| Article 3 |
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| Article 4 |
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| Article 5 |
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| Article 6 |
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| Article 7 |
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| Article 8 |
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| Article 9 |
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| Article 9-1 |
In case of change of corporate name, type of stocks, par value, number of issued shares, name of exchanged stocks from convertible bonds or other contents of an OTC company, the company shall, after such change has been made in line with relevant laws and regulations, prepare an "Application for Change of Contents of OTC Stock or Convertible Bond" and submit the same together with a "Plan for Exchange of Share (Bond) Certificates" and other documents to the GreTai to apply for change of contents of OTC stocks or convertible bonds. After the GreTai has reported the same to the Competent Authority for recordation, the OTC company shall, before the date for suspension of the entry of any change in the shareholders register or creditors register and within the time limit prescribed by the GreTai, submit the required documents to the GreTai and disclose the change on the Internet information reporting system designated by the GreTai. In case where the company name is changed, within three years of approval of the change of company name, all information for compulsory disclosure in accordance with the laws and regulations shall be disclosed under both the previous company name and the new company name, and each day for consecutive three months after the change of company name, the company shall post the aforesaid information, as material information for public announcement, onto the Internet information reporting system designated by the GreTai. In the case of capital reduction registration, it shall be provided in the “Plan for Exchange of Securities” submitted to the Competent Authority that the procedures for exchange of new securities certificates shall be processed within three months from the date on which the exchange plan is approved by the Competent Authority. Thereafter, the said exchange plan shall be actually implemented. If the exchange of new share certificates resulting from the capital reduction is likely to fall behind schedule or there might be any abnormal situation, the GreTai shall be notified in writing in advance; provided, exchange of securities certificates may be waived in the case of buy back of treasury stocks and cancellation of shares under Article 28-2 of the Securities and Exchange Act.
The contents of the "Plan for Exchange of Share (Bond) Certificates" referred to in the preceding paragraph shall be prescribed in accordance with the GreTai's "Procedures for Exchange of Securities Certificates by OTC Companies".
An OTC company may decide the date for trading new shares or new convertible bonds on the OTC Market (identical with the last day of trading of old shares or old convertible bonds) only if either the total number of the exchanged shares has reached 30% of the total numbers of stocks traded on the OTC Market or the total face value of the exchanged convertible bonds has reached 30% of the remaining issued units traded on the OTC Market, and may submit an application with the GreTai for its transmission to the Competent Authority in charge for its recordation, for permission to implement the plan.
Where the volume of the total exchanged stocks has not reached 30% of total OTC-listed shares of the OTC company or the total face value of the exchanged convertible bonds has not reached 30% of the remaining issued units traded on the OTC Market, if the OTC company makes a written undertaking that starting from the date the new shares or new convertible bonds are traded, the replacement procedures will be commenced and any old shares or old convertible bonds received will be exchanged with new shares or new convertible bonds on the same date, the procedures enumerated in the preceding paragraph shall apply. If it does not issue the written undertaking, the designation of the date for OTC trading of the new shares or new convertible bonds (identical with the last day of trading of old shares or old convertible bonds) shall not at the latest be later than 30 days after the first date on which the old shares or old convertible bonds are replaced with new shares or new convertible bonds. Further, commencing
from the above date, it shall continue with the replacement procedures and issue new replacement shares or new replacement convertible bonds on the same date on which it receives the old shares or old convertible bonds.
Where an issuer of convertible bonds traded on the OTC Market is a TSE-listed company which changes its company name, after such change has been processed in accordance with the laws and regulations, paragraphs 1 through 4 shall be applicable in conjunction with relevant documents.
Where an issuer of corporate bonds traded on the OTC Market changes its company name, the issuer shall, within thirty (30) days after approval by the Competent Authority of such change, prepare an "Application for Change of the Name of OTC Corporate Bond" and submit the same together with a "Plan for Exchange of Bond Certificates" and other documents to the GreTai to apply for change of name of the OTC corporate bonds. After the GreTai has reported the same to the Competent Authority for recordation, the OTC company shall, thirty (30) days before the commencement date for exchange of the new bond certificates, submit the required documents to the GreTai and disclose the change on the Internet information reporting system designated by the GreTai.
The contents of the "Plan for Exchange of Bond Certificates" referred to in the preceding paragraph shall be prescribed in accordance with the GreTai's "Operation Procedures for Exchange of OTC Securities"
An issuer of OTC corporate bonds shall undertake in writing that commencing from the first date for exchange of the new bond certificates, it shall continue with the replacement procedures, including unconditional payment of principle and interest to holders of old bond certificates for such exchange, and concurrently issue new replacement corporate bonds on the same date on which it issues new replacement bonds.
An OTC-listed securities firm shall cease to trade old corporate bonds since the first date on which the new corporate bonds are traded on the OTC Market.
In the case of change of the contents or name of issuer of other bonds, foreign securities, beneficial securities, asset-backed securities, or REIT or REAT beneficial securities traded on the OTC Market, unless otherwise provided for by laws and regulations, the provisions in paragraphs 1 through 9 above shall apply mutatis mutandis.In case of change of corporate name, type of stocks, par value, number of issued shares, name of exchanged stocks from convertible bonds or other contents of an OTC company, the company shall, after such change has been made in line with relevant laws and regulations, prepare an "Application for Change of Contents of OTC Stock or Convertible Bond" and submit the same together with a "Plan for Exchange of Share (Bond) Certificates" and other documents to the GreTai to apply for change of contents of OTC stocks or convertible bonds. After the GreTai has reported the same to the Competent Authority for recordation, the OTC company shall, before the date for suspension of the entry of any change in the shareholders register or creditors register and within the time limit prescribed by the GreTai, submit the required documents to the GreTai and disclose the change on the Internet information reporting system designated by the GreTai. In case where the company name is changed, within three years of approval of the change of company name, all information for compulsory disclosure in accordance with the laws and regulations shall be disclosed under both the previous company name and the new company name, and each day for consecutive three months after the change of company name, the company shall post the aforesaid information, as material information for public announcement, onto the Internet information reporting system designated by the GreTai. In the case of capital reduction registration, it shall be provided in the “Plan for Exchange of Securities” submitted to the Competent Authority that the procedures for exchange of new securities certificates shall be processed within three months from the date on which the exchange plan is approved by the Competent Authority. Thereafter, the said exchange plan shall be actually implemented. If the exchange of new share certificates resulting from the capital reduction is likely to fall behind schedule or there might be any abnormal situation, the GreTai shall be notified in writing in advance; provided, exchange of securities certificates may be waived in the case of buy back of treasury stocks and cancellation of shares under Article 28-2 of the Securities and Exchange Act.
The contents of the "Plan for Exchange of Share (Bond) Certificates" referred to in the preceding paragraph shall be prescribed in accordance with the GreTai's "Procedures for Exchange of Securities Certificates by OTC Companies".
An OTC company may decide the date for trading new shares or new convertible bonds on the OTC Market (identical with the last day of trading of old shares or old convertible bonds) only if either the total number of the exchanged shares has reached 30% of the total numbers of stocks traded on the OTC Market or the total face value of the exchanged convertible bonds has reached 30% of the remaining issued units traded on the OTC Market, and may submit an application with the GreTai for its transmission to the Competent Authority in charge for its recordation, for permission to implement the plan.
Where the volume of the total exchanged stocks has not reached 30% of total OTC-listed shares of the OTC company or the total face value of the exchanged convertible bonds has not reached 30% of the remaining issued units traded on the OTC Market, if the OTC company makes a written undertaking that starting from the date the new shares or new convertible bonds are traded, the replacement procedures will be commenced and any old shares or old convertible bonds received will be exchanged with new shares or new convertible bonds on the same date, the procedures enumerated in the preceding paragraph shall apply. If it does not issue the written undertaking, the designation of the date for OTC trading of the new shares or new convertible bonds (identical with the last day of trading of old shares or old convertible bonds) shall not at the latest be later than 30 days after the first date on which the old shares or old convertible bonds are replaced with new shares or new convertible bond |
| Article 10 |
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| Article 10-1 |
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| Article 10-2 |
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| Article 10-3 |
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| Article 11 |
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| Article 11-1 |
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| Article 11-2 |
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| Article 11-3 |
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| Article 11-4 |
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| Article 11-5 |
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| Article 11-6 |
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| Article 12 |
In the event that an issuer has any of the following conditions, the GreTai may place the OTC securities under an altered trading method, and a securities broker shall collect in advance the full amount of the purchasing price or securities for sale when accepting trading orders:
1. Where its latest individual financial report as publicly announced and reported in accordance with Article 36 of the Securities and Exchange Act shows that its net worth is lower than half of its share capital stated on the financial statement. If the issuer is a holding company, the term "net worth" means the shareholders' equity minus minority interest as stated on the consolidated financial report. However, when an OTC company records as a deduction from shareholders equity the cost of shares bought back by it pursuant to Article 28-2 of the Securities and Exchange Act or of shares held in said OTC company by subsidiaries thereof, the par value of treasury stock held in said OTC company by the OTC company and subsidiaries thereof may be deducted from the share capital stated on the financial statement in the calculation of the above-stated ratio.
2. Where the issuer fails to call a general shareholders meeting within 6 months after the closure of a fiscal year; provided that this provision shall not apply if the issuer has applied, with justifiable reasons, to the Competent Authority and obtained its approval.
3. Where the CPA issues an audit report or review report containing an unqualified opinion with modified wording for the issuer's financial report for the most recent period as publicly announced and registered pursuant to Article 36 of the Securities and Exchange Act due to substantial doubt as to the going concern assumption regarding that issuer, or where the certifying CPA issues an audit report containing a qualified opinion regarding the issuer's annual or semi-annual financial report, or, for a company other than a holding company, issues a qualified review report for its semi-annual consolidated financial report, as publicly announced and registered pursuant to Article 36 of the Securities and Exchange Act, because of restrictions on the scope of the audit or because the accountant deems there to be anything inappropriate in the accounting policy choices of the management or in the disclosure in the financial statement; however, this restriction shall not apply to a semi-annual financial report where the CPA has issued the qualified audit report for the reason that an amount of long-term equity investment and profit/loss thereupon is calculated on the basis of statements of the invested company that have not been attested by a CPA, and the attesting CPA fully discloses in the audit report the reasons for the qualified opinion and the monetary amounts of any accounting items that may be affected thereby, and no material irregularities are present. However, if an above-mentioned invested company is a major subsidiary included in the preparation of the consolidated statement or a subsidiary of a financial holding company, its semi-annual financial report shall also be reviewed or audited by a CPA in accordance with applicable laws and regulations.
4. Where the issuer has any of the conditions, to serious extent, under Article 9 of the Handling Procedures of the OTC Securities Exchange for Verification and Publication of Material Information of OTC Companies, Article 7 of the OTC Securities Exchange Operation Procedures for Press Conference Regarding Material Information of OTC Companies, Article 11 of the Handling Procedures of Routine and Exceptional Administration Regarding Finance and Business of OTC Companies, Article 8 of the Handling Procedures for Verification and Publication of Material Information of Foreign Securities, and Article 6 of the Rules Governing Submission of Information by OCT Companies.
5. Where two-thirds or more directors and supervisors are under court order of suspension of performing job responsibilities.
6. Where an application to the court for reorganization in accordance with Article 282 of the Company Act has been filed.
7. Failure to repay creditors upon maturity, or early redemption of bonds per demand of creditors.
8. Dishonor of a negotiable instrument by a financial institution because of insufficient funds on deposit, where the GreTai is aware of such dishonor.
9. Where more than 50% directors and supervisors have been changed and, as a result, the dispersal of shareholding fails to meet the standard prescribed in subparagraph 3 of paragraph 1 of Article 3 of the Review Rules, or any new director, supervisor or general manager has any condition provided for in subparagraph 7 of paragraph 1 of Article 10 of the Review Rules and fails to rectify within the time limit prescribed by the GreTai.
10. Where the number of companies held by an investment holding company falls below two companies; provided, for investment holding companies created as the result of share conversion, general assignment, assignment of business, or corporate split, this shall not apply within one year of commencement of OTC trading.
11. Where, after a company split, paid-in capital fails to reach the standard set forth in subparagraph 1 of paragraph 1 of Article 3 of the Review Rules.
12. Where an already OTC-listed parent company (including a financial holding company or investment holding company) fails to abide by an undertaking to purchase the shares of minority shareholders of a listed/OTC subsidiary in which it has shareholding of more than 70 percent.
13. Failure to handle shareholder services in accordance with Article 3, paragraph 5, subparagraph 1 or 2 of the GreTai Rules Governing Review of Securities Traded on Over-the-Counter Markets, where the circumstances in the particular case are serious.
14. Where explanations given in a press conference concerning material information fail to clarify points in question, and the GreTai deems it necessary to protect the rights and interests of investors.
15. Other conditions for which the GreTai deems requiring such compliance.
The GreTai shall publicly announce, two (2) days before the date of implementation, the securities whose trading requires collection in advance of the full amount of the purchase price or the securities for sale pursuant to the preceding paragraph, provided that the requirement of collection in advance of the full purchase price or securities shall not apply to trades of odd-lot shares of such securities.
The duration for which securities are placed under the altered trading method by the GreTai for any reason set forth in a subparagraph of paragraph 1, except for those subject to disposition under subparagraph 6, may not be less than three months, or, unless otherwise provided by these Rules, upon the extinguishment of the reason and in the absence of any other reason set forth in the subparagraphs of that paragraph, the GreTai may publicly announce the reinstatement of normal settlement trading for such securities beginning from the second business day after the public announcement date.
When an issuer of OTC securities placed under the altered trading method by the GreTai due to a circumstance in subparagraph 1, 7, or 8 of paragraph 1 achieves compliance with all of the subparagraphs below, and in the absence of any other reason set forth in the subparagraphs of paragraph 1, the GreTai may reinstate normal settlement trading:
1. Where OTC securities are placed under the altered trading method due to the circumstances under paragraph 1, subparagraph 1, and the financial report for the most recent period as publicly announced and registered by the issuer pursuant to Article 36 of the Securities and Exchange Act indicates that its net worth is not lower than one-half the value of its share capital as reported in that financial report, and the stated net worth is higher than the previous period.
2. Where securities are placed under the altered trading method due to the circumstances under paragraph 1, subparagraph 7, and the issuer has already settled the obligation, or reached an agreement with the creditor resolving the obligation.
3. Where securities are placed under the altered trading method due to the circumstances under paragraph 1, subparagraph 8, and the issuer completes any of the remedial procedures listed below within three months, presents a direct or indirect note from the clearing house as evidence thereof, and there is no further instance of the dishonoring of its negotiable instruments prior to reinstatement of normal settlement trading. However, if the OTC company adopts the remedial procedure of "extinguish the debt under the negotiable instrument by actual settlement of the amount of the instrument," it shall additionally submit a rechecking form prescribed by the GreTai. The form shall be signed and certified by a certified public accountant and an attorney at law and submitted to the GreTai along with the other relevant documents and materials for approval and recordation:
(1) Extinguish the debt under the negotiable instrument by actual settlement of the amount of the instrument.
(2) Deposit the amount of the instrument into the financial enterprise that dishonored the instrument with a request that it be listed as provision for payment under "other payables."
(3) Pay the amount of the instrument out of the checking account or other payables account upon re-presentment of the instrument subsequent to its dishonoring.
The GreTai may impose the periodic trading method for the OTC-listed securities of an issuer to which any of the circumstances listed below applies, and implement that method beginning on the second business day after the public announcement date:
1. Its OTC-listed securities are placed under an altered trading method by the GreTai due to the existence of circumstances under subparagraphs 6, 7, or 8 of paragraph 1.
2. Its OTC-listed securities are placed under an altered trading method by the GreTai due to the existence of circumstances under subparagraph 1 of paragraph 1, and the net worth stated in its individual financial report or its holding company consolidated financial report for the most recent period as publicly announced and registered by the issuer pursuant to Article 36 of the Securities and Exchange Act is lower than three-tenths of the share capital stated in the financial report. The aforementioned net worth and ratio shall be calculated in accordance with the provisions of paragraph 1, subparagraph 1.
3. Its OTC-listed securities are placed under an altered trading method by the GreTai, and the GreTai deems it necessary to impose the periodic trading method for the securities.
Orders for securities for which periodic trading is imposed pursuant to the preceding paragraph shall be matched once every 30 minutes, provided that this procedure shall not apply to odd-lot trades of such securities.
When the reason for which the GreTai imposes periodic trading for securities pursuant to paragraph 5 is extinguished, and absent any of the circumstances in the other subparagraphs of that paragraph, the GreTai may publicly announce the cancellation of the periodic trading method for such securities from the second business day following the public announcement date.
When the GreTai duly places OTC-listed securities under an altered trading method, reinstates normal settlement trading, or imposes or cancels the periodic trading method, the GreTai shall report such matters to the Competent Authority for recordation within one month from the public announcement date.In the event that an issuer has any of the following conditions, the GreTai may place the OTC securities under an altered trading method, and a securities broker shall collect in advance the full amount of the purchasing price or securities for sale when accepting trading orders:
1. Where its latest individual financial report as publicly announced and reported in accordance with Article 36 of the Securities and Exchange Act shows that its net worth is lower than half of its share capital stated on the financial statement. If the issuer is a holding company, the term "net worth" means the shareholders' equity minus minority interest as stated on the consolidated financial report. However, when an OTC company records as a deduction from shareholders equity the cost of shares bought back by it pursuant to Article 28-2 of the Securities and Exchange Act or of shares held in said OTC company by subsidiaries thereof, the par value of treasury stock held in said OTC company by the OTC company and subsidiaries thereof may be deducted from the share capital stated on the financial statement in the calculation of the above-stated ratio.
2. Where the issuer fails to call a general shareholders meeting within 6 months after the closure of a fiscal year; provided that this provision shall not apply if the issuer has applied, with justifiable reasons, to the Competent Authority and obtained its approval.
3. Where the CPA issues an audit report or review report containing an unqualified opinion with modified wording for the issuer's financial report for the most recent period as publicly announced and registered pursuant to Article 36 of the Securities and Exchange Act due to substantial doubt as to the going concern assumption regarding that issuer, or where the certifying CPA issues an audit report containing a qualified opinion regarding the issuer's annual or semi-annual financial report, or, for a company other than a holding company, issues a qualified review report for its semi-annual consolidated financial report, as publicly announced and registered pursuant to Article 36 of the Securities and Exchange Act, because of restrictions on the scope of the audit or because the accountant deems there to be anything inappropriate in the accounting policy choices of the management or in the disclosure in the financial statement; however, this restriction shall not apply to a semi-annual financial report where the CPA has issued the qualified audit report for the reason that an amount of long-term equity investment and profit/loss thereupon is calculated on the basis of statements of the invested company that have not been attested by a CPA, and the attesting CPA fully discloses in the audit report the reasons for the qualified opinion and the monetary amounts of any accounting items that may be affected thereby, and no material irregularities are present. However, if an above-mentioned invested company is a major subsidiary included in the preparation of the consolidated statement or a subsidiary of a financial holding company, its semi-annual financial report shall also be reviewed or audited by a CPA in accordance with applicable laws and regulations.
4. Where the issuer has any of the conditions, to serious extent, under Article 9 of the Handling Procedures of the OTC Securities Exchange for Verification and Publication of Material Information of OTC Companies, Article 7 of the OTC Securities Exchange Operation Procedures for Press Conference Regarding Material Information of OTC Companies, Article 11 of the Handling Procedures of Routine and Exceptional Administration Regarding Finance and Business of OTC Companies, Article 8 of the Handling Procedures for Verification and Publication of Material Information of Foreign Securities, and Article 6 of the Rules Governing Submission of Information by OCT Companies.
5. Where two-thirds or more directors and supervisors are under court order of suspension of performing job responsibilities.
6. Where an application to the court for reorganization in accordance with Article |
| Article 12-1 |
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| Article 12-2 |
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| Article 12-3 |
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| Article 12-4 |
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| Article 12-5 |
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| Article 12-6 |
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| Article 12-7 |
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| Article 12-8 |
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| Article 12-9 |
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| Article 12-10 |
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| Article 12-11 |
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| Article 12-12 |
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| Article 12-13 |
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| Article 13 |
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| Article 13-1 |
If any of the following situations exists with respect to an issuer, the GreTai may report to the Competent Authority for approval to terminate the trading of its managed stocks on the OTC Market:
1. Where the stocks have been listed on Taiwan Stock Exchange Corporation;
2. Where the stocks have been changed to ordinary trading on the OTC Market pursuant to Article 12-5 of these Rules;
3. Where the application and the attached documents contain false statement or omission in connection with significant issues or facts;
4. Where the most recent financial report publicly announced or reported under Article 36 of the Securities and Exchange law shows that the net worth is minus twice the paid-in capital; likewise, where a subsequently publicly announced and registered individual financial report shows that the net worth is minus twice the share capital stated on the financial report. However, when a company records as a deduction from shareholders equity the cost of shares bought back by it pursuant to Article 28-2 of the Securities and Exchange Act or of shares held in said company by subsidiaries thereof, the par value of treasury stock held in said company by the company and subsidiaries thereof may be deducted from the share capital stated on the financial report in the calculation of the above-stated ratio;
5. Where the issuer has any of the conditions under Article 9, Article 10, Article 11, paragraph 2 of Article 17, subparagraph 1 through subparagraph 7 of paragraph 1 of Article 315, and Article 397 of the Company Act or other conditions, and its corporate registration is revoked or the company is dissolved by the relevant Competent Authority;
6. Where the issuer has any of the conditions under Article 251 or Article 271 of the Company Act or other conditions, and the approval is revoked by the relevant Competent Authority;
7. Where an application for re-organization is dismissed pursuant to Article 285-1, paragraph 3, subparagraph 2 of the Company Act and such dismissal becomes final;
8. Where the issuer is adjudicated bankrupt by the court and such adjudication becomes final;
9. Where, if a financial institution, the issuer has become subject to receivership duly imposed by the Competent Authority in charge of the relevant industry;
10. Where the stocks have been traded as OTC managed stocks for a period of longer than two years;
11. Where OTC trading of the stocks has been suspended under any subparagraph of paragraph 1 of Article 13 hereof, and any circumstance set out in any subparagraph of paragraph 1 of that article subsequently continues to exist after six months has elapsed.
12. Where the issuer has materially violated the contract for trading securities on the OTC Market or these Rules, or where other significant event occurs, and the GreTai decides that it is improper for the issuer to trade as managed stocks on the OTC Market; or
13. Where there is any other matter for which it is necessary to terminate the trading of managed stocks on the OTC Market.
Subparagraph 9 of the preceding paragraph shall also apply to any company whose stock fell in the category of OTC managed stock and to which the cause set forth in that subparagraph applied prior to the addition of that subparapgraph.
Upon approval by the Competent Authority to terminate the OTC trading of a managed stock, the GreTai shall publicly announce the termination 20 days before the implementation date, except in the case of subparagraph 9 of paragraph 1, in which case paragraph 5 of Article 12-2 shall apply mutatis mutandis. |
| Article 13-2 |
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| Article 14 |
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| Article 15 |
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| Article 16 |
In the event that an OTC company merges with another OTC company, the surviving company is still an OTC company, and the extinguished company shall make public announcement of the termination of the trading of its stocks on the OTC Market or of the de-listing of its stocks from the centralized stock exchange. If by reason of the merger, the surviving company issues new shares or certificates of entitlement to new shares of the same class of stocks that are already listed on the OTC Market, OTC trading of the shares may commence from the record date of the merger; provided, trading of the originally OTC-listed securities shall be suspended eight trading days before the record date of the merger (and non-inclusive of that date), and an application shall be completed and filed with the GreTai, annexing the relevant documents, at least 15 trading days before the record date of the merger (and non-inclusive of that date).
Except in the case of a securities, financial, or insurance company with special approval from the authority in charge of the industry concerned, where an OTC company merges with an unlisted or non-OTC company by using as consideration an follow-on issue (whether by public offering and issuance or private placement) of shares, or securities that may be converted into or may be used to subscribe shares, all of the conditions listed below shall be met, the surviving company after the merger shall remain an OTC-listed company, and the common shares or overseas depositary receipts additionally issued due to the merger (including those publicly offered and issued or privately placed) shall be handled in accordance with paragraph 4 of this Article:
1.The financial information of the merged non-OTC/unlisted company as well as the consolidated financial information of the merging and merged companies shall meet the profitability requirement under the Review Rules; provided, this restriction shall not apply where the net worth per share of the surviving company after the merger, both in the most recent financial year and on the most recent pro-forma financial report, is higher than the net worth per share of the original OTC company. Where the above proviso is satisfied, if the OTC company or the merged non-OTC (unlisted) company, from the date next following the date of the balance sheet in the most recent financial report to the date the application is filed with the GreTai, undergoes any material change in capital affecting the net worth per share, such as a capital increase or reduction or distribution of dividends, the net worth per share of the surviving company shall be higher than the net worth per share of the original OTC company, and the
attesting CPA shall submit a review opinion following the imputed adjustment.
2.The merged non-OTC/unlisted company does not have any of the conditions under subparagraphs1, 3, 4, 7, and 10 of paragraph 1 of Article 10 of the Review Rules, or the condition under subparagraph 6 where an examination or CPA's opinion shows that the company fails to prepare financial reports in accordance with relevant laws and regulations and generally accepted accounting principles;
3.The financial report of the merged non-OTC/unlisted company within the most recent year shall have been audited and certified by a CPA approved by the Competent Authority to handle financial certification of public issuers, and such CPA has issued an audit report with an unqualified opinion.
4. Where the merged non-OTC/unlisted company is a foreign company meeting the conditions set forth in Article 21 of the Business Mergers and Acquisitions Act, documentation of foreign investment approval by the Ministry of Economic Affairs Investment Commission shall be obtained. Also, an audit report with an unqualified opinion issued by the attesting CPA shall be obtained for the foreign company's financial report, as well as an opinion issued by a Taiwan CPA regarding the differences in accounting principles applied in the Republic of China and in the foreign company's home country and the resulting effects on the financial report; the provisions of the preceding subparagraph shall not apply. In addition, a CPA other than the original attesting CPA, and approved by the Competent Authority to perform financial attestation for public companies, shall submit a written reference report analyzing and explaining the reasonableness of the share exchange ratio and price and overall synergy at the time of the
merger between the OTC company and the foreign company. Provided, subparagraphs 1 and 2 of this paragraph, and paragraph 4, do not apply if the foreign company meets the requirements of Article 4, paragraph 1, subparagraphs 2 and 4 of the GreTai's Rules Governing Review of Over-the-Counter Trading of Foreign Securities.
If the new shares issued for capital increase due to merger under the preceding two paragraphs are not of the same type as those already traded on the OTC Market, they shall meet the conditions under paragraph 6 of Article 15 of the Review Rules.
Where a merger is made in accordance with paragraph 2, and the additional common shares or overseas depositary receipts issued (whether by public offering or private placement) due to that merger will account for 10 percent or more of the aggregate shares already issued and anticipated to be issued by the OTC company, any director, supervisor, or shareholder holding more than 10% of issued shares of the merged company who holds common shares or overseas depositary receipts issued due to the merger (including those publicly offered and issued or privately placed) shall comply with all the below-listed provisions, provided, this requirement may be waived where an OTC company merges with a subordinate company of which it holds 90 percent or more of the outstanding shares in accordance with Article 316-2 of the Company Act:
1. Such persons shall deposit all such common shares publicly offered and issued due to the merger and held by them into central custody. Further, the total amount of shares under custody shall not be less than 30 percent of the common shares publicly offered and issued due to the merger. In case of a shortfall, negotiation shall be made with other shareholders holding common shares publicly offered and issued due to the merger to make up the shortfall. The method for withdrawal of the shares from custody shall be governed by mutatis mutandis application of the provisions of Article 3, paragraph 1, subparagraph 4 of the GreTai Securities Market Rules Governing Review of Securities Traded on Over-the-Counter Markets concerning withdrawal of shares upon expiration of custody. However, where, pursuant to Article 316-2 of the Company Act, an OTC company merges with a subordinate company of which it holds 50 percent or more of the issued shares, it may be exempted from the restriction that the total amount shall not be less than 30 percent of the new stocks issued for capital increase due to the merger.
2. Such persons shall provide a written undertaking that for a certain period of time they shall not redeem or transfer the overseas depositary receipts issued due to the merger (including those publicly offered and issued or privately placed) held by them, and shall incorporate provisions restricting redemption or transfer into the contract signed and entered into with the custodian institution, undertaking that they shall not redeem or transfer for a certain period of time shares numbering in total not less than 30 percent of the number of overseas depositary receipts issued due to the merger (including those publicly offered and issued or privately placed). In case of a shortfall, negotiation shall be made with other shareholders holding overseas depositary receipts issued due to the merger (including those publicly offered and issued or privately placed) to make up the shortfall. The period of restriction of redemption or transfer and the provisions for release of the restriction shall accord with the
provisions of the preceding subparagraph concerning the deposit into central custody of common shares publicly offered and issued due to the merger.
3. Such persons shall provide a written undertaking that for a certain period of time they shall not transfer the common shares they hold through private placement due to the merger, undertaking as follows: The total position that shall not be transferred for the certain period of time shall not be less than 30 percent of the number of common shares privately placed due to the merger; in case of a shortfall, they shall arrange with other shareholders holding common shares privately placed due to the merger to make up the shortfall; the period of restriction of transfer and the provisions for release of the restriction shall accord with the provisions of subparagraph 1 concerning the deposit into central custody of common shares publicly offered and issued due to the merger. In addition to stating that the shares “shall not be transferred for a certain period,” the undertaking referred to in this subparagraph shall also contain at least the following language: “For as long as the common shares that I hold
remain common shares privately placed due to the merger, the GreTai Securities Market may from time to time carry out spot checks to ascertain whether I have faithfully abided by the undertaking. For common shares that I hold that continue to be classified as common shares privately placed due to the merger, I shall continue to abide by the restrictions on transfer under Article 43-8 of the Securities and Exchange Act even after and despite the expiration of the period of restricted transfer under this subparagraph.”
If the merger of an OTC company with another company does not meet the requirements referred to in the preceding 4 paragraphs, or in the case a new company is established as a result of merger, the original OTC company shall apply for termination of trading of its stocks on the OTC Market, and the surviving company or the newly established company shall separately apply for trading stocks on the OTC Market after the merger is completed.
Where an OTC company, pursuant to the Business Mergers and Acquisitions Act, Company Act, or other laws or regulations, acquires shares, business, or assets of a non-OTC/unlisted company, with shares, or securities that may be converted into or may be used to subscribe shares, as consideration, if such transaction reaches the standards listed below, such non-OTC/unlisted company shall additionally comply with the conditions set out in all of the subparagraphs of paragraph 2:
1. If the book entry amount of the shares, or securities that may be converted into or may be used to subscribe shares, as consideration obtained by the non-OTC/unlisted company as a result of being acquired reaches 70 percent or more of its book net asset value, or the shares, or securities that may be converted into or may be used to subscribe shares, paid as consideration by the OTC company for the acquisition reach 10 percent or more of the aggregate shares already issued and anticipated to be issued by the OTC company.
2. If the total number of shares acquired from shareholders of the non-OTC/unlisted company reaches 70 percent or more of its issued shares.
3. If the operating revenue or operating profit or book net asset value of a division being spun off from the non-OTC/unlisted company to the OTC company reaches 70 percent or more of its entire operating revenue or operating profit or book net asset value, or reaches 10 percent or more of the entire operating revenue or operating profit or book net asset value on the OTC company's pro forma financial statements.
Any non-OTC/unlisted company under the preceding paragraph, and any director, supervisor, or shareholder holding more than 10 percent of the shares thereof, that has holdings of the additional common shares or overseas depositary certificates issued by the OTC company under that paragraph (including those publicly offered and issued or privately placed) shall also comply with the provisions of paragraph 4 concerning placement of shares in custody and withdrawal of shares upon expiration of custody.
When filing for a case under paragraph 1, 2, or 6, the OTC company shall complete an application form and submit it along with relevant attachments to the GreTai to apply for issuance of an opinion that the case complies with the conditions provided in this article. After the GreTai has examined and approved the application, it shall send a written letter of opinion to the company approving the merger or acquisition. The letter shall state, "This approval letter is provided only for purposes of the applicant company registering with (applying to) the Competent Authority for capital increase and issuance of new shares as a result of merger (or acquisition). If the application is not approved by the Competent Authority, this approval letter shall become void."
If a non-OTC/unlisted company that is acquired or assigns business operations as set out in paragraph 6 is a foreign company, the provisions of paragraph 2, subparagraph 4 shall apply mutatis mutandis.In the event that an OTC company merges with another OTC company, the surviving company is still an OTC company, and the extinguished company shall make public announcement of the termination of the trading of its stocks on the OTC Market or of the de-listing of its stocks from the centralized stock exchange. If by reason of the merger, the surviving company issues new shares or certificates of entitlement to new shares of the same class of stocks that are already listed on the OTC Market, OTC trading of the shares may commence from the record date of the merger; provided, trading of the originally OTC-listed securities shall be suspended eight trading days before the record date of the merger (and non-inclusive of that date), and an application shall be completed and filed with the GreTai, annexing the relevant documents, at least 15 trading days before the record date of the merger (and non-inclusive of that date).
Except in the case of a securities, financial, or insurance company with special approval from the authority in charge of the industry concerned, where an OTC company merges with an unlisted or non-OTC company by using as consideration an follow-on issue (whether by public offering and issuance or private placement) of shares, or securities that may be converted into or may be used to subscribe shares, all of the conditions listed below shall be met, the surviving company after the merger shall remain an OTC-listed company, and the common shares or overseas depositary receipts additionally issued due to the merger (including those publicly offered and issued or privately placed) shall be handled in accordance with paragraph 4 of this Article:
1.The financial information of the merged non-OTC/unlisted company as well as the consolidated financial information of the merging and merged companies shall meet the profitability requirement under the Review Rules; provided, this restriction shall not apply where the net worth per share of the surviving company after the merger, both in the most recent financial year and on the most recent pro-forma financial report, is higher than the net worth per share of the original OTC company. Where the above proviso is satisfied, if the OTC company or the merged non-OTC (unlisted) company, from the date next following the date of the balance sheet in the most recent financial report to the date the application is filed with the GreTai, undergoes any material change in capital affecting the net worth per share, such as a capital increase or reduction or distribution of dividends, the net worth per share of the surviving company shall be higher than the net worth per share of the original OTC company, and the
attesting CPA shall submit a review opinion following the imputed adjustment.
2.The merged non-OTC/unlisted company does not have any of the conditions under subparagraphs1, 3, 4, 7, and 10 of paragraph 1 of Article 10 of the Review Rules, or the condition under subparagraph 6 where an examination or CPA's opinion shows that the company fails to prepare financial reports in accordance with relevant laws and regulations and generally accepted accounting principles;
3.The financial report of the merged non-OTC/unlisted company within the most recent year shall have been audited and certified by a CPA approved by the Competent Authority to handle financial certification of public issuers, and such CPA has issued an audit report with an unqualified opinion.
4. Where the merged non-OTC/unlisted company is a foreign company meeting the conditions set forth in Article 21 of the Business Mergers and Acquisitions Act, documentation of foreign investment approval by the Ministry of Economic Affairs Investment Commission shall be obtained. Also, an audit report with an unqualified opinion issued by the attesting CPA shall be obtained for the foreign company's financial report, as well as an opinion issued by a Taiwan CPA regarding the differences in accounting principles applied in the Republic of China and in the foreign company's home country and the resulting effect |
| Article 16-1 |
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| Article 16-2 |
Where a single OTC company converts its shares into shares of another newly incorporated company or already-OTC-listed existing company pursuant to Article 31 of the Business Merger and Acquisition Act, and becomes a 100 percent held subsidiary of such newly established or already-OTC-listed existing company, after the Competent Authority has granted approval, the securities of the newly incorporated or already-OTC-listed existing company shall be listed for OTC trading after completion of applicable OTC listing procedures, and the OTC listing of the securities of the original OTC company shall be terminated on the record date of the share conversion.
The provisions of the preceding paragraph shall also apply in cases where a single or multiple company(ies) limited by shares convert their shares into a newly established or already-OTC-listed existing company; provided that if an unlisted/non-OTC company(ies) converts shares together therewith, the operating revenue or operating income from said unlisted/non-OTC company(ies) shall not exceed 50 percent of the total operating revenue or operating income on the pro-forma post-conversion consolidated financial statements of said newly established or already-OTC-listed existing company for the most recent fiscal year, and said unlisted/non-OTC company(ies) limited by shares shall conform to the provisions of all the following subparagraphs:
1. Profitability shall conform to subparagraph 2 of paragraph 1 of Article 3 of the Review Rules.
2. There shall not exist any circumstance specified in subparagraphs 1,3,4,6, 7, or 10 of paragraph 1 of Article 10 of the Review Rules.
3. The financial report for the most recent fiscal year shall have been audited by a certified public accountant approved by the Competent Authority to audit public companies and have received an unqualified opinion from such certified public accountant.
If any unlisted/non-OTC company included in a conversion as set out in the preceding paragraph is a foreign company, documentation of foreign investment approval by the Ministry of Economic Affairs Investment Commission shall be obtained. Also, an audit report with an unqualified opinion issued by the attesting CPA shall be obtained for the foreign company's financial report, as well as an opinion issued by a Republic of China CPA regarding the differences in accounting principles applied in the Republic of China and in the foreign company's home country and the resulting effects on the financial report; the provisions of subparagraph 3 of the preceding paragraph shall not apply. In addition, a CPA other than the original attesting CPA, and approved by the Competent Authority to perform financial attestation for public companies, shall submit a written reference report analyzing and explaining the reasonableness of the share exchange ratio and price and overall synergy at the time of the merger between the OTC company and the foreign company. Provided, subparagraphs 1 and 2 of the preceding paragraph, and paragraph 7, do not apply if the foreign company meets the requirements of Article 4, paragraph 1, subparagraphs 2 and 4 of the GreTai’s Rules Governing Review of Over-the-Counter Trading of Foreign Securities.
Where an investment holding company is established by means of share conversion in accordance with paragraph 1 or paragraph 2, such investment holding company shall comply with the provisions of subparagraphs 1, 3, 4, 6, 7, and 9 of paragraph 1 of Article 3 of the GreTai's Supplementary Provisions for Applications for OTC Listing of Investment Holding Companies before it may be listed on the OTC market.
Where circumstances in paragraph 1 or paragraph 2 apply to a company(ies) limited by shares, the OTC company whose converted shares are anticipated to account for the greatest proportion of the anticipated issued shares of the newly incorporated or already-OTC-listed existing company shall carry out with the GreTai the various procedures set forth in the subparagraphs hereinbelow on behalf of all the companies whose shares are being converted, and, after the GreTai has obtained approval from the Competent Authority, the trading of such company's(ies') original OTC securities shall be suspended two trading days prior to (and non-inclusive of) the record date of the share conversion; provided, where shares of a single or multiple OTC or listed companies are converted into a newly incorporated company to form an investment holding company, the securities of the investment holding company may be traded over the counter from the record date of the share conversion, but trading of the original OTC securities shall cease eight trading days prior to (and non-inclusive of) the record date of the share conversion:
1. An Application for OTC Trading of Shares of a Newly Incorporated Company or OTC Company Receiving Assignnment of Shares shall be completed and filed, along with all specified attachments, with the GreTai no later than fifteen trading days prior to (and non-inclusive of) the record date of the share conversion.
2. An Application for Suspension of Share Transfers shall be completed and the GreTai shall directly make an announcement to the market of suspension of amendments to entries in the shareholder rosters of the OTC company(ies) among the companies participating in the conversion.
Where pursuant to Article 27 of the Business Merger and Acquisition Act an OTC company undergoes general assignment to an investment holding company incorporated under Article 185, paragraph 1, subparagraph 2 of the Company Act, and the investment holding company complies with the conditions set forth in Article 3, paragraph 1, subparagraphs 1, 3, 4, 6, 7, and 9 of the GreTai Supplementary Provisions for Applications for OTC Listing by Investment Holding Companies, and it holds 100 percent of the shares of the assignee company, it shall file an application with the GreTai for amendment of the content of OTC securities pursuant to Article 9-1 of these Rules; provided, the provisions of Article 12-2, paragraph 1, subparagraph 6 of these Rules shall not apply to the amendment of its business scope.
Where a company whose shares are converted under the circumstances set forth in paragraphs 1, 2, or the preceding paragraph is, before the conversion, an OTC/listed company, those shares already duly placed in centralized custody by directors, supervisors, and shareholders with shareholding of 10 percent or higher at the time of initial OTC listing (or stock exchange listing) shall remain in centralized custody after the conversion until the expiration of the custody period; if before the conversion the company was a non-OTC/unlisted company, and it is anticipated that the converted shares will account for 10 percent or more of the aggregate shares already issued and anticipated to be issued by the company that is the assignee of the shares, the directors, supervisors, and major shareholders of such non-OTC/unlisted company shall still place in centralized custody all of the shares they hold in the company that is the assignee of the shares. The method for withdrawal of the shares from custody shall be
governed by mutatis mutandis application of the provisions of Article 3, paragraph 1, subparagraph 4 of the GreTai Securities Market Rules Governing Review of Securities Traded on Over-the-Counter Markets concerning withdrawal of shares upon expiration of custody.
When an OTC company carries out a case under paragraphs 1 or 2, after the GreTai has examined and approved the application, a written opinion approving the share conversion shall be sent to the company, stating "This approval letter is provided only for purposes of the applicant company registering with (applying to) the Competent Authority for capital increase and issuance of new shares as a result of share conversion. If the application is not approved by the Competent Authority, this approval letter shall become void." Provided, where shares of a single or multiple listed or OTC companies are converted into a newly established company to form an investment holding company, the case shall be submitted directly to the Competent Authority after examination and approval by the GreTai.Where a single OTC company converts its shares into shares of another newly incorporated company or already-OTC-listed existing company pursuant to Article 31 of the Business Merger and Acquisition Act, and becomes a 100 percent held subsidiary of such newly established or already-OTC-listed existing company, after the Competent Authority has granted approval, the securities of the newly incorporated or already-OTC-listed existing company shall be listed for OTC trading after completion of applicable OTC listing procedures, and the OTC listing of the securities of the original OTC company shall be terminated on the record date of the share conversion.
The provisions of the preceding paragraph shall also apply in cases where a single or multiple company(ies) limited by shares convert their shares into a newly established or already-OTC-listed existing company; provided that if an unlisted/non-OTC company(ies) converts shares together therewith, the operating revenue or operating income from said unlisted/non-OTC company(ies) shall not exceed 50 percent of the total operating revenue or operating income on the pro-forma post-conversion consolidated financial statements of said newly established or already-OTC-listed existing company for the most recent fiscal year, and said unlisted/non-OTC company(ies) limited by shares shall conform to the provisions of all the following subparagraphs:
1. Profitability shall conform to subparagraph 2 of paragraph 1 of Article 3 of the Review Rules.
2. There shall not exist any circumstance specified in subparagraphs 1,3,4,6, 7, or 10 of paragraph 1 of Article 10 of the Review Rules.
3. The financial report for the most recent fiscal year shall have been audited by a certified public accountant approved by the Competent Authority to audit public companies and have received an unqualified opinion from such certified public accountant.
If any unlisted/non-OTC company included in a conversion as set out in the preceding paragraph is a foreign company, documentation of foreign investment approval by the Ministry of Economic Affairs Investment Commission shall be obtained. Also, an audit report with an unqualified opinion issued by the attesting CPA shall be obtained for the foreign company's financial report, as well as an opinion issued by a Republic of China CPA regarding the differences in accounting principles applied in the Republic of China and in the foreign company's home country and the resulting effects on the financial report; the provisions of subparagraph 3 of the preceding paragraph shall not apply. In addition, a CPA other than the original attesting CPA, and approved by the Competent Authority to perform financial attestation for public companies, shall submit a written reference report analyzing and explaining the reasonableness of the share exchange ratio and price and overall synergy at the time of the merger between the OTC company and the foreign company. Provided, subparagraphs 1 and 2 of the preceding paragraph, and paragraph 7, do not apply if the foreign company meets the requirements of Article 4, paragraph 1, subparagraphs 2 and 4 of the GreTai’s Rules Governing Review of Over-the-Counter Trading of Foreign Securities.
Where an investment holding company is established by means of share conversion in accordance with paragraph 1 or paragraph 2, such investment holding company shall comply with the provisions of subparagraphs 1, 3, 4, 6, 7, and 9 of paragraph 1 of Article 3 of the GreTai's Supplementary Provisions for Applications for OTC Listing of Investment Holding Companies before it may be listed on the OTC market.
Where circumstances in paragraph 1 or paragraph 2 apply to a company(ies) limited by shares, the OTC company whose converted shares are anticipated to account for the greatest proportion of the anticipated issued shares of the newly incorporated or already-OTC-listed existing company shall carry out with the GreTai the various procedures set forth in the subparagraphs hereinbelow on behalf of all the companies whose shares are being c |
| Article 16-3 |
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