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Ratio of Shares for Centralized Custody
- The following shall place their respective shares in centralized custody: directors, supervisors, and shareholders with shareholding of 10 percent or more; a technology or cultural and creative enterprise's directors, supervisors, shareholders with shareholding of 5 percent or more, and shareholders providing patent rights or technical know-how as capital contribution, and holding a position in the company, and holding 0.5 percent or more, or at least 100,000 shares, of the total issued shares of the company at the time of applying for TPEx listing; a securities investment trust enterprise's directors, supervisors, and shareholders with shareholding of at least 5 percent. However, this restriction shall not apply where during the emerging stock registration period of a technology or cultural and creative enterprise or securities investment trust enterprise, its recommending securities firm holds 5 percent or greater of its total issued shares as a result of subscription or trading of operating securities.
- The persons required to place shares in centralized custody under the preceding paragraph shall place the full amount of the shares they hold as set out in the application documents after deduction of the number of shares placed with the recommending securities firm for underwriting, and the total shares placed in centralized custody shall not be less than the percentage of the total number of shares of common stock already offered and issued by the company at the time of application for listing as calculated in accordance with paragraph 1, subparagraph 2. An applicant company that is a securities investment trust enterprise shall place in centralized custody not less than 50 percent of its total issued shares of common stock as of the time of application for TPEx listing. If there is any deficit, arrangements shall be made with other shareholders to make up the deficit.
Where paragraph 1, subparagraph 2 requires that a certain minimum total number of shares be placed in centralized custody at the time of application for TPEx listing, the total percentage of shares that must be placed in centralized custody shall be calculated using one of the following methods:
- Where the total number of shares at the time of application for TPEx listing is 30 million or fewer, 25 percent of the total number of shares shall be placed in centralized custody.
- Where the total number of shares at the time of application for TPEx listing is greater than 30 million but not more than 1 billion, in addition to abiding by the provisions of paragraph 1 above, the party shall place in centralized custody 20 percent of those shares in excess of 30 million.
- Where the total number of shares at the time of application for TPEx listing is greater than 1 billion but not more than 2 billion, in addition to abiding by the provisions of paragraph 2 above, the party shall place in centralized custody 10 percent of those shares in excess of 1 billion.
- Where the total number of shares at the time of application for TPEx listing is greater than 2 billion, in addition to abiding by the provisions of paragraph 3 above, the party shall place in centralized custody 5 percent of those shares in excess of 5 billion.
- Persons who are required to place shares in centralized custody and who, when the issuing company carries out a share issuance for capital increase and completes amendment registration with the Ministry of Economic Affairs between the date of application for listing and the listing date, obtain capital increase shares or who obtain shares for other reasons, may not pledge, transfer, or similarly dispose of those shares, which shall be transferred as a block to centralized custody. Persons who have not physically received the shares as of the listing date shall undertake that they will submit those shares to centralized custody after their receipt. The "other reasons" given above refers to acquisition through succession or donation or through purchase on the Emerging Stock Market.
- Shares of the recommending securities firm that was engaged for underwriting were originally deducted and need not be placed in custody, provided that any number of shares that cannot actually be sold during an overallotment shall be placed in custody after their return by the recommending securities firm and prior to listing.
Shares bought back from the market by the recommending securities firm while implementing price stabilization measures during the first 5 business days after listing need not be placed in custody.
- Where the total number of shares placed in centralized custody pursuant to regulations is confirmed to exceed 50 percent of the total shares of the issuer at the time of application for TPEx listing, and where the issuer has paid-in capital of at least NT$30 billion, in the event that the portion of the number of shares placed in centralized custody exceeding the above-stated 50 percent of the total shares at the time of application for TPEx listing has been pledged to a financial institution by any director, supervisor, or shareholder with shareholding of 10 percent or more of the issuer for purposes of guaranteeing financing for the company or for him/herself, evidentiary documents furnished by the financial institution may be substituted for shares required to be placed in centralized custody; provided that if the pledge is released during the custodial period, such director, supervisor, or shareholder shall deposit the same amount of shares into centralized custody, or if the subject of the pledge is disposed of by the financial institution, the issuer's responsible person shall arrange within one month thereafter for deposit of the same amount of shares into centralized custody. However, the same shall not apply to technology or cultural and creative enterprises or securities investment trust enterprises.
- The shares required to be place in centralized custody shall be collected and deposited in coordination by the issuer's responsible person.
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The Taiwan Depository & Clearing Corporation (TDCC) shall be designated as the centralized depository institution.
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One-half of the shares placed in custody in accordance with applicable regulations may be withdrawn upon expiration of the 6-month period following the first day the issuer's shares are traded on the TPEx. A securities investment trust enterprise may make the withdrawal only after expiration of a 1-year period.
For shares placed in custody in accordance with applicable regulations, upon expiration of the 1-year period following the first day the issuer's shares are traded on the TPEx, the full amount of the remaining shares placed in custody may be withdrawn. A securities investment trust enterprise may make the withdrawal only after expiration of a 2-year period.
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The effect of stock custody shall not be affected by any change of an original holder's status.
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The above directors, supervisors, and shareholders shall commission the issuer to enter into a custody contract with a custodian institution, and the issuer shall submit a copy of the custody contract to the TPEx.
The custody contract shall expressly state the following matters:
- The types and amounts of the stocks under custody.
- The conditions and limitations on withdrawing stocks under custody according to regulations, and that under no circumstances shall the custody contract be rescinded during the custody period.
- The custodial receipt shall not be transferred or pledged, which restriction shall be noted on the receipt.
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Where a shareholder's equities belong to the public treasury and thus are subject to Article 3 of the Public Treasury Act, his/her shares may be exempted from the requirement for custody under these Regulations.
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Where, prior to expiration of the custody period, as a result of withdrawal of shares by operation of court orders or for other causes, the shares placed in centralized custody under relevant regulations fall below the number required for centralized custody for such custody period as calculated pursuant to regulations, the issuer's responsible person shall coordinate to remedy the deficit within one month.
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Where a TPEx listed company fails to observe relevant regulations by remedying its deficit of shares required for centralized custody, the TPEx may impose a penalty of NT$50,000 on a case-by-case basis and notify the company by letter to make corrections within 2 days from receipt of the letter, and, where the company still fails to make corrections within that time limit, a further penalty of NT$10,000 may be imposed on a daily basis until the day corrective measures are taken.
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These Directions, and any amendments hereto, shall be promulgated and enforced following submission to the competent authority for recordation.
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