On December 8, 2020, the Taiwan Stock Exchange amended Articles 4, 5, 19, 20, 28-1, and 28-6 of the Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings.

Subparagraph 4 of Paragraph 2 of Article 4 of the Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings (hereinafter the “Rules”) previously provides, “Where an issuing company applying for the listing of its stock has a market value of NT$5 billion or more and meets the criteria listed below, the TWSE will agree to list its stock: 4.The net worth on the financial reports for the most recent quarter and the most recent fiscal year is not lower than two-thirds of the capital stock identified in the financial report.” Subparagraph 3 of Paragraph 3 of the same previously provides, “Where an issuing company applying for the listing of its stock has a market value of NT$6 billion or more and meets the criteria listed below, the TWSE will agree to list its stock: 3. The net worth on the financial reports for the most recent quarter and the most recent fiscal year is not lower than two-thirds of the capital stock identified in the financial report.” This amendment deletes the text “the most recent fiscal year” from the provision of “the net worth on the financial reports for the most recent quarter and the most recent fiscal year is not lower than two-thirds of the capital stock identified in the financial report” to require only the most recent quarter. The same modification is also done for Article 5, provisions on technology or cultural and creative enterprise, Article 20, provisions on investment holding companies, and Article 28-1, provisions on foreign issuers.  

Taiwan Stock Exchange clearly indicated that this amendment is aimed to encourage domestic and foreign technology or cultural enterprise, and big non-profit new ventures to file for IPO. Such companies often have the traits of shorter establishment years and with large investment resulting in lack of performance in return on investment or even still in the loss. In order to encourage such companies to well utilize the capital market for fundraising and expand their operations, the Taiwan Stock Exchange decided to loosen the financial report observation period so that the IPO filing threshold can be lowered for such companies.

(Author: Hsin-Yang Lee, Intern Attorney at Formosan Brothers Attorneys-at-Law)

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