds or certificates of payment for bonds are guaranteed by a financial institution, the application may be handled in accordance with the preceding paragraph.
14     For new issues of bonds by issuers whose corporate bonds or financial bonds are already traded on the TPEx, the new issue shall be reported no later than 5 business days prior to the commencement of TPEx trading, with case handlers announcing TPEx listing after examining the documents submitted for completeness. However, for straight corporate bonds that are sold only to professional investors as defined under the TPEx Rules Governing Management of Foreign Currency Denominated International Bonds, and where the relevant securities underwriters publish the underwriting announcements on the website of the securities dealers association, the aforementioned deadline for application may be adjusted to no later than 4 business days prior to the commencement of TPEx trading. For reports of TPEx trading of bonds previously issued, case handlers shall announce TPEx listing after examining the documents submitted for completeness.
    Where the issuer applies to list certificates of payment for bonds, application to the TPEx shall be made within 15 days of the competent authority's approval of, and full receipt of payment for, the new bonds. Case handlers shall examine application documents for completeness and announce TPEx listing in accordance with Article 15 of the TPEx Securities Review Rules, providing notification to the board of directors and a letter of report to the competent authority.
    When the issuer of corporate bonds or financial bonds that are already traded on the TPEx applies for TPEx trading of those bonds as stripped corporate bonds or stripped financial bonds, the case handler shall announce TPEx listing after examining application documents for completeness.
    When a securities firm applies to the TPEx to strip corporate bonds or financial bonds into principal-only or interest-only bonds, or applies to restructure stripped corporate bonds or stripped financial bonds as corporate bonds or financial bonds, the case handler shall examine application documents for completeness, announce the change to the market, and copy the announcement to the Taiwan Depository and Clearing Corporation.
Chapter VIII-1 Review of Beneficial Securities and Asset-backed Securities
14-1     When an issuer applies for TPEx trading of beneficial securities or asset-backed securities issued pursuant to the Financial Asset Securitization Act, it shall first apply to the TPEx for issuance of an "Approval Letter for TPEx Trading of Beneficial Securities or Asset-backed Securities" ("TPEx Trading Approval Letter") in accordance with the Review Standards Governing Issuance of Approval Letters for TPEx Trading of Beneficial Securities or Asset-backed Securities. After the TPEx case handlers review the issue of beneficial securities or asset-backed securities and find it in conformance with Article 7-1 of the TPEx Securities Review Rules and that all required documents have been submitted in full, they shall fill out a review checklist, submit it to the supervisor for approval within 7 business days. The TPEx will issue a letter of approval for TPEx listing to the trustee institution or special-purpose company, which will state, "Contingent upon the competent authority's approval of the application for public offering of beneficial securities/asset-backed securities, and on compliance with TPEx listing requirements based on beneficiaries/securities holders distribution data at the time of completion of the offering, the TPEx grants approval for TPEx listing of this issue of beneficial certificates/asset-backed securities. Where no application for public offering is made with the competent authority within 30 days from the date of issuance of this letter, this approval shall be void," with a copy to the competent authority.
14-2     When the issuer has obtained the TPEx Trading Approval Letter issued by the TPEx and applies to the TPEx for TPEx trading of its beneficial securities or asset-backed securities, it shall submit an application to the TPEx for TPEx trading of the beneficial securities or asset-backed securities, filled out in full and including all required attachments, and within 3 days after completion of underwriting, shall also submit a beneficial owner/securities holder distribution chart and agree with the TPEx on the TPEx listing date, such date to be not less than 3 business days after the date of its submission of the chart. After case handlers have ascertained that a complete set of application documents has been submitted and carried out all application review procedures in accordance with TPEx regulations, they shall announce the TPEx listing of the issue, and report monthly on the issue to the board of directors. The case handling department shall file a letter of report with the competent authority for recordation within the prescribed period, enclosing the TPEx trading agreement for the beneficial securities or asset-backed securities entered into with the issuer.
Chapter VIII-2 Review of Real-estate Trust or Real-estate Asset Trust Beneficial Certificates
14-3     A trustee institution that applies with the competent authority to offer or make a follow-on offering of real-estate investment trust (REIT) or real-estate asset trust (REAT) beneficial securities for TPEx trading shall fill out an application form together with the required attachments and submit them to the TPEx for review, as provided in Articles 4 and 5 of the Regulations Governing the Public Offering or Private Placement of REIT and REAT Beneficial Securities by a Trustee (hereinafter, the "Offering Regulations"). Upon receipt of the application, the TPEx shall review it pursuant to the provisions of the Review Standards Governing Issuance of Approval Letters for TPEx Listing of Real-Estate Investment Trust or Real-Estate Asset Trust Beneficial Securities and check it against the list of required documents prescribed in the Offering Regulations. After the TPEx review finds the application in conformance with applicable provisions and that all required documents are complete, a review form shall be filled out, signed, and submitted to the supervisor for approval, the TPEx will then issue a letter of approval for TPEx listing to the trustee institution, and forward the copies of the list of required documents prescribed in the Offering Regulations and the letter of approval for TPEx listing to the competent authority.
     The letter of approval for TPEx listing under the preceding paragraph shall state, "Contingent upon the competent authority's approval of the application for offering or follow-on offering of beneficial securities, and on compliance with TPEx listing requirements based on beneficial owner distribution data at the time of completion of the sale, and on an undertaking to carry out centralized custody in accordance with applicable regulations, the TPEx grants approval for listing of these offered or additionally offered beneficial securities," while the letter forwarded to the competent authority under the preceding paragraph shall additionally state, "The trustee institution has the necessary qualifications and all required documents are complete."
     In case the documents submitted by the trustee institution are found incomplete, the TPEx shall issue a notice requiring supplementation within a time limit, and the period of review by the TPEx plus the time limit for the trustee institution to submit supplementary documents may not exceed 1 month. If the trustee institution makes supplementation within the time limit set by the TPEx, the TPEx shall handle the application following the procedure provided in paragraph 1. If the trustee institution fails to make supplementation within the time limit, the TPEx shall issue a letter notifying the trustee institution that it has not approved and forwarded the application to the competent authority, and shall reject and return the application, and send a copy of the notice to the competent authority as well as each competent authority in charge of the relevant industry.
14-4     A trustee institution that has obtained approval from the competent authority for its offering of REIT or REAT beneficial securities shall submit the required information to the TPEx within the time limits listed below:
  1. Within 3 days after the competent authority's approval, submit an application form for TPEx trading of REIT or REAT beneficial securities, filled out in full with all required documents attached. After reviewing the application and finding it in compliance with the requirements for TPEx trading, the TPEx shall enter into a contract for TPEx trading of REIT or REAT beneficial securities with the trustee institution, and shall submit the contract to the competent authority for recordation, with notifications in writing made to each securities firm and other relevant entities advising them to make pre-trading preparations.
  2. Within 3 days after completion of the sale, submit a beneficial owners distribution chart and agree with the TPEx on the listing date, which date shall not be less than 3 business days after the date of the submission of the chart.
    After the TPEx verifies that all required matters regarding the application are carried out in accordance with its regulations and that requirements for TPEx trading such as beneficial owner distribution are met, it shall announce the listing of the beneficial securities, and a monthly report shall be made to the board of directors. In case the application is found not in compliance with the requirements for TPEx trading, the contract for TPEx trading of REIT or REAT beneficial securities shall be voided, and the voidance shall be reported to the competent authority for recordation.
     A trustee institution that has obtained approval from the competent authority for a follow-on offering of REIT beneficial securities shall, within the time limit set forth in paragraph 1, subparagraph 2, file with the TPEx a report for TPEx trading of REIT beneficial securities, filled out in full with all required documents attached. After its review confirms that the report documents are complete, the TPEx will announce the listing of the REIT beneficial securities issued in the follow-on offering.
Chapter VIIII Review of Other Securities for TPEx Listing
15     When a public company applies for trading of its stock as TPEx managed stock, case handlers shall perform a review to ascertain whether the applicant company conforms to Article 3-1 of the TPEx Securities Review Rules. After they examine application documents for completeness, the TPEx will notify the issuer of its agreement to list the stock as TPEx managed stock and announce TPEx listing of the stock, and submit the contract for TPEx trading of the stocks to the competent authority and the board of directors for recordation.
    The aforementioned provisions regarding various securities and review procedures will be applied mutatis mutandis to review of other securities already approved for issuance, in accordance with the nature of the given security.
15-1      When a companies whose stock is traded as managed stock applies for its stock to be traded in ordinary trading on the TPEx, the case handlers shall review whether the submitted application documentation is compete and complies with the provision of Article 12-3 of the TPEx Rules Governing Securities Trading on the TPEx, and submit the application for discussion by the Internal Review Meeting. If there is a resolution approving the application, the case handlers, after receiving signed ratification of the resolution, shall notify the applicant company in writing, and file the TPEx trading contract for recordation with the competent authority, and report it to the TPEx board of directors. If there is a resolution denying the application, the case handlers, after receiving signed ratification of the resolution, shall reject the application, and notify the applicant company in writing, and return the application documents.
     The provisions of Article 7, paragraphs 6 and 7 of these Procedures shall apply mutatis mutandis to the composition and convening procedures of the Internal Review Meeting under the preceding paragraph.
Chapter X Review by the Committee for Review of TPEx Securities Listings
16     Formal Review
  1. Case handlers shall draft a formal review report and proposal (Attachment 12) with respect to the complete review findings and submit it to the Review Committee for consideration, and provide an opinion on whether or not they agree to TPEx listing of the security. Where inspection finds an applicant company conforms to any of the conditions set forth in the provisos regarding business nature, market demand and supply conditions, government policy, or any other reasonable causes under Article 2, paragraph 2 or Article 3, subparagraphs 2 or 3 of the TPEx Supplementary Provisions for Applications for TPEx Stock Listing by Group Enterprises, the fact shall be listed in the review report as an important factor for review. If the case handling department finds the applicant company conforms to conditions in any one of the subparagraphs of Article 10, paragraph 1 of the TPEx Securities Review Rules making TPEx listing inadvisable, or is in violation of relevant supplementary provisions of the TPEx Securities Review Rules, it shall make a recommendation against TPEx listing in the review report or a recommendation that TPEx listing be approved in consideration of the totality of factors, provided that it shall give an explicit recommendation against TPEx listing when the applicant company conforms to the conditions under Article 10, paragraph 1, subparagraphs 7, 8, and 9 of the TPEx Securities Review Rules making TPEx listing inadvisable or is in violation of Article 2 or Article 3 of the TPEx Supplementary Provisions for Applications for TPEx Stock Listing by Group Enterprises.
  2. The review findings report, proposal information, and the audit report from the applicant company's CPA (including financial report) to be submitted along with the review recommendation for the initial application for TPEx listing and the questionnaire for review by the Review Committee shall be submitted to each Review Committee member for evaluation no less than 7 days prior to the convening of the Review Committee. Each Review Committee member shall complete a review opinion chart listing their opinions regarding each item and specifying any questions they may have and submit the review opinion chart to the case-handling department 2 days before the Review Committee convenes. The manager of the case-handling department shall designate a person to be responsible for the above items. The meeting sequence and order in which cases submitted during a given month shall be reviewed shall in principle be based on the serial number assigned to each TPEx listing application in the order they are received.
  3. Beginning 3 days prior to the convening of the Review Committee, members of the Review Committee may personally proceed to the TPEx's case-handling department to inspect the applicant company's application documents, the case handlers' audit report working papers, the CPA's audit report working papers, the recommending securities firm's assessment working papers, and the application review working papers of the case handling department's personnel.
17     Convening of Review Committee Meetings
  1. When the Review Committee convenes, Review Committee members shall attend, along with relevant review personnel from the TPEx case-handling department invited to provide direction.
  2. When the Review Committee convenes, the TPEx may invite representatives of the applicant company, the recommending securities firm, the certifying CPA, or their attorneys to appear for questioning and supplementary explanation. Inquiries put forward by Review Committee members will be answered in the meeting by relevant persons from the applicant company. The case-handling department shall submit a report based on the TPEx's comprehensive audit opinion; an explanation shall also be supplemented in regard to the matters on which the case-handling department made inquiries. In addition, the reasonableness of the responses shall be carefully considered prior to the agreement for TPEx listing of the securities being submitted to the competent authority for recordation. Questions involving calculation of the security's offering price or matters of professional judgment shall be handled in accordance with the above procedures, and in addition, the recommending securities firm shall also be asked to provide a supplementary assessment and the certifying CPA to issue an opinion.
  3. After the conclusion of meetings of the Review Committee, the results of the review and the committee members' questions and the responses given shall be made available in the reading room at the TPEx.
18     When the Review Committee convenes, reviews of the following matters shall be conducted in accordance with the TPEx Securities Review Rules and other relevant laws, regulations, and materials:
  1. When it is determined through agreement that the conditions provided in any of the subparagraphs of Article 10, paragraph 1, subparagraphs 7 through 9 of the TPEx Securities Review Rules exist or there is a violation of Article 2 or 3 of the Taipei Exchange Supplemental Directions Governing Applications by Consortiums for TPEx Listing of Stock, the Review Committee shall make a resolution to reject the application.
  2. Voting may commence only after a determination that none of the circumstances of the previous paragraph exist. A two-thirds majority (inclusive) of Review Committee members present shall be required for approval.
  3. Where approval for TPEx listing has been granted by resolution of the Review Committee, a record of the case shall be compiled and submitted to the Board of Directors. Where a resolution is approved to submit the application to the Board of Directors following submission of supplementary materials, the applicant company shall be notified in writing of a deadline by which the supplementation shall be completed, at which time the application shall be submitted to the Board of Directors. Where TPEx listing approval is denied or the application rejected by resolution, signed approval of the TPEx's president shall be obtained and the applicant company notified by letter.
19     Case handlers shall submit a written report in the event that an applicant company is required to supplement application materials pursuant to the preceding Point and supplementation remains incomplete beyond the deadline and after due notice has been given.
Chapter XI Ratification by the Board of Directors and Reporting to the Competent Authority for Recordation
20     After a recommendation for agreement to TPEx listing has been issued by the Review Committee in a case of initial application for TPEx listing of securities, and after its deliberation and passage by the board of directors, a case record will be made. If the board of directors also adds supplementary resolutions, it shall notify the applicant company by letter to supplement the required matters within a specified time period.
21     When an application for a TPEx primary listing of a stock is submitted to the board of directors, which resolves that further relevant information must be supplemented and the application re-submitted to the board of directors, the applicant company shall be notified by letter to supplement the required materials within a specified time period; if the board resolves that the application must be returned to the Review Committee for re-review, the provisions of Point 16, paragraph 2 will apply mutatis mutandis to the review procedures, and the provisions of Point 18, paragraphs 1 and 2 will apply mutatis mutandis with regard to voting procedures.
Chapter XII (deleted)
22     In an application for TPEx primary listing of a stock, it shall first be determined that necessary items have been supplemented in the applicant company's preliminary prospectus in accordance with TPEx directions before the TPEx may agree to the application for primary listing of a stock, and in accordance with Article 9 of the Regulations Governing Trading of Securities on the TPEx, submit the TPEx contract for trading of the stock to the competent authority for recordation.
23     (deleted)
24     (deleted)
Chapter XIII Rejection and Re-review of Applications
25     When the Review Committee makes a resolution against TPEx listing or rejecting the application in the case of an initial application for TPEx listing, or the applicant company fails to apply or to supplement the application within the period prescribed by these Procedures or official notices from the TPEx, then following report and signed approval, the applicant company shall be notified in writing and the application returned.
26     Re-review of Initial Applications for TPEx Listing of Stock:
  1. In cases where the Review Committee passes a resolution rejecting the application or against TPEx listing or the application is rejected in accordance with Point 7(6) of these Procedures, the applicant company may, within 20 days of the date of issuance of the TPEx's notification letter, submit its reasons for requesting re-review along with relevant materials to the TPEx for reconsideration.
  2. An applicant company's reasons for requesting re-review shall be limited to whether the grounds for the original resolution rejecting the application or against TPEx listing were erroneous.
  3. After the case-handling department has rendered a specific opinion on the application for re-review, the application shall again be submitted to the Review Committee for review. During the review, case handlers shall compile a record of the previous review's question and answer session for the reference of committee members. Following the Review Committee's review of the application for re-review, where there are determined to be no grounds for re-review or where on the basis of relevant information TPEx listing of the securities is still deemed inadvisable, the signed consent of the TPEx's president shall be obtained and the applicant company notified. Where it is determined that there are grounds for re-review, the application shall be submitted to the TPEx's board of directors for consideration. An application that is rejected in accordance with Point 7(6) of these Procedures shall be re-reviewed by the Internal Review Meeting, and the case-handling personnel shall compile and provide the question and answer materials from the previous review for reference by the Internal Review Meeting. If, after its review, the Internal Review Meeting resolves that the appeal is without merit, or it considers on the basis of relevant information that the stock is still not suitable for TPEx listing, it shall reject the application after submitting a written request for approval to the TPEX president. If the Internal Review Meeting resolves that the appeal has merit, it may then submit it to the Review Committee for review.
  4. Where the Review Committee or the Internal Review Meeting has resolved that there are no grounds for re-review or that based on the relevant materials TPEx listing of the securities is still inadvisable, the applicant company may make no further application for re-review.
  5. Where the board of directors resolves that there are grounds for a re-review and there are no other factors making TPEx listing inadvisable, the company's securities shall be approved for TPEx listing.
  6. Where an applicant company withdraws its application for re-review during the review process, it shall be deemed not to have applied for re-review.
  7. The content to be reviewed in applications for re-review shall be strictly limited to whether the grounds for the original rejection of the application or decision against TPEx listing were erroneous and whether any other conditions have subsequently arisen rendering the securities unsuitable for TPEx listing. The provisions of these Procedures shall apply mutatis mutandis to the re-review process. The provisions of these Procedures shall apply mutatis mutandis to the re-review period except where no other conditions have subsequently arisen rendering the securities unsuitable for TPEx listing, and where the applicant for re-review has filed the application with the Review Committee or the Internal Review Meeting for re-review in a given month by the first of the month.
27     Where the applicant company's initial TPEx listing application has been voluntarily withdrawn, the application is rejected in accordance with Point 7(6) of these Procedures, or there has been a resolution of the Review Committee or the board of directors rejecting the application or against TPEx listing, if the reasons for the voluntary withdrawal or the resolution of the Review Committee or the board of directors rejecting the application or against TPEx listing have been rectified or extinguished, if the recommending securities firm, after a thorough assessment, finds no impediment to TPEx listing, another application for TPEx listing may be made only after the complete underwriter's assessment report has been submitted together with a financial report.
     When a voluntary withdrawal of an application by the applicant company or the resolution rejecting its application or against TPEx listing occurs during the first half of a given year, the applicant may make another application for TPEx listing only after obtaining a second-quarter financial report for the current year that has been submitted to the board of directors and reviewed by a CPA. When a voluntary withdrawal of an application by the applicant company or the resolution rejecting its application or against TPEx listing occurs during the second half of a given year, the applicant may make another application for TPEx listing only after obtaining an annual financial report for the current year that has been approved by the board of directors, audited and attested by a CPA, and recognized by the supervisors or the audit committee.
Chapter XIV Supplementary Provisions
28     These Procedures, and any amendments hereto, shall be implemented following approval and/or recordation by the competent authority. Any addition, deletion, or amendment to the appendices of these Procedures shall be implemented after approval by the President of the TPEx.