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When a TPEx primary listed company, pursuant to Article 4, paragraph subparagraph 9 of the Taipei Exchange Rules Governing Review of TPEx Trading of Foreign Securities ("the Review Rules"), mandates a lead recommending securities firm to assist its compliance with ROC securities laws and regulations, TPEx rules and public announcements, and the TPEx primary listing contract for stock of a foreign issuer that is entered into with the TPEx in the TPEx listing year and the following three accounting years, it shall do so in accordance with these Guidelines.
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A lead recommending securities firm assisting a TPEx primary listed company in complying with the ROC's relevant securities laws and regulations and the rules related to TPEx listing shall perform the following duties:
- It shall appoint dedicated personnel to assist and guide the TPEx primary listed company to comply with ROC securities laws and regulations, the TPEx rules and public announcements, and the TPEx listing contract, and provide relevant suggestions in a timely manner.
- When the TPEx primary listed company will hold a press conference concerning material information, the lead recommending securities firm shall provide consultation and recommendations and review the completeness and compliance of the information disclosure. If it knows or discovers that the TPEx primary listed company fails to comply in any respect in connection with the holding of the press conference concerning material information, it shall immediately take the initiative to contact the company and guide it to duly comply, and shall notify the TPEx.
- When the TPEx conducts routine regulation, regulation by exception, and other supervisory procedures concerning the TPEx primary listed company, the lead recommending securities firm shall assist it to complete matters requested by the TPEx, and accompany it to attend the supervisory meetings held by the TPEx and assist it in making statements and preparing materials.
- It shall ensure that the TPEx primary listed company scrupulously performs its commitments to the TPEx made at the time of TPEx listing; if the TPEx primary listed company is found unable to perform any commitment, the lead recommending securities firm shall immediately notify the TPEx.
- It shall annually hold for or assist the required attendance by the directors, supervisors, general manager, spokesperson, acting spokesperson, financial officer, accounting officer, research and development officer, internal audit officer, and representative for litigious and non-litigious matters of the TPEx primary listed company in courses in areas including corporate governance, commercial affairs, and legal affairs, to ensure their understanding of relevant legal liabilities. When any such personnel member resigns or is transferred to a different position, the lead recommending securities firm shall ascertain the reasons. If it finds any material irregularity, it shall notify the TPEx.
- It shall attend meetings of the company's board of directors as a nonvoting participant and provide timely consultation and recommendations. It also shall review the board meeting minutes after meetings, to ascertain the state of operations of the board. It furthermore shall appoint dedicated personnel to establish mechanisms for communication with the independent directors. It shall assist the company to select qualified candidates for the roster of nominated director candidates, to form an effectively operating board of directors.
- It shall annually make site visits to the company's important business locations or subsidiaries and ascertain the current status of operations. It furthermore shall interview those companies' de facto responsible persons and the key personnel in charge of their finances and business, and compile records of the interviews.
- It shall annually assist the TPEx primary listed company to conduct investor conferences in the ROC.
- It shall collect any information that has a material effect on the company's shareholders' equity or securities price from mass media coverage at the important business operation locations of the TPEx primary listed company, and assist the company in disclosing relevant material information. If the TPEx primary listed company is found unable to duly disclose material information in a timely manner, the lead recommending securities firm shall immediately consult with and guide the company to duly disclose the information, and notify the TPEx.
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The mandate contract entered into between a lead recommending securities firm and a TPEx primary listed company shall be approved by the board of directors, and include at least the following matters:
- The duration of the mandate contract shall be the TPEx listing year of the stock of the TPEx primary listed company, and the following three accounting years.
- A TPEx primary listed company shall, before holding press conferences regarding material information, notify the lead recommending securities firm and solicit its opinion. The lead recommending securities firm shall be obligated to faithfully maintain the confidentiality of any non-public information of the TPEx primary listed company that it knows of.
- During the duration of the mandate contract, the lead recommending securities firm shall annually assist the TPEx primary listed company with the procedures for, and filing matters in connection with, the holding of, or participating by invitation in, investor conferences in the ROC.
- During the duration of the mandate contract, the lead recommending securities firm shall send personnel to attend meetings of the company's board of directors as nonvoting participants. It shall review the board meeting minutes after meetings, and shall establish mechanisms for communication with the independent directors. The lead recommending securities firm shall assist the company to select qualified candidates for the roster of nominated director candidates, to form an effectively operating board of directors.
- When the lead recommending securities firm makes any request to access or read relevant information in accordance with TPEx requirements or the stipulations of the mandate contract, the TPEx primary listed company shall cooperate with the request.
- When the lead recommending securities firm assists the TPEx primary listed company in the compliance with laws and regulations pursuant to the mandate contract, it shall exercise the due care of a good administrator. If any matter attributable to the lead recommending securities firm results in a breach of the mandate contract, the lead recommending securities firm shall be held liable for damages for any injury to the TPEx primary listed company (including but not limited to any default penalty, change of trading method, suspension of trading, or delisting from the TPEx, imposed on the TPEx primary listed company by the TPEx).
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The TPEx primary listed company may not terminate the mandate contract with the lead recommending securities firm before the expiration of the mandate contract except for reason of a failure by the lead recommending securities firm to perform the mandate contract, a material dispute on the performance of the mandate contract between the parties, or another legitimate reason.
A TPEx primary listed company terminating the mandate contract with the lead recommending securities firm pursuant to the preceding paragraph shall state in writing the reasons for the termination and the name of the succeeding recommending securities firm, affixed with the written undertaking by the succeeding recommending securities firm committing it to bear the obligations of a lead recommending securities firm, and the mandate contract, and report the above materials by letter to the TPEx for recordation. The duration of the new mandate contract shall not be shorter than the remaining duration of the original mandate contract.
A mandated recommending securities firm referred to in the preceding two paragraphs shall comply with the provisions of Article 8 of the Taipei Exchange Rules Governing Review of TPEx Trading of Foreign Securities.
Relevant provisions in these Guidelines shall apply when a TPEx primary listed company mandates another recommending securities firm to assist in the compliance with laws and regulations pursuant to paragraph 2.
If a TPEx primary listed company fails to mandate another recommending securities firm to assist in the compliance with laws and regulations pursuant to paragraphs 2 and 3, it is deemed to have "violated a commitment made at the time of the application for TPEx listing." The TPEx may suspend the TPEx trading of its securities pursuant to Article 12-1, paragraph 1, subparagraph 7 of the Taipei Exchange Rules Governing Securities Trading on TPEx Markets and report the suspension to the competent authority for recordation.
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A lead recommending securities firm may not resign before the expiration of the mandate contract except in the case of a merger, demerger, or business transfer, or when the competent authority voids its permit, approves its dissolution, or orders it to suspend business, or for another legitimate reason.
A lead recommending securities firm referred to in the preceding paragraph shall state in writing the reasons for the resignation and the name of the qualified succeeding recommending securities firm, jointly signed by the new and the original recommending securities firms, and affixed with a letter of consent by the TPEx primary listed company, and the undertaking by the new recommending securities firm to bear the obligations of a lead recommending securities firm, and the mandate contract, and report the above materials by letter to the TPEx for recordation.
When the TPEx has given approval for a lead recommending securities to resign, the succeeding recommending securities firm that continues to assist in the compliance with laws and regulations shall be subject to all relevant provisions of these Guidelines.
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Lead recommending securities firms and succeeding recommending securities firms shall, during the period when they are mandated by the TPEx primary listed company to assist with its compliance with laws and regulations, retain relevant documents, working papers, data, or visit records in connection with the assistance process and with the site visits conducted, and such materials may be requisitioned by the TPEx when necessary.
A lead recommending securities firm on a quarterly basis shall upload via the internet, to the internet reporting system designated by the TPEx, a log recording its assistance with the company's compliance with laws and regulations under the preceding paragraph. The TPEx each fiscal year shall randomly select 5 percent or more of these logs as sample audit subjects. However, logs to which any of the following circumstances apply will be listed as priority sample audit subjects, and counted in the above percentage and cases:
- Those as instructed by the competent authority or judicial or law enforcement authorities for auditing or for evidentiary use.
- Those falling within the subject matter of a signed complaint for which concrete evidence has been provided.
- Where there has been media reportage of material irregularities in the company's finances or business.
- Where there has been serious failure by the lead recommending securities firm to duly file on a quarterly basis the logs of its assistance with the company's compliance with law and regulations.
- Where the TPEx primary listed company, because of a serious violation of ROC securities law or regulation or rules related to TPEx listing, has been subject to a disposition or sanction equal to or heavier than an administrative fine imposed by the competent authority in accordance with law or regulation or a monetary penalty imposed by the TPEx in accordance with rules.
- Where the TPEx considers necessary for another cause.
If a recommending securities firm violates these Guidelines, the TPEx may requisition documents, working papers, or data referred to in paragraph 1, and issue a demerit or refuse for a certain period to accept applications for registration of emerging stocks recommended by that recommending securities firm and assessment reports produced by that recommending securities firm, pursuant to the TPEx Regulations for Handling Deficiencies in an Evaluation Report, Concluding Opinion, or other Related Information Submitted by a Securities Firm.
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These Guidelines, and any amendments hereto, shall be implemented following the approval of the competent authority.
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