Good afternoon! My name is Roy Chang. I am the Vice President of Listing Examination Dept. The job of our department, to put it simply, is to examine applications for listing on the general board and emerging market board of GreTai. I am pleased to have the opportunity to brief the distinguished guests on our recent mission, to introduce companies in the Silicon Valley, the world’s high tech hub, how to apply for listing on Taiwan’s GreTai market. A listing on the GreTai Securities Market allows issuer companies to benefit from low capital costs, with investors profiting from liquid trading and high transparency standards. Issuers can choose between two clearly defined market segments for the admission of their shares to the Emerging Stock Board and Regular Stock Board agree to comply with additional transparency requirements based on international best-practice.
First of all I like to talk briefly about Taiwan’s economy as well as capital market, the advantages of listing on Taiwan’s GTSM, and the role of GreTai, and then in greater details the listing procedures and requirements What opportunities does a listing at GreTai Securities Market offer? What conditions and obligations must be satisfied? A comprehensive overview of IPO opportunities and preparations will be given in my 60 min introduction We are glad that this time a few heavyweight underwriters in Taiwan have also come here to play the role of a harbinger. Given the limited time of my briefing, there might be things I won’t be able to elaborate on. So if you have any questions after the meeting, I am sure our underwriter partners will be more than happy to answer your questions and provide you with more services.
GLOBAL CITIES: The MasterCard report lauded Taipei’s growing influence, but also highlighted the need to improve ease of doing business and the city’s livability Taipei ranked 22nd this year in MasterCard Worldwide’s index of the world’s top 25 centers of commerce. Although it was the first time Taipei was included in the survey, it ranked seventh in Asia — ahead of Shanghai and Beijing. Moreover, the nation’s economic stability index ranked second in Asia, only behind Singapore, underlining Taiwan’s influence over global commerce activities. “If weekend cross-strait direct flights can be realized, Taipei will then be fused into the two-hour economic circle that includes the Yangtze Delta and Pearl River Delta. This should attract foreign investors and China-based Taiwanese businesspeople to set up their headquarters or research and development centers in Taipei,” Taipei Mayor Hau Lung-bin According to the MasterCard Worldwide Centers of Commerce Index, the areas that Taipei needed to improve the most were the ease of doing business and the city’s livability, in which Taipei ranked 12th and 10th respectively in Asia. The seven areas covered in the Worldwide Centers of Commerce Index are legal and political framework, economic stability, ease of doing business, financial flow, business center, knowledge creation and information flow and livability.
You might have read news reports that Taiwan’s economy has been stagnant in recent years. But what we see is that our listed companies are experiencing steady growth in profit. Taiwan is not short of money. Many Taiwanese companies have seen positive return on their overseas investments, but they elect to keep their money abroad due to all kinds of regulatory restrictions.
Taiwan’s geographic position makes the country a particularly attractive alternative for foreign investors as described by Mr. Lee from the Taiwan Trade Center. As the ruling party holds an absolute majority in the congress, the newly inaugurated government has declared on many occasions full government and full service for the economy. We can anticipate improved relationship across the Taiwan Straits, which will allow Taiwan to benefit more directly from China’s impressive GDP growth. Also in the pipelines are Mainland tourists in Taiwan, direct flights between Taiwan and China, and investments from Mainland China. All these developments will have a positive impact on Taiwan’s economy. The new government will also adjust the policies of 40% cap on China-bound investment and restricted investment items, which in the past have been a disincentive for overseas Taiwanese enterprises to list in Taiwan. The lift of more restrictions will add to the appeal and positive prospect of Taiwan’s securities market. Onstage at Ma‘s inauguration party at the Taipei Arena 1970s chanteuse Fong Fei-fei ( 鳳飛飛 ) performed 「掌聲響起」 (“The Sound of Applause Erupts”). A rather fitting pun on the title changes the characters to 「漲聲響起」 “ 今天打開電視台 看到汽油漲四塊 我的眼淚忍不住掉下來 石油囤積哄抬 開車上班活該 告訴自已要忍耐 漲聲響起來 我心更明白 高物價將與我同在 漲聲響起來 我心更明白 通膨掏空你我口袋
In January 2002, Taiwan became the 144 th member of the World Trade Organization (WTO). This has exposed Taiwan to external competitiveness, including the expansion of external trade through barrier-free access to the economies of other WTO members and the lowering of domestic consumer prices. Also, a ccording to IMD’s report, “World Competitiveness,” Taiwan’s overall competitiveness is ranked eleventh in the world, second to only Hong Kong and Singapore in Asia. I n the World Economic Forum's Global Competitiveness Report 2005-2006, which assesses 117 economies, Taiwan ranks fifth . Meanwhile, as indicators in 2007, GNP in Taiwan was about USD394 billion, and per capita was USD17,252; the GDP Growth Rate was 5.46%. In 2008, GNP is expected to be USD421 billion, and per capita will be USD18,359. Real GDP is predicted to grow by 4.53% this year . Industry clusters and complete supply chain ： Taiwan has 3 science-based industrial parks which have stimulated the emergence of high-tech industry clusters and “cities of science and humanities”, with R&D production, ecological, and lifestyle attractions.
Taiwan capital market continues to move up after its democratic presidential election in March. The new government is expected to push for closer economic cooperation between China and Taiwan. Taiwan’s export-oriented economy is seen as shrugging off the US slowdown in 2008 on domestic political stability and growing consumer and business confidence. This is expected to result in more international capital flow into Taiwan which benefits companies listed or planning to list in Taiwan. The international community has long been anticipating the consolidation of the “Three Direct Links”, which will facilitate enormous flows of trading and investments between Taiwan and China. We believe the new government will work on this phenomenon, in which the improved relationship across the Taiwan Strait plays a key factor.
Here’s a quick glance on the overview of Taiwan’s securities market. Companies listed in Taiwan enjoy higher multiples, higher liquidity and greater international exposure. The average Price-to-earnings (P/E) ratio in Taiwan is 15.4, which is relatively high in Southeast Asia. The turnover of Taiwan stocks in 2007 is 178%, two times greater than that of Hong Kong, which came second at 75%. Trading volume of Taiwan stocks in 2007 stood high at US$1.28 trillion. High liquidity in Taiwan gives listed firms the opportunities to raise capital through successful offerings in the secondary market.
In light of the increasing mergers between securities exchanges in recent years, the trend for international and borderless securities market is set. Taiwan is also considering the mergers of GreTai, Taiwan Stock Exchange, Taiwan Futures Exchange, and Taiwan Depository and Clearing Corporation into one, and will form strategic alliance with well-known exchanges in other countries in the moves to enhance the international competitiveness of Taiwan’s securities market.
Attracted by its industries, foreign investors take a strong interest in the Taiwan market. As at the end of December 2007, foreign shareholding is 33.2% of total shareholding, and foreign investors account for 19.7% of total trading. The exposure to international investors not only helps diversify the company’s shareholding structure, but also helps a company build its reputation internationally.
However, in recent years, emerging markets such as Taiwan have instituted reforms to become more global, information is more readily available and many companies from these markets have transformed themselves into world-class enterprises Taiwan companies offer relatively low price-to-earnings ratios, a great reputation for manufacturing electronic devices, plus they provide a strategic bridge to China with their shared language and values higher percentage of foreign investment in a company is seen as representing more transparency or better governance.&quot; Taiwan's government is working hard to improve the investment environment through broad reform and deregulations. The aim is to allow easy foreign access and increased investment in Taiwan securities. In 2003, the government abolished many restrictions such as the Qualified Foreign Institutional Investor (QFII) system, and it simplified registration and approvals. &quot;Now foreign investors can launch into the markets immediately after finishing the registration process.
Many foreign investors are finding Taiwan stocks particularly attractive compared with current investment opportunities in the West. &quot;Foreign investors are looking for companies with better growth, especially in Asia. They want to invest in good companies for the mid and long term,&quot; With the concerted efforts of government together with people, Taiwan’s economic development over the past half-century has achieved the results credited by the world. This slide might give you a glance at Taiwan. Taiwan’s securities market carries great momentum. This table shows the sustained and high interest of foreign investors in Taiwan. I would also like to point out the vital role of foreign investors in the reform and development of emerging market. Foreign investors not only bring in funds to invigorate market turnover, they are a force to urge market improvement. Taiwan opens its markets to offshore funds in a progressive manner: In May 1983, local mutual fund companies were allowed to raise trust funds abroad and invest in Taiwan’s stock markets, and the qualified foreign institutional investor system, or QFII was established. Subsequently, the stock markets are open to foreign individuals. In October 2003, the QFII system was abolished, and a more open “one-time registration” system is in place. Up to the end of August this year, foreign funds approved to invest in Taiwan’s stock markets netted close to US$96.4 billion, and accounted for more than 25% of total market capitalization. Take the examples of the two well-known foundries in Taiwan, TSMC and Foxconn , 75.17% and 53.25% of their stocks were held by foreign investors respectively as of May 30, 2008. In addition to few indicators listed here, certainly there are many others revealing Taiwan’s economic success. For example, the foreign exchange reserve in Taiwan is ranked number three in the world, just next to mainland China and Japan. We are also the number three maker of personal computer and peripherals in the world.
Taiwan’s small and medium-sized enterprises are known for their innovative approach to business. A strong work ethic and a carefully managed economy have produced a nation of aspiring entrepreneurs. Taiwanese companies have created their unique edge by advanced production processes, unparalleled manufacturing efficiency, integrated services, and a spirit of innovation. An export-driven economy has brought Taiwan the experience needed to work with international companies, placing the island in a pivotal position in the increasing integration of the Asia-Pacific region. Taiwan will concentrate her resources in the development of knowledge-intensive industries, such as the system single wafer, nanotechnology, photoelectric communication, and biotechnology. By way of the “Two-Trillion, Twin-Star Project,” Taiwan’s industry development priority is placed on the semiconductor and video display industries in which she possesses a competitive advantage, as well as on future star industries such as digital content and biological science and technology industries.
It is apparent that foreign investment has made substantial contribution to Taiwan’s economic growth, particularly in the capital-intensive and technology-intensive sectors. Companies listed on the Taiwan Stock Exchange are larger, and many foreign financial institutions are more interested in large companies, but we have a developing potential – small but perfect With close business ties and large investments in China, Taiwan enterprises can make the most of the low-cost manufacturing resources there. Foreign investors see the purchase of shares in Taiwan companies as an indirect way of investing in China's growth, but with less risk.
GTSM is in constant competition with the Taiwan Stock Exchange, especially after a recent government initiative stating that GTSM and the Taiwan Stock Exchange must increase the number of listed companies by 250 in three years. This is a challenge for TSE since there requirements are higher, so they are naturally eyeing the companies that we have fostered that are now qualified to list on TSE. We are promoting greater transparency for listed companies. Transparency is how well a company communicates its health and future prospects through financial and qualitative reporting. Greater corporate disclosure and CG is seen as helping Taiwan companies win a more competitive status in the global market. The SFC does not believe that the level of corporate governance is primarily determined by the regulators. It believes that corporate governance principles and practice falls squarely in the realm of corporate captains and shareholders. The regulators have to work out an infrastructure that promotes good corporate governance and to enforce breaches of the relevant rules or regulations, but the delivery of performance and the willingness to conform to best practices must come from the drive and action of corporate management, helped by Boards which are duly elected by alert investors. Markets today are an intersection of supply and demand. The supply of good corporate governance practices by management must match the investor demand for better practices, as well as the transparency of performance. Apart from shareholders, companies themselves also benefit from good corporate governance. Internally, there would be clearer accountability, better-defined responsibilities and greater protection of company interests. These enable companies to capitalise on business opportunities in economic upturns and, equally important, to tide themselves over in economic downturns. Externally, companies with good corporate governance also have easier access to cheaper capital, from both the debt market and the equity market. At the macro-economic level, corporate governance has wider and more systematic implications for financial markets. It is the cornerstone of an international financial centre where the confidence of international investors lies. The Enron and Worldcom sagas did not only have disastrous impact on the companies themselves, their employees and business partners, but also caused a huge loss in market capitalisation as well as the collapse of one of the world's then big five accounting firms.
Next, allow me to introduce the GreTai Securities Market. The term “exchange” does not fully describe our organization since it only limits to stock trading and therefore, we believe “market” is a better term because it includes both stock and bond trading. Second, the name GreTai comes from the direct pronunciation of our name in Mandarin, Chinese, which means, “counter”. In addition, we decided to adopt the name GreTai because it also has a connotation of “Greater Taipei.” allow me to introduce the GreTai Securities Market. GreTai has been playing a successful role of business nurturer and promoter of economic vitality since its inception in 1994. In a short span of 15 years, our workforce has expanded from 30 to 240 today. As of the end of 2007, 922 stocks had listed on GreTai. The emerging market board was established in 2002 and has had 882 stocks registered at the end of 2007. We at GreTai are honored to witness the growth of both GreTai and the emerging market board as the number of listed firms grow. Because of our firm commitment to services, advanced trading systems and rigorous market administration, the market functions could come into play to provide enterprises with great development potential diverse and effective venue to acquire direct financing.
You might want to ask why did Taiwan, a small island, want to set up an OTC market in addition to the highly successful Taiwan Stock Exchange that has been around for more than 40 years. The main reason is to segment the market by establishing a venue for small and medium enterprises to raise capital. Taiwan has few natural resources, but people on the island have entrepreneurship. Taiwan has more than 600,000 companies, but the great majority of them are small in size. In fact, many prominent Taiwanese companies started out small. With the emergence of capital and technology intensive knowledge industry, businesses nowadays are faced with the challenge of funding and cross-border competition. Previously Taiwan only had TSE whose listing requirements are designed for large and more mature companies and not geared towards nurturing SMEs. Of course, investors were hesitant in trading OTC stocks in the beginning when they worried that more slack listing requirements meant the listed stocks were second rate. Thus the OTC market has taken initiatives to seek the listing of companies with growth potential, good management, and good internal control and accounting systems. Also in consideration that market investors are primarily individuals, the OTC market also phased in electronic competitive trading to boost turnover. Why is GreTai so important as an alternative market? Well, there are several reasons. Firstly , small-and-medium size enterprises make up a large percentage of Taiwan’s business. The entrepreneurs are also highly encouraged. GreTai Securities Market is established to encourage Small and Medium companies developing their strength and entrepreneurial spirit. Secondly , due to industry transformation, the Small and Medium companies ’s survival was intensified and thus, the need for capital became more important than ever and being listed on the GreTai providing a proper channel for the SMEs to raise fund directly from the capital market. Thirdly , GreTai provides a platform for listed Small and Medium companies’ direct financing, these companies no longer turn to indirect financing from bank loan. As an old Chinese saying illustrates the problem of borrowing from the bank, which is that “They are willing to lend you an umbrella on a sunny day, but want it back on a rainy day.” I believe you can all relate to this. Fourthly, Taiwan’s economy heavily relies on the high-tech industry. GreTai has noticed of this and has been devoted to provide the channel for electronics corporations’ financing for better competition in this ever-changing environment and remain competitive globally. Finally , GreTai serve as an alternative market, we foster the growth of Taiwan’s economy with TSEC. Big and mature company can raise funds through TSEC while small-and-medium size entrepreneurs can advance through GreTai.
GreTai is set up as a non-profit organization with no stock ownership and a self-regulatory organization. It is quasi official under legislative supervision. Unlike other association, it does not adopt the practice of membership. Our market is very much market-oriented; however, 1/3 of our board is government authority, which means it is also legislation-oriented. And the following is an view of the different product offer at the GTSM. A feature of the OTC market is “diversified products and multiple trading modes.” Aside from stocks on the general board, the OTC market rolled out the emerging stock market in 2002, which works like a “bulletin board” and trades stocks that are not officially listed. The emerging stock market means to provide a convenient, safe and legal trading platform for those stocks. Currently there are more than 250 stocks registered on the emerging stock market.
Here’s a quick glance on the overview of our organization chart. The board of directors is the controlling body and is composed of 15 directors and 5 supervisors. All these members are either designated by governing authority, or hired, from sponsors, well-known scholars and professionals from securities industry. Ultimately, GTSM thrives on market oriented management. The SFB must approve any major rule changes. Currently, we have 8 functional departments. Listing Exam department has the jurisdiction over listing qualification. Listing Supervision watches the management of GTSM issuer. The trading department is responsible for market management, processing settlement, clearance, delivery and market surveillance. Currently, we are staffed with 240 professionals, most of them with the Listing Supervision department.
Now, let’s take a closer look at the history and development of GTSM. Taiwan’s industries are composed of largely small and medium-sized enterprises, or SMEs that need funds to grow. In the past, there was only Taiwan Stock Exchange that had rigorous listing requirements and practically shunned all SMEs. While many firms in the high-tech and emerging industries started out small and needed outside funding to grow, their ability to acquire financing from banks was also limited. This was how GreTai came about. Investors were doubtful when GreTai was first established. But after we started trading like Taiwan Stock Exchange, investors found that growing companies had greater potential in terms of stock price. As funds started to pour into GreTai, more firms realized that listing of GreTai was the same as listing on Taiwan Stock Exchange, and more well-run companies were attracted to GreTai. Those SMEs that entered the capital market via GreTai saw a rapid transformation of their financial structure, which was one of the reasons why Taiwan was able to storm through the 97 Asian financial crisis unscathed. From the start, trading via OTC market patterned after NASDAQ. Trades were completed via negotiation conducted at securities trader facility. Negotiated trades work best with institutional buyers; therefore performed miserably in Taiwan’s individual investor environment. Investors had to overcome to all kinds of obstacles to make trade, such as: seeking out the securities dealer who handles the OTC trades, then, authorizing trader to complete trade by locating potential buyer and/or seller via telephone. This only guaranteed slow trades, and due to lack of proper price formation. Such travesty only discouraged dealer from making market. Public issuers were vying to get listed on Taiwan Stock Exchange. Under these conditions, no firms were applying to get listed on OTC exchange. This meant no growth in primary and secondary markets. This vicious cycle continued; 5 years later in 1994, OTC market registered only 11 listed stocks.
At the end of May 2008, altogether 793 firms with total capitalization of NT$2.4 trillion were listed on the regular stock board (551) and the emerging market board (242) of GreTai. It is apparent that listing on GreTai enjoys more and more benefits and GreTai, with the offering of stocks, bonds and derivatives, is poised to provide diverse capital market services to issuers, entrepreneurs, investors and securities firms worldwide
In 2007, Taiwan’s semi-conductor industry grew by 7.7%, compared to a global average of 3.3%, according to iSupply. Enterprises have found the resources for growth by listing on GTSM, and our focus on the standard of corporate governance has increased market liquidity. In March 2008, 366 companies from the high-tech industry were listed on the general equity board, out of a total of 546.
Go to any stock broker’s office and ask any what we call “food basket mom” who watches the stock monitors there, you will be surprised to find how knowledgeable they are about the high tech sector and the fundamentals of the stock market. In comparison with Hong Kong and Singapore stock markets that are more familiar with and put more emphasis on real estate and financial stocks, listing in Taiwan enjoys higher PE ratio and lower listing cost. Statistics show that the majority of companies with ties to Taiwan listed in Hong Kong or Singapore have underperformed in terms of stock price, PE ratio and liquidity. 成交值週轉率之計算公式 : 成交值 / 市值 其用意在統計每 1 元在特定統計期間的週轉率
The daily market turnover of Regular Stock Board averaged NT$34.56 billion in 2007, while Emerging Stock Board averaged NT$1.28 billion
By the end of April 2008, the number of GTSM listing reached 548. The majority belongs to High Tech, almost 80% of them; we expected the number would go up. Another feature, which is both unique and cute, is that Taiwan has the strongest base of retail investors who are highly receptive to emerging industries and high-tech sector.
I believe that all the market elements must converge on the same purpose, which is to continually foster a robust securities market environment. The elements I am referring to (are): individual investor, private corporation, securities industry, media, and most of all, active government supports. First, the government will lay down the policy that clearly backs up that directive, as we understand, it involved the establishment of OTC market. With this understanding, the securities industry is encouraged to actively seek out the target companies, and convince them to get listed on the OTC exchange. And this active involvement from the industry will eventually help to expand market size, and provide the investing public with an efficient and safe trading environment. Private industry will opt for draw capital from securities market. We also aggressively promote OTC market through media to the investing public. These promotions inform the public about all there is to know about the market. As result, capital inflow from investors attracted by the growth potential listed firms, will ultimately build up market liquidity. These elements lay the foundation that will lead to the ultimate success of OTC market.
I feel privileged to see through our tremendous market growth, from almost nothing to currently what we have.
For growing business entities with high potential for further development, GTSM not only provides the most desired services but also helps to significantly increase the exposure of the company as a result of GTSM-listing It’s the focus on quality, and the drive to meet the needs of market participants, as the determining factor of our growing success.
Another major feature of our OTC market is that it trades both stocks and bonds, which differentiate it from other emerging markets. Bonds are typically traded through negotiation. Thus Taiwan’s bond transactions take place nearly entirely on the OTC market and rarely on TSE. Given the lack of proper management mechanism in the bond market, GTSM has been actively playing the role of a bond market pioneer since its establishment. It continuously develops new bond products and constructs electronic trading system. Its electronic bond trading system in particular has been a big boost to the bond market since its debut and widely accepted by bond dealers. It helps establish the yield indicators in Taiwan’s bond market, boost turnover, and enhance bond trading transparency. Now turnover in the bond market has surpassed that on both stock exchanges. Aside from bonds, many bond derivatives have been developed. This table shows the components of bond issuing in Taiwan market. We can learn that the issuing size is continuing to grow. In the past 5 years, the bond outstanding has grown at average 7% annually.
From this pie chart, we can see that government bonds dominate the domestic debt market with approximately 65%, while corporate bonds account for 17%, and financial debentures, bonds issued by foreigners and convertible bonds make up the remainder.
GTSM has also worked vigorously on the development of new bond market systems, since bonds are traded in large measure over-the-counter. New systems implemented in recent years include the Electronic Bond Trading System, which tallies up to NTW200 billion every day. BTS in particular is widely recognized among major bond dealers in Taiwan as a successful trading platform that also helps boost trading volume and facilitate price transparency, For you to understand Taiwan’s bond trading size easier, please take a look at this chart. It shows the average daily trading volume of our outright and repo trade. The red line represents the percentage of EBTS outright trading to outright trading of whole market. The average daily trading volume this year is around 24 billion US dollars. After EBTS officially launched on 2002, almost 90% outright trading are through this system. The average trading volume has been grown for almost 5 times compare to year 1999 before the system has been launched. And 94% of outright trading are also trade through this system. The organization is also now introducing a US government bond trading platform. This is a two-stage process: we are educating dealers for them to be familiar with the system. Then we’ll open the platform for trading and providing local investors for the first time with exposure to US-government bonds, The project is being implemented in co-operation with broker/ inter-dealer Cantor.
It’s the focus on quality, and the drive to meet the needs of market participants, as the determining factor of our growing success. Our latest innovations comprise a series of exchange-traded funds developed to take advantage of Taiwan’s obvious strengths. In May, GTSM plans to launch its semiconductor ETF which will track an index of 50 global semiconductor leaders among wafer foundries, integrated circuit design houses, and integrated circuit packaging and testing companies. Of Primasia’s semi50 index, Taiwan comes second after the US with 17.44% of shares outstanding in January 2008 versus 16.83% in January 2007. The country ranks above South Korea, Europe and Japan. This is the first semiconductor ETF in the world, which we are keen to develop given Taiwan’s leading position in this industry. It’s our first ETF and its uniqueness puts us in a strong position to achieve dual listings with stock exchanges across the region. So far, GTSM is in talks with Singapore, Tokyo and Abu Dhabi stock exchanges for potential dual-listings of the semiconductor ETF. Once the ETF trades in Taiwan and we succeed in creating liquidity for the product, we can swap listings and promote a more global presence for Taiwan’s ETFs. There are more to come. Among them is GTSM’s corporate governance ETF which will encompass 50 firms listed on the OTC market boasting good corporate governance, due to launch in the second half of the year. Companies will be assessed independently by Chung Hwa corporate governance association, based on the OECD Principles of Corporate Governance. Baptized the ISO Corporate Governance ETF, the exercise will help increase the corporate-governance level among domestic firms. GTSM has wavered the listing fee for one year for those companies that accept Chung Hwa’s valuation, and encourage them to then be included in the ISO CG ESF. As well as promoting confidence in these companies, the ETF will allow them to them also to become the trading targets of funds, ETF and discretionary trading by trustee investment banks. There are also plans to integrate Taiwan's trading platforms. The government has started a &quot;Four-in-One&quot; project that will consolidate TSEC, GTSM, the Taiwan Depository & Clearing Corp. and the Taiwan Futures Exchange into one holding company. Modeled on the Hong Kong and Singapore markets, the integration of trading platforms will reduce costs and application procedures while enhancing the overall efficiency of Taiwan's capital market.
What is more exciting is that Taiwan’s securities market regulator, the Financial Supervisory Commission has announced on March 5 this year a 123 initiative to encourage the listing of foreign corporations in Taiwan. The 1 in the 123 initiative means “initial public offering” versus the listings of secondary offering and Taiwan Depositary Receipt allowed at the present time, which to speak honestly have not worked well. The 2 means there are two markets available for listing, the emerging market board and the general board, which includes GTSM and Taiwan Stock Exchange. The 3 means three great benefits, that is, the listed enterprise will be in close contact with Taiwan’s market, investors are offered more options, and Taiwan’s capital market becomes more international and competitive. We can forecast optimistically that foreign corporations, in particular the large number of corporations with ties to Taiwan, will be very interested in entering Taiwan’s capital market and seeking more opportunities there.
Taiwan has a strong securities market and is widely recognized by institutional investors around the world for its robust and solid investment environment. Taiwan is also a major high-tech supplier country with complete industrial supply chains, abundant and high quality human sources, and highly efficient management structure. Taiwan is poised to be the stepping-stone to China and Southeast Asian markets for businesses. Both the local and international investors in Taiwan are highly receptive to small and medium-sized enterprises and the high-tech industry. Hence listed stocks here typically enjoy higher price/earnings ratio. For a growing firm, Taiwan’s securities market offers a high-quality trading platform. But these advantages were more or less sidetracked by regulatory restriction that disallows companies not registered in Taiwan to register on the emerging market board or to go IPO on Taiwan’s exchange. Such restriction is due for a change. So now, you might want to ask where are the advantages of listing in Taiwan. I believe some Silicon Valley companies listed on NASDAQ will agree to what I have to say. Moreover, we benefit from better liquidity due to the high percentage of individual investors – 60% of the market transaction volumes are created by individuals – and we also benefit from higher P/E ratios.” In March 2007, GTSM’s price/earnings stood at 24.88 times, versus the Taiwan Stock Exchanges 18.71 times. We have calculated that listing here represents just one fifth of the cost to companies listing in Hong Kong and Singapore
Another important point is that Taiwan has high quality and highly efficient underwriters, and other market participants, including accountants and lawyers, have the international experience to provide full services to businesses. If cost is a consideration, the cost of listing in Taiwan is very very inexpensive as compared to other exchanges. Even if the fees of listing service are a bit higher for foreign enterprises, under an intensely competitive environment (I hope I didn’t divulge any information that is heart wrenching for the underwriters here), I am sure underwriters in Taiwan will be happy to provide services at a “very reasonable” fee as long as the company has vision and potential. In addition, the low cost I mention also includes the low annual listing fee. Regardless of firm size, our annual fee is less than US$15,000 at the most. Even for firms as big as TSMC and Hong Hai that have benefited tremendously from listing on Taiwan’s exchange, they are charged with a miniscule annual listing fee. The examination fee for listing is under US$20,000, let alone the fact firms will pay only NT$50,000 to register on the emerging market board. Another advantage of listing in Taiwan is that the firm will extend its recognition and reputation in Greater China area. The firm can also recruit more talents by offering its employees stock options. For the sake of letting foreign enterprises get adapted to the operation of Taiwan’s capital market, get acquainted with the local securities regulations, and gain more recognition on Taiwan’s market, we will require foreign enterprises, the same as required of a local enterprise, to first register on the emerging market board and then apply for listing on GreTai at least six months later. GTSM has developed several successful trading platforms, introducing in 2002 an emerging market board in order to provide a legal and transparent trading platform for smaller growing companies preparing to list on the general equity board. Similar to the London Stock Exchange’s AIM, this has been instrumental in helping companies raise capital on a market with a pragmatic and appropriate approach to regulation. In order to join, companies don’t need a particular track record or financial history, and there is no minimum requirement in terms of size or number of shareholders.
I like to explain what is the emerging market board. This is a board that an enterprise must register on before its official listing in Taiwan, either on Taiwan Stock Exchange or GreTai. Its objectives are multifold: to help the firm understand the operation and regulatory compliance of the capital market, and to let investors learn more about the firm through information disclosure. Taiwanese enterprises are required to go through an advisory period before they formally submit their application for listing, during which underwriters help the firm make necessary preparations. Our design now is to let the emerging market registration period and the advisory period overlap to shorten substantially the time to listing. However emerging stocks are traded over-the-counter by negotiation, in which the advisory underwriters play market makers. Investors in Taiwan are predominantly retail investors who are less familiar with negotiated trade. As GreTai endeavors to boost the turnover on emerging market, market liquidity has started to rise. More so, companies on the emerging market board that meet certain requirements are allowed to make public offering. A substantial number of unlisted SME stocks in Taiwan had been traded on the curb market. As a result, the SFC adopted a market liberalization measure in 2001 to provide liquidity, safety and convenience to such SME stock trading for protecting investor public. Here I like to explain briefly the process and criteria for registering on the emerging market board and the general board of GreTai. First of all, we do not plan to establish a separate board for foreign enterprises, for investors care about whether a stock is good, whether they can make money on the stock, not where the company is registered.
The newly introduced Emerging Stocks are traded by negotiation. GTSM establishes an Internet quotation system for every market maker to quote bid and ask prices to the public. Investors can trade through any participating brokerage or directly contact the market makers to negotiate the price. In the market inauguration, 107 issuers were registered. At the end of May, 2008, the number of Emerging Stocks reached 242.
We are constantly propagating the trading of emerging stocks to boost market participation, and recommending securities firms to play the role of market makers to further enhance the liquidity of the emerging stock market. We continue to adjust our mechanisms for trading, payment and settlement, and administration of securities firms that serve the market needs and stay in line with international trends. This way, we can serve both our local markets and provide the tools and the confidence for foreign institutions to become more active with us.
Trading emerging stocks is done without a centralized system, with brokerage houses matching client buy and sell orders. Unlike companies listed on the TAIEX and TAISDAQ, emerging stocks are not restricted by minimum paid-in capital or profitability requirements. Emerging stocks are differentiated from other unlisted stocks. Two qualified securities underwriters provide recommendations, and issuing companies set up offices to deal with shareholders. Besides longer trading hours, there are no daily limits on price changes for emerging stocks and no minimum trading lots. There is a 7-percent limit on price fluctuations and minimum trading lots of 1,000 shares on the two stock exchanges. The new measures restore OTC trading. In addition, investors are better protected, since unqualified middlemen have been replaced by brokerage houses. Not only does this give local entrepreneurs another fund-raising channel, but also securities houses gain a new business function.
The process of applying for registration on the emerging market board is simple and easy.
Any foreign issuer lawfully registered in a foreign country can be registered with the written recommendation of two or more recommending securities firms, provided the issuer is a limited liability company and does not violate the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area. There are no requirements for the year of establishment or the profitability of the company. Registered shares issued by a company on emerging market board must be common shares that are not listed on any foreign exchange. The shares of emerging stocks shall be delivered by book-entry transfer in physical or scripless form.
Recommending securities firm plays an important role in listing in Taiwan. Of the two or more recommending securities firms just mentioned, one of which will act as the lead advisor and underwriter, while the rest are co-underwriter. Because the recommending securities firms have the obligations to give quotes and make market while the stock is registered on the emerging market board, the issuer must let the recommending securities firm subscribe at least 3% and at least 500,000 shares of its stocks, or at least 1.5 million shares if 3% represents more than 1.5 million shares. Each recommending securities firm shall subscribe at least 100,000 shares. 其應為中華民國證券商業同業公會登記之會員，且於我國境內具備證券承銷商及櫃檯買賣自營商之資格，並應符合證券商管理規則第二十三條規定之條件。另與外國發行人間，不得有證券商管理規則第二十六條所列情事，且非屬同一集團企業。 The lead RSF is responsible for submitting to GreTai a latest month Material Financial Events Checklist 「財務業務重大事件檢查表」 on the issuer for registration purpose, and the same statement before the 20 th of each month thereafter, and reporting to GreTai whenever there is a material corporate event.
A foreign issuer must appoint at least an individual or juristic person inhabited or registered in Taiwan to act as its contentious or non contentious attorney . Why appointing an attorney in Taiwan? They will act on behalf of the foreign issuer with regard to communication and correspondence with GreTai and to undertake matters in compliance with the local regulations. The Attorney can be an individual or an institution in Taiwan. 至少設有一名在我國境內之訴訟及非訟代理人，其主要職能，係作為櫃買中心與外國發行人間有效送達相關文件及通知配合辦理事項，遵循我國證券法令、櫃買中心規章暨公告事項及外國發行人股票第一上櫃契約等事宜。
Ready availability of listed company financial information is an important resource for investors. Over the past few years a number of companies and regulators have sought ways to make financial information readily searchable electronically. A number of jurisdictions have chosen a machine-readable language XBRL. Whilst hailed by its supporters as the way forward, support across the world is mixed. The Market Observation Post System (MOPS) was established in August 2002 to simplify procedures for the reporting of corporate information and provide investors easier access to more up-to-date information. Investors can use the website to check the various types of information that must be reported on a regular basis by unlisted public companies and companies listed on either the Taiwan Stock Exchange (TSE) or the GTSM.
I assume you all care about the requirements for financial reports and certifying accountant. Foreign issuers must produce consolidated financial reports , which meet the following criteria: The financial reports must be audited by two CPAs in Taiwan or by a multinational accounting firm having a cooperative relationship with the office of the aforesaid CPAs and the CPAs in Taiwan must issue an audit report that does not mention the audit work performed by other CPAs. 經主管機關所核准簽證公開發行公司財務報告之我國二位會計師出具查核（或核閱）報告，或與前述會計師所屬事務所有合作關係之國際性會計師事務所查核簽證（或核閱），並由我國會計師出具不提及其他會計師查核（或核閱）工作之查核（或核閱）報告。 The financial reports shall be denominated in NTD and prepared in Chinese that may be accompanied by an English version. 應以中文版本為主，得加送英文版本，並以新台幣為編製單位。 The financial reports shall be prepared in compliance with the accounting standards of Taiwan or the US, or internationally accepted standards presenting two-period figures for comparison purpose. 財報以臺灣、美國或國際財務會計準則編製。但採二期對照方式 . The accounting standards adopted should be explained in notes to financial reports. If the financial reports are not prepared in compliance with the accounting standards of Taiwan, the issuer must identify the differences in the two-period balance sheet and income reports, including significant differences and resulting amounts affected. 財務報告附註應敘明所採用之會計原則；非採臺灣會計準則編製者，應就二期對照之資產負債表及損益表科目說明與臺灣會計原則之差異情形，包括重大差異項目及影響金額。 外國發行人申請股票第一上櫃時，應檢附申請公司最近二年度及申請年度最近一季經會計師查核簽證或核閱之合併財務報告二份（合併季財務報告得免經會計師核閱），會計外國發行人申請其股票第一上櫃時及其應公告申報之財務報告，需依據我國、美國或國際會計準則編製財務報告，且需以合併個體為編製主體，並採二期對照方式，編製內容包括合併資產負債表、合併損益表、合併現金流量表、合併股東權益變動表及附註，但季合併財務報告無須編製合併股東權益變動表。財務報告附註應敘明所採用之會計原則，若採我國會計原則編製者，無需適用證券發行人財務報告編製準則第十五條規定；若非採我國會計準則編製者，應就二期對照之資產負債表及損益表科目揭露與我國會計原則之差異情形，包括重大差異項目及影響金額。且會計師應於查核報告之範圍段敘明外國發行人所採用之會計原則，及所採用會計原則與我國一般公認會計原則之差異情形與附註索引，並應明確載示業依我國會計師查核簽證財務報表規則及一般公認審計準則查核。至於財務報告之申報期限，原則上同本國發行人之規定，惟師並應出具不提及其他會計師查核工作之查核（核閱）報告。
A foreign issuer shall undertake to comply with Taiwan’s Securities Exchange Act and applicable regulations and policies. If the foreign issuer is a holding company, firms under holding shall also make the same undertaking. 承諾遵守臺灣之證券交易法及相關法令政策規定，若外國發行人係屬投資控股公司型態，則其被控股公司也需承諾遵守。 The trading of emerging stocks shall be governed by the laws of Taiwan. Thus Taiwan Taipei District Court shall be the court of jurisdiction in case any litigation arises out of trading of emerging stocks 興櫃股票櫃檯買賣契約所適用之準據法為臺灣法律，因興櫃股票櫃檯買賣契約所生之紛爭，以臺灣臺北地方法院為訴訟管轄法院。 Any legal suit relating to the contract will be enforced by the Taiwan Taipei district court In the supervision of foreign issuers, we will not go overseas like to we do for domestic firms to carry out examination work. If it is truly necessary, we will ask the foreign issuer to appoint a CPA or a professional institution at its own cost to conduct examination of designated items and submit the examination report to GreTai. . The stocks trading on Gretai Emerging Stock Market shall be confined to those for which delivery is handled by book-entry. Foreign issuers shall include shareholders protection matters in its articles of incorporation or organizational documents. . 有關股東權益保護之重要事項，應增訂於公司章程或組織文件內。
Can be in physical or scripless form. The par value of the shares issued shall be NT$10. According to Taiwan’s Company Act and the prevailing market practice, stocks are traded by the unit of 1000 shares. I know that firms in the U.S. provide net worth instead of paid-in capital on their financial reports. Firms interested in listing on Taiwan’s market need to make some adjustment in this regard. A foreign company that went IPO on GreTai should hold shareholders’ meeting inside Taiwan, provided it does not violate the law of the registered country. If the law of the registered country provides that a company may not hold shareholders meeting outside the country, the foreign company should have in place a proxy or correspondence voting system, which stipulates the actual procedures, regulatory restrictions of the registered country on voting, measures for protecting the interests of shareholders in Taiwan and other important matters. The time to convene a shareholders’ meeting varies from a general shareholders’ meeting to a special shareholders’ meeting. The general shareholders’ meeting shall be convened at least once every year and within six months after close of each fiscal year, unless otherwise approved by the competent authority for good cause shown whereas the special shareholders’ meeting shall be convened when necessary (Article 170 of the Company Act). 在不違反註冊地國法令情況下，外國第一上櫃公司應於我國境內召開股東會。若註冊地國法令規定不得於境外召開股東會者，國外企業應訂有得採委託投票或通訊投票之相關制度，內容應包括具體作法、註冊地國法令對投票之限制及對我國股東之股東權益保護等重要事項。
Based on the principles of national treatment, the prevailing rules for the information disclosure, reporting of material events, press conference for major announcement, and cessation of trading and termination of registration governing domestic stocks on the emerging market board will apply to foreign issuers. 基於國民待遇原則，有關國外企業登錄興櫃後之資訊申報、重大訊息申報、重大訊息說明記者會及停止、終止興櫃之規定，基本上比照本國興櫃公司現行規定辦理。
The FSC in recent years has upped the frequency with which public companies must compile consolidated financial statements, required public companies to implement fair value accounting, and required companies to rigorously appraise their assets for any appreciation or depreciation. In addition, to enhance the consistency and quality of disclosed information, the FSC has amended various statutory and regulatory provisions and adopted coordinated measures to dovetail with the amendments. The purpose of all these steps is to improve the transparency of corporate financial matters and spur improvements in the quality of financial information.
If a listed company intends to release price sensitive information it should do so only after taking due care as to accuracy and completeness and by way of a public announcement
A stock registered on the emerging market board may apply for IPO on GreTai after six months. All securities listed on the Exchange are traded through Fully Automated Securities Trading (FAST). Orders are executed in strict price and time priority. An order entered into the system at an earlier time must be executed in full before an order at the same price entered at a later time is executed.evolving from the traditional negotiated-price trading method, GTSM has outgrown its original role as an over-the-counter market among securities firms and has dramatically transformed itself into a fully automated stock exchange by installing a highly developed electronic order-matching system for its services and functions. Most of GTSM’s trading rules are similar to TSE’s. The entire transaction settlement can be completed in T ＋ 2 days. Continuous strong market performance has allowed GTSM to constantly enhance its technology infrastructure to ensure that GTSM offers efficient price discovery, low execution costs and a higher degree of certainty of executions, putting GTSM at the forefront of Chinese Taipei's securities markets.
There is a Listing Committee in place to review all listing applications. The Listing Committee comprises of eleven members, including 2 industrial experts, 1 financial and 1 legal export, and 7 in-house members who will vote on the grant of approval for listing. For a domestic issuer to apply for listing, GreTai will send staff to the company to undertake a five-day onsite examination before the application is considered by the review board. Foreign issuers will be subject to document review only, however the senior management of the issuer needs to be present in front of the Listing Committee once. After approved by SFB, GTSM will sign the Listing Agreement with issuer. Agreement contains provisions relating to board and shareholder meetings, the contents of annual reports and other financial disclosure, requirements for timely disclosure of material (price-sensitive) information and numerous other matters.
Any foreign issuer lawfully registered in a foreign country can be registered with the written recommendation of two or more recommending securities firms, provided the issuer is a limited liability company and does not violate the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area. There are no requirements for the year of establishment or the profitability of the company. 「外國發行人第一上櫃股票」就是外國發行人所發行記名股票未在國外證券市場掛牌交易，而於本國櫃檯買賣市場初次掛牌交易。其與「外國發行人第二上櫃股票」之差別在於，第一上櫃股票未在國外證券市場掛牌交易，而第二上櫃股票已在經核定之國外證券市場掛牌交易。 依照外國法律組織登記之股份有限責任公司，且未違反「臺灣地區與大陸地區人民關係條例」相關規範者，可以申請股票第一上櫃。
經二家以上證券商書面推薦者，惟應指定其中一家證券商係主辦推薦證券商 Within the first two years of listing, the foreign issuer is required to continue the appointment of a lead recommending securities firm to help the foreign issuer stay in compliance with the local securities laws and regulations, the rules, regulations and announcements of GreTai, and GreTai’s Foreign Issuer Initial Public Offering Contract. The role of the lead recommending securities firm is essentially the same as the compliance advisor after listing on Hong Kong Exchange. 外國發行人應於申請上櫃年度及其後二個會計年度內繼續委任主辦推薦證券商協助其遵循我國證券法令、櫃買中心規章暨公告事項及外國發行人股票第一上櫃契約。 外國發行人應於申請上櫃年度及其後二個會計年度內繼續委任主辦推薦證券商協助其遵循我國證券法令、櫃買中心規章暨公告事項及外國發行人股票第一上櫃契約。此為本國發行人所無之規定。
But if the foreign issuer has changed its lead underwriter, the newly appointed lead underwriter will take over the advisory work and apply for GreTai listing on behalf of the foreign issuer after another six months on the emerging market board. The purpose of such requirement is to make sure that the newly appointed underwriter understands the situations of the foreign issuer well before making listing application on its behalf. It is also designed to prevent undue competition and tug-of-war over customers among securities firms 主辦推薦證券商若有異動，發行人應由新任之主辦推薦證券商進行輔導，且再於興櫃股票櫃檯買賣滿六個月以上，才能提出上櫃之申請。
the foreign issuer has been incorporated and registered for at least two full fiscal years 依照外國法律設立登記滿二個完整會計年度。
The income before tax in the most recent year as shown in the consolidated financial reports is NT$4 million or more, t he ratio of net profit before tax against the shareholder’s equity is 4% of higher for the most recent year, and there is no accumulated loss in the most recent fiscal year, or it is 3% or higher for each of the past two fiscal years, or the average for the last two fiscal years is 3% or higher and the profitability in the most recent year is better year-on-year. 依我國財務會計準則編製之合併財務報表，其最近一個會計年度之稅前純益不得低於折合新台幣四百萬元，且其稅前純益不予考量少數股權純益（損）對其之影響，並占股東權益總額之比率，應符合下列條件之ㄧ： 1 最近年度達百分之四以上，且其最近一個會計年度決算無累積虧損者。 2 最近二個會計年度均達百分之三以上者。 3 最近二個會計年度平均達百分之三以上，且最近一個會計年度之獲利能力較前一個會計年度為佳者。
its shareholder’s equity valued at least NT$100 million or US$3.3 million 最近一個會計年度經會計師查核簽證之股東權益總額折合新台幣一億元以上者。
For the dispersion of equity, the company must have at least 300 shareholders 持有股份一千股至五萬股之記名股東人數不少於三百人，且其所持股份總額合計占發行股份總額百分之十以上或逾五百萬股。 The shares of major shareholders must be put under central custody for a period of time. 董事、監察人及持有公司已發行股份總數百分之十以上股份之股東，將其持股總額依本準則第五條規定辦理集中保管及屆期領回等事宜。
We also have six exclusion clauses for the listing of foreign issuer on GreTai. 相較於本國發行人申請股票上櫃計有 11 款不宜上櫃條款，外國發行人申請股票第一上櫃計有 6 款不宜上櫃條款，謹予分述如下： 1. 遇有證券交易法第一百五十六條第一項第一款至第三款所列情事者。 2. 財務或業務未能與他人獨立劃分者。 3. 有重大非常規交易迄申請時尚未改善者。 4. 公司或申請時之董事、監察人、總經理或實質負責人於最近三年內，有違反誠信原則之行為者。 5. 申請公司之董事會，有無法獨立執行其職務者。其他因事業範圍、性質或特殊情況，櫃買中心認為不宜上櫃者。 遇有證券交易法第一百五十六條第一項第一款至第三款所列情事者。 審查認定標準：證券交易法第一百五十六條第一項第一款至第三款所列情事： （一）發行該有價證券之公司遇有訴訟事件或非訟事件，其結果足使公司解散或變動其組織、資本、業務計劃、財務狀況或停頓生產，而有影響市場秩序或損害公益之虞者。 ( 二 ) 發行該有價證券之公司，遇有重大災害，簽訂重要契約，發生特殊事故，改變業務計劃之重要內容，或退票，其結果足使公司之財務狀況有顯著重大之變更，而有影響市場秩序或損害公益之虞者。 ( 三 ) 發行該有價證券公司之行為，有虛偽不實或違法情事，足以影響其證券價格，而及於市場秩序或損害公益之虞者。 1. Any of the events in Article 156, paragraph 1, subparagraphs 1 through 3, of the Securities and Exchange Act. Determination standards: an event under Article 156, paragraph 1, subparagraphs 1 through 3 of the Securities and Exchange Act: (1) The issuer of the securities becomes involved in litigious or non-litigious matters that are sufficient to result in dissolution, or change in corporate organization, capital, business plan, financial condition, or suspension of production, where there results a danger of affecting the market order or impairing the public interest. (2) The issuer of the securities encounters significant disasters, enters into important agreements, is confronted with special circumstances, or initiates major changes in its business plan, or has a check dishonored, the result of which is sufficient to cause major changes in the financial condition of the company, thus creating a danger of affecting the market order or impairing the public interest. (3) The issuer of the securities engages in deceptive, dishonest, or illegal practices, the result of which is sufficient to affect the prices of its securities, thus creating a danger of affecting the market order or impairing the public interest.
With respect to corporate governance, our requirement is that the company has at least three independent directors that account for at least one fifth of all directors, and one of the independent directors has household registration in Taiwan. 對公司治理，我們的要求是公司至少要有三席獨立董事，應達全體董事席次五分之一以上，其中一名獨立董事在台灣要有戶籍。 獨立董事之任職條件： (1) 應符合「公開發行公司獨立董事設置及應遵循事項辦法」所訂之 實質獨立性要件。 (2) 需有一人以上為會計或財務專業人士。 (3) 自其推薦證券商與公司簽訂輔導契約日起，每年應就法律、財務或會計專業知識進修三小時以上，並取得非推薦證券商之外部專業進修體系所出具之講授課程、上課、座談會與談人等證明文件
The term &quot;held company&quot; as used in these Supplemental Directions means any of the following companies: 1.An invested company of which an investment holding company directly holds more than 50 percent of the issued voting shares or has made a capital contribution of more then 50 percent; 2.An invested company of which an investment holding company indirectly through its subsidiary holds more than 50 percent of the issued voting shares or has made a capital contribution of more then 50 percent; or 3.An invested company of which an investment holding company directly, and indirectly through its subsidiaries, holds more than 50 percent of the issued voting shares or has made a capital contribution of more then 50 percent. 本補充規定所稱之被 控股公司 係指下列情形之一者：一、投資 控股公司 直接持有逾百分之五十已發行有表決權股份或出資逾百分之五十之各被投資公司。二、投資 控股公司 經由子公司間接持有逾百分之五十已發行有表決權股份或出資逾百分之五十之各被投資公司。三、投資 控股公司 直接及經由子公司間接持有逾百分之五十已發行有表決權股份或出資逾百分之五十之各被投資公司。
For domestic applicant companies, GreTai will send staff to the company to undertake a five-day onsite audit/examination before the application is considered by the Listing Committee. Foreign issuers will be subject to document review only, however the senior management of the issuer needs to be present in front of the review board once. The issuer agree that GTSM may assign CPA or professional instrument to make a special inspection regarding the finance and business of the issuer and pay the fees for inspector. The Articles of Incorporation of the company shall contain the particulars regarding protecting shareholder's equity. The contract for trading relevant stocks on Gretai Emerging Stock Market is governed by and construed in accordance with the laws of the ROC. 應櫃買中心要求委託指定會計師或專業機構，依櫃買中心指定之查核範圍進行專案檢查，並將檢查結果提交櫃買中心，且同意負擔相關費用。
Our supervision of foreign issuers who go IPO on GreTai is basically the same as for domestic issuers. The GreTai Listing Supervision Department will assign a staff to each listing to help them with compliance matters, such as reporting. Linda who is here today is from the Listing Supervision Department. I am sure she will be glad to answer any question you may have about compliance.
Some such filings are periodic (e.g. financial reports; monthly operating reports; annual reports; statements of changes in the shareholdings of, or pledges created by, directors, supervisors, or 10-percent shareholders; shareholders meeting records; and internal audit reports) while others are made on an as-needed basis (e.g. events that could affect shareholders equity or share price; prospectuses; public tender offers; acquisition or disposal of assets; loans, endorsements, and guarantees; approvals of public offerings or private placement deals; treasury stock repurchases by listed companies; and accounting changes). To make it easier for website visitors to find what they're looking for, the MOPS site has special sections for such topics as corporate governance, credit ratings, capital raising plans, and financial forecasts.
I think this is the end of my briefing today. Preparing for listing might be painstaking. But the efforts are worth it for a business seeking growth. We are glad to see that some of our listees who were originally registered in the U.S., took the trouble of switching listing to Taiwan and enjoyed excellent results. I believe that you have heard stories like that. Taiwan’s stock market has a long history and complete sets of regulations. It is highly favored by foreign investors who hold nearly 30% of stocks on the market. Policy wise, our government has declared the goal of turning Taiwan into the Asia-Pacific financial center, including the funding center and the asset management center. Hence the government will accelerate the integration of financial markets and bring our financial regulations in line with international practice. These goals may sound like slogans in the past. But as the tension between Taiwan and China eases and economic enhancement has attained national consensus, we have every confidence in a brighter future for Taiwan. This is the perfect time for foreign enterprises to link up with Taiwan’s capital market. Guided by the tenets of professionalism, efficiency, innovation, and service, we have set up a team to serve you. Please contact us at any time if you have any needs or questions. We hope to offer you an alternative that will meet your financing needs and your desire to become better known to international investors, hence creating a win-win situation for the state, the securities market, the listee and the investors. Naturally, we want to make our listing platform as attractive and competitive as possible. We will maintain a delicate balance between market regulation and market facilitation. While we want to give our investors an appropriate level of protection, we do not wish to go overboard and burden listing companies with undue compliance costs. You can be sure that we will give it the typical efficient Taiwan treatment: a minimum of fuss with a maximum of openness.
We look forward to a long and fruitful partnership between the Taiwan and Silicon Valley in the years to come. Finally, I would like to end my presentation by taking questions. I shall be happy to answer any questions that the floor may have. Thank you. (OR, I apologize but we ran out of time for questions. However, if you have any question, please do not hesitate to ask me on the way there.) Thank you very much for your participation. Please do not hesitate to contact me shall you remembered any additional questions after the Seminar.
Foreign Issuer Applying for Listing on Taiwan GTSM and ...
June 12, 2008 Foreign Issuer Applying for Listing on Taiwan GTSM and Emerging Stock Market
OUTLINE <ul><li>Snapshot of Taiwan’s Economy </li></ul><ul><li>The Status of Taiwan’s Capital Market </li></ul><ul><li>The History & Characteristics of GTSM Securities Market </li></ul><ul><li>Emerging Stock Board Registration </li></ul><ul><li>Regular Stock Board Listing </li></ul><ul><li>Conclusion </li></ul>
<ul><li>Snapshot of Taiwan’s Economy </li></ul>
<ul><li>Since the 1997 Asian financial crisis, the Taiwan economy has confronted a number of challenges, including, among others, the rise of the Chinese economy, the burst of the dot-com bubble in 2000, and SARS. In response to these challenges, Taiwan has undertaken financial reforms and economic transformation, and emerged stronger. </li></ul>Introduction
<ul><li>Average growth rate of the economy for the past four years (2004-2007) was 5.2%, compared with 4.7% for Korea, one of its most important competitors. The economy is expected to grow at 4.5% in 2008 amid growing global concerns about recession. </li></ul><ul><li>The subprime mortgage problem has had relatively limited effect on the economy. The FSC put subprime loss at US$741mn, as per yearend 2007. </li></ul><ul><li>The economy is fundamentally strong. </li></ul>Economic Performance
<ul><li>Although it imports 98% of energy, and global energy prices have been significantly rising recently, Taiwan has been able to maintain price stability. e.g. the CPI growth remains less than 1% in 2001-06, while it rose to 1.8% in 2007 due to the surge in global raw material prices. </li></ul><ul><li>The unemployment rate peaked at 5.17% in 2002 due to rapid migration of labor intensive manufacturing industry to China and dot com bubble. It is now at the six year low rate of 3.9% as a result of economic growth and various government policy of job creation. </li></ul>Economic Performance
Latest Indicators <ul><li>GDP Growth Rate [2008forecast ]: 4.78% </li></ul><ul><li>GNP [ 2007 ] : 12,933,890million NT dollars </li></ul><ul><li>Per Capita GNP [ 2007 ] ： 566,566NT dollars </li></ul><ul><li>CPI Change Rate : 3.86% (Apr. 2008) (compared with the same month last year) </li></ul><ul><li>WPI Change Rate : 6.18% (Apr. 2008) (compared with the same month last year) </li></ul><ul><li>Unemployment Rate : 3.81% (Apr. 2008) </li></ul><ul><li>The economic growth of 2008 is forecasted to 4.53%. </li></ul>
SWOT Analysis of Taiwan’s Economy Weakness Threat Strength ‧ Efficiency of Full Government ‧ Geographic center ‧ Research and development capabilities ‧ Rising market opportunities in the BRICs ‧ Rise of the BRICs and formation of regional trading blocs: Hollowing-out (?) and widening income gap ‧ Rising energy and raw material prices . Opportunity ‧ Inadequate investment in R&D and infrastructure. ‧ Fragile financial system and chronic budget deficits. ‧ Rigid labor markets ‧ Abundant high quality human resources. ‧ Excellent entrepreneurial spirit and R&D Capabilities ‧ Solid manufacturing industry base ‧ SMEs highly flexible in responding to market changes.
<ul><li>the 144th member of the World Trade Organization (WTO) </li></ul><ul><li>Taiwan’s overall competitiveness ranked 13, IMD’s report, “World Competitiveness, 2008 ” </li></ul><ul><li>Rank the top 5 competitive countries according to the WEF Global Competitiveness Report 2005-2006 </li></ul><ul><li>By the end of Mar. 2008, the foreign exchange reserves hit US$286.86 billion </li></ul>Taiwan’s Momentum
Prospects <ul><li>Speed up the direct transportation across the strait. </li></ul><ul><li>Relax the upper limit of 40% net value for Taiwanese businesses investing in Mainland China. </li></ul><ul><li>Study the amendment of“The statues of relationship between the people in Taiwan and Mainland China” and establish as early as possible the cross strait currency exchange mechanism. </li></ul><ul><li>Aggressively open the door for tourists from Mainland China to visit Taiwan and invest real estate property. </li></ul><ul><li>Sign the memorandum of cross strait financial market collaboration, allow capital to Mainland China </li></ul>
<ul><li>The Status of Taiwan’s Capital Market </li></ul>
The Status of Taiwan’s Capital Market <ul><ul><li>Knowledge of the manufacturing sector and particularly the information technology companies </li></ul></ul><ul><ul><li>Top 10 industries by market capitalization and trading values (End of 2007)) </li></ul></ul>2. 594 Steel 10 2.679 Transportation 10 2.887 Plastic 9 3.498 Steel 9 4. 707 Component 8 4.185 Component 8 4.709 Transportation 7 4.51 Energy 7 5.285 Electronic 6 5.042 Net Work 6 5.709 Financial&Banking 5 7.737 PC 5 8. 082 Net Work 4 8. 547 Electronic 4 8.783 PC 3 8. 967 Photonics 3 1 3.973 Photonics 2 13. 374 Financial&Banking 2 2 5.257 Semiconductor 1 1 7.742 Semiconductor 1 Trading Values % Industry Market Cap. ％ Industry
Enhancing the Confidence of Foreigners <ul><li>Foreign ownership of Taiwan stocks as a percentage of total market capitalization rose from 22.18% at the end of 2004 to 31.1% at the end of 2007. </li></ul>137.60 31.10 2007 66.34 21.46 2003 130.61 31.90 2006 153.20 31.10 Apr.2008 108.95 30.25 2005 80.09 22.18 2004 The cumulated net inward remittance by Foreign Institutional Investors (US$ bn) Foreign ownership of Taiwan stocks(%) Year
Total Accumulated Net Inward Remittance Enhancing the Confidence of Foreigners Abolished the screening system for qualified foreign institutional investors (QFII) Source: FSC Unit: US$ billion
<ul><li>The percentage of foreign ownership of Taiwan stocks is growing not only in TSEC, but also in GTSM. </li></ul><ul><li>MSCI Taiwan Index including GTSM companies: </li></ul>Foreign Capital also Flowing in GTSM Powerchip (5346 力晶 ) Semiconductor VIS (5347) 世界先進 ) Semiconductor ProMOS (5387 茂德 ) Semiconductor MOTECH (6244 茂迪 ) Optoelectronic KGI (6008 中信證 ) Finance FIRICH (8076 伍豐 ) Computer & Peripheral Equipment SAS (5483 中美晶 ) Semiconductor Wafer Works (6182 合晶 ) Semiconductor
Foreign Holding of GTSM Stock 4.26 5.26 5.92 5.01 3.69 Trading percentage by Foreign ownership (%) 7,264.6 5,391.2 3,744.2 3,476.0 1,517.9 Trading values by Foreign ownership (NT 100 million) 9.66 2007 9.36 2006 8.68 2005 6.89 2004 8.82 2003 Foreign ownership of GTSM stocks (%)
Corporate Governance <ul><li>Taiwan's ranking in corporate governance rise to 4th place in the “Asia Corporate Governance report 2007” published in 2007 by Asia Corporate Governance Association. </li></ul><ul><li>Corporate governance provides a firm foundation for the development of financial markets. A good corporate governance mechanism improves the health of the corporate sector and enhancing competitiveness. </li></ul><ul><li>GTSM has extensive experience in promoting corporate governance and creating a positive corporate governance culture. </li></ul><ul><li>Based on the latest OECD Principles of Corporate Governance, GTSM requires listing companies focus on Board functions, non arms-length transactions, supervisory responsibilities for corporate governance, and corporate social responsibility. </li></ul>
<ul><li>The History and Characteristics of GreTai Securities Market </li></ul>
Importance of Taiwan’s Alternative Market <ul><li>SME </li></ul><ul><ul><li>-Take major part of industry composition </li></ul></ul><ul><ul><li>-Entrepreneurship </li></ul></ul><ul><ul><li>Taiwanese want to be their own boss rather than work for others </li></ul></ul><ul><li>Industry Upgrade </li></ul><ul><ul><li>-Shift from Labor to Capital Intensive </li></ul></ul><ul><li>Direct Financing vs. Indirect Financing </li></ul><ul><li>Securities Market Segmentation and Coordination </li></ul><ul><ul><li>GTSM plays a role as an effective fund-raising channel for the medium and small business. </li></ul></ul>
GTSM’s Basics <ul><li>14 years old </li></ul><ul><li>Non-profit organization with no stock ownership and membership </li></ul><ul><li>Quasi official, market-oriented </li></ul><ul><ul><li>Each 1/3 of board member designated by SFB, appointed by major donators, and third-party respectively </li></ul></ul><ul><ul><li>Full time executive </li></ul></ul><ul><li>3 markets </li></ul><ul><ul><li>Equities – Regular, Supervised and Emerging stocks, DRs, ETFs and warrants </li></ul></ul><ul><ul><li>Bond – Government bonds, financial bonds, foreign bonds, corporate bonds, convertible bonds </li></ul></ul><ul><ul><li>Financial Derivatives – Corporate bond asset swaps, forward rate agreement, index derivatives </li></ul></ul><ul><li>Staff </li></ul><ul><ul><li>240 </li></ul></ul>
Organization Chart Board of Directors President Compliance Dept. Chairman Supervisors Information Dept Listing Exam. Dept. Bond Dept. Administration Dept. Trading Dept. Listing Supervision Dept. Auditing Dept. Planning Dept . Senior EVP Senior EVP
History of GTSM <ul><li>Nov. 1, 1994 Established as a Government Designated Organization </li></ul><ul><li>Dec. 1994 QFII Allowed to Invest </li></ul><ul><li>Sep. 1995 Trading Rules Revised </li></ul><ul><li>Jan. 1998 Margin Trading Allowed </li></ul><ul><li>July 24, 2000 Electronic Bond Trading System (EBTS) </li></ul><ul><li>Jan. 1, 2002 Emerging Stock Market Established </li></ul><ul><li>May 2002 Joined IOSCO as an Affiliate Member </li></ul><ul><li>Dec, 2003 Hosted 2nd Asia Pacific New Market Forum </li></ul><ul><li>Nov. 2004 Hosted 1st Int’l Bond Market Conference </li></ul><ul><li>Mar. 2006 Hosted 2nd Int’l Bond Market Conference </li></ul><ul><li>Sep. 2006 Listing of Taiwan’s First Foreign Currency-Denominated Bond </li></ul><ul><li>Nov. 2006 First GTSM Int’l Bond “Formosa Bond” Listing </li></ul><ul><li>Embarked Overseas Taiwan Bond Market Roadshows </li></ul><ul><li>May 2007 Embarked Overseas GTSM Corporate Roadshows </li></ul><ul><li>Nov. 2007 US Treasury Bond Quote System Go Online </li></ul><ul><ul><ul><ul><li>Hosted 3rd Int’l Bond Market Conference </li></ul></ul></ul></ul>
Beginner’s Strategies <ul><li>“ Follower” Philosophy </li></ul><ul><li>Position ourselves as a gateway market </li></ul><ul><li>Cooperate and coordinate with the stock exchange </li></ul><ul><li>Create own characteristics in market role </li></ul><ul><li>OTC no longer stands for Over-the-Counter, but Over-the-Computer </li></ul>Enlarge the Market Scale <ul><li>Providing high-quality service and enhancing efficiency </li></ul><ul><li>Laying great emphasis on market efficiency </li></ul><ul><li>Improving the liquidity </li></ul><ul><li>Increasing the incentives for issuers to list </li></ul>
Individual investors’ active participation and more than 85% of total market trading volume to high tech related Sectors Retailer investors dominate the market Stock Trading Values of Major Sectors Jan.~Apr. 2008 Breakdown of Trading Values for Investors Jan.~Apr. 2008
Characteristics of GTSM <ul><li>Multiple Trading Approaches </li></ul><ul><ul><li>Computerized Auto Matching </li></ul></ul><ul><ul><li>Negotiation Trading </li></ul></ul><ul><ul><li>Off-Exchange Transaction </li></ul></ul>
GTSM Regular Stock <ul><li>(As end of May 2008) 551 Listed companies </li></ul><ul><ul><li>Market Capitalization ： NT1,766 bn </li></ul></ul><ul><ul><li>Daily Trading Value: NT$19.45 bn </li></ul></ul><ul><ul><li>Daily Trading Values in 2007: NT$ 34.56 bn </li></ul></ul><ul><ul><li>Historical High: NT$ 109.4 bn July 26, 2007 </li></ul></ul>
Trading Values & Market Cap. on GreTai Regular Board
GTSM Examples of Corporate Growth Unit: NT 100 million 1095 4.28 52.55 10.29 246 0.56 10.69 9.43 379 2.84 20.26 5.8 The year of listing 12.24 Profit 496 Number of employees 32.76 Capital LCD-back Light 18.84 Capital Solar Energy 42.57 Revenue 2161 Number of employees 164.14 Revenue 68.22 Revenue 8.6 Capital Golf Metal Wood 10.86 Profit 636 Number of employees 5.62 Profit Five years later Average Industry
Bond - Primary Market US:NT$=$32.5 Bond market size has grown at average 7% annually for the past 5 years
Bond - Issuance Composition Government bond accounts for the largest portion (2007)
Bond -Trading Status *Total buy and sell amount among brokers and clients. * EBTS = Electronic Bond Trading System USD:NTD=1:32.5 Currently, over 90% outright trading are through GreTai’s EBTS
Ongoing Missions of GTSM <ul><li>Global Semiconductor ETF, ISO CG ETF </li></ul><ul><li>Taiwan Supervision Center 監理中心 </li></ul><ul><li>Operational Property Service Platform 營業用資產服務平台 </li></ul><ul><li>VCs Startups IPO 創投投資標的上櫃 </li></ul><ul><li>Agricultural Technology IPO 農業技術上櫃 </li></ul><ul><li>Development international cooperation </li></ul><ul><ul><li>-Asia Bond Trading Platform 亞洲債券交易平台 </li></ul></ul>
<ul><li>Goal </li></ul><ul><li>The purpose of this project is to assist these Taiwanese Enterprises listing in Taiwan including Primary listing or Secondary listing. </li></ul><ul><li>Encouraging the foreign issuer whose product has commercial potential for the global market and the place of register is not in Taiwan applying for listing on Taiwan GTSM and Emerging Stock Market . </li></ul><ul><li>Amending statutes and assisting corporations to list </li></ul><ul><li>Most overseas corporations listed by issuing Taiwan Depository Receipts (TDRs) in the past. Upon amendment of relevant statutes, overseas companies will be allowed to launch primary listings, a much simplified process. </li></ul>123 Plan for Attracting Overseas Companies
<ul><li>Very favorable PE valuations for Silicon Valley SME to raise capital for funding organic growth and sustainable development . </li></ul><ul><li>Economic and efficient way close to high-tech and knowledge-based clusters. </li></ul><ul><li>A platform quickly raise the issuer’s reputation. </li></ul><ul><li>Much easier channel for SPO in stock market. </li></ul><ul><li>Attracting outstanding employee and institutional investors. </li></ul>Listing on GTSM’s Advantages
Purposes of Emerging Stock Board <ul><li>For Investors: </li></ul><ul><ul><li>To establish a legal trading platform for unlisted public companies </li></ul></ul><ul><ul><li>To provide investors an legal, safe, visible market </li></ul></ul><ul><li>For Issuers: </li></ul><ul><ul><li>To raise capital for funding organic growth </li></ul></ul><ul><ul><li>To be familiar with Corporate Governance and market rules </li></ul></ul><ul><ul><li>To increase visibility to investor public and business partners </li></ul></ul><ul><ul><li>To upgrade as a listed company </li></ul></ul><ul><li>For GTSM: </li></ul><ul><ul><li>To maintain a fair and orderly market for SMEs trading </li></ul></ul><ul><ul><li>To provide vital support for the SMEs to upgrade to TSEC/GTSM </li></ul></ul><ul><ul><li>To enhance the competitive capability of TW capital market </li></ul></ul>
Companies Registering on Emerging Stock Board 180 227 42 47 90 230 257 350 245 246 172 02 03 04 05 06 07 Number of new registered Number of yr-end registered
*Include companies applied in 2001, but listed directly in GTSM, 2002 Companies Registering on Emerging Stock Board 18.49 22.46 23.00 17.65 14.25 8.43 Market Cap (US$ Bn) 22 36 73 22 3 0 Terminated Registration 35 35 55 87 83 110 * Moved to GTSM 17 3 7 12 21 34 Moved to TSEC 90 47 42 227 180 296 Newly Registered 97.65 230 2006 50.42 350 2004 89.49 257 2005 58.16 245 2003 75.16 246 2007 49.01 172 2002 Emerging Stock # Avg. Mkt. Cap (US$ Mn)
Market Trading Mechanism GTSM Emerging Stocks Quoting /Trading System Brokers / Dealers Investors Market Makers GTSM Website/ Info. Vendors TDCC Make orders / Deals feedback Directly negotiating/trading over the counter Settled Deals Reporting Order inputs/ / Deals feedback Quoting/orders execution Executed deals records Market quotes and trading info.
Trading Stipulations-1 <ul><li>Negotiation trading via GTSM Emerging Stock Quoting and Trading Platform : </li></ul><ul><li>－ The minimum quoting unit is 1,000 shares and minimum trading unit is 1 share. </li></ul><ul><li>－ Trading quotes shall be based on a trading unit or integral multiples. </li></ul><ul><li>Counter Negotiation: </li></ul><ul><li>－ Every trading shall meet the minimum amount of 100,000 shares. </li></ul>Trading unit <ul><li>No limits </li></ul>Daily price fluctuation <ul><li>Market maker’s quotes shall be firm priced and only on the stocks they recommended. </li></ul><ul><li>Tick ： NT$0.01 （ Min. ） </li></ul><ul><li>Investor’s order shall be limit order. </li></ul>Market maker’s quotes and investor’s orders <ul><li>Monday ~ Friday 9:00am － 3:00 pm </li></ul>Trading hours
Trading Stipulations-2 <ul><li>No auto-execution system, and GTSM never involve in orders matching. </li></ul><ul><li>Only market makers are entitled to trigger the process of order execution. </li></ul><ul><li>Market makers have the obligation to execute the incoming orders if the orders meet or enter into the price range of their quotes. </li></ul>Order execution <ul><li>Market maker’s best bid/offer is disclosed on the GTSM quoting and trading platform, and so is on the GTSM’s website. </li></ul><ul><li>Through GTSM’s website, the public can inquire all posted quotes and market prices information. </li></ul>Quotes and market transactions disclosure
Trading Stipulations-3 <ul><li>Negotiable, and with a cap ratio of 0.5% of settled trading value. </li></ul>Broker’s commission <ul><li>Not permitted. </li></ul>Margin trading <ul><li>T ( RTGS; specially on bilateral agreement) or T+2 ( market regular ) </li></ul>Cyclic settlement period <ul><li>Negotiation trading via GTSM Emerging Stock Quoting and Trading Platform : </li></ul><ul><li>-via TDCC book-entry system. </li></ul><ul><li>Counter Negotiation: </li></ul><ul><li>-via TDCC book-entry system or on bilateral arrangement. </li></ul>Delivery
Foreign Investment Related Issues <ul><li>Via FINI and FIDI system. </li></ul>Market Participation <ul><li>Capital gains tax: exempt. </li></ul><ul><li>Transaction tax : 0.3% of trade value (only on sellers). </li></ul><ul><li>Dividend, interest & other income : fitted into income tax and relative rank ratios （ for residents ） and 20% WHT （ on foreign nationals ） . </li></ul>Tax levy on emerging stock holding and transactions (for domestic stock) <ul><li>Except for very few particular industries still with foreigner ownership caps, the emerging stock companies are generally with no restrictions on foreigner ownership. </li></ul>Foreign investment limitations
Registering procedures for Emerging Stock An issuer decides to register as Emerging Stock Appointment of at least 2 recommending securities firms Restructuring, preparation of Accountants’ Report Lead RSF submits application & related document to the Listing Exam. Dept, GTSM GTSM announces approval & discloses issuer’s information GTSM conducts basic document reviews. RSFs begin making quotation and trading At least 5 business days 3 business days
Entity 申請主體 <ul><li>Company limited by shares, organized and incorporated in accordance with the laws of a foreign country and do not contravene the “Act of Governing Relations between Peoples of the Taiwan Area and the Mainland Area” ( 台灣地區與大陸地區人民關係條例 ) and related regulations. </li></ul><ul><li>Registered share, and common stock not list on the other foreign stock market. </li></ul><ul><li>Company has a consultant agreement 輔導契約 with securities firm. </li></ul>
Recommending Securities Firm/Underwriter 推薦證券商 <ul><li>The issuer is recommended in writing by two or more securities firms, one of them shall be designated as lead recommending securities firm. 主辦推薦證券商 </li></ul><ul><li>RSFs should subscribe not less than 3% of the total number of shares of the applicant company and shall not be less than 500,000 shares. </li></ul><ul><ul><li>-provided that if 3% of the total number of shares exceed 1.5 million shares, not less than 1.5 million shares shall be allocated for subscription by the securities firms </li></ul></ul><ul><li>Each recommending securities firm shall severally underwrite not less than 100,000 shares. </li></ul>
Professional Agent for Stock Affairs 股務代理機構 <ul><li>The issuer has established a professional agent for stock affairs or stock affairs unit in Taipei to process stock affairs. </li></ul>Attorney 代理人 <ul><li>The issuer shall authorize at least one contentious or non contentious attorney 訴訟或非訟代理人 who lives in Taiwan to help the issuer to enter information into the Market Observation Post System (MOPS), submit documents and so on. </li></ul>
Market Observance Post System （ MOPS ） 公開資訊觀測站 <ul><li>To ensure that investors have complete and timely material information on all listed companies, GTSM and TSEC have established the Market Observation Post System (MOPS), an information disclosure platform. All public-held companies (including TSEC/GTSM listed/registered companies) are required by law to publish basic relevant information such as company profile, operational revenue, financial reports, mergers and acquisitions, convening of shareholders meetings, stock dividends and any other matters which affect companies. </li></ul>
CPA and Financial Reports 簽證會計師和財務報告編製 <ul><li>The issuer’s financial reports shall be audited by the CPA of Taiwan or international accounting firm in alliance with CPA of Taiwan. The final audit report shall be issued by the CPA of Taiwan and without reference to any other accountant's audit. </li></ul><ul><li>The financial reports shall be denominated in NTD and prepared in Chinese that may be accompanied by an English version. </li></ul><ul><li>The issuer’s financial reports shall be consolidated financial reports and comparing two consecutive periods. ( 兩期對照 ) </li></ul><ul><li>In accordance with one of the following principles: </li></ul><ul><li>ROC GAAP, US GAAP and IFRS. </li></ul><ul><li>For accounting principles other than the Taiwan GAAP, the major differences in items and amount should be disclosed. </li></ul>
Commitment 應承諾遵守事項 <ul><li>The issuer shall commit to obey the ROC Securities & Exchange Act and related regulations. </li></ul><ul><li>Court with jurisdiction over an action 訴訟管轄法院 is the Taiwan Taipei district court. </li></ul><ul><li>CPA or professional instrument’s special inspection 專案檢查 . </li></ul><ul><li>Delivery by book-entry form 帳簿劃撥 . </li></ul><ul><li>Foreign issuers shall include shareholders protection matters in its Articles of Incorporation 公司章程 or organizational documents. </li></ul>
Above Fees collected shall be > NT$50,000 and < NT$225,000 . Initial registration handling fee: NT$20,000 Registration Fees 0.00125% More than NT$3 billion 0.0025% More than NT$2 billion to NT$3 billion 0.005% More than NT$1 billion to NT$2 billion 0.01% More than NT$500 million to NT$1 billion 0.015% NT$300 million to NT$500 million 0.02 % NT$300 million or less Annual Trading Fee Total Par Value of Shares Traded
Others <ul><li>The stocks and bonds issued by the issuer could have been issued in intangible form 得 無實體發行 . </li></ul><ul><li>Par value per share will be denominated in NTD 10. </li></ul><ul><li>No need for operations in Taiwan. </li></ul><ul><li>Issuer should convene shareholder’s meeting in Taiwan, , provided it does not violate the law of the registered country. If law prohibit it hold outside the country, issuer should have in place a proxy or correspondence voting system. </li></ul>
<ul><li>Consolidated Financial report (In Chinese version) </li></ul><ul><li>Annual /semi-annual financial report </li></ul><ul><li>by end of April / end of June plus 75 days </li></ul><ul><ul><li>Annual report </li></ul></ul><ul><ul><li>by the shareholders' meeting </li></ul></ul>Regular Information Reporting
<ul><li>Material (Price-Sensitive) Information : Inputting the content or explanations of the information into the MOPS before the commencement of trading hours of the trading day next following the date of occurrence of the event. </li></ul><ul><li>Press Conference Regarding Material Information: The company shall promptly dispatch a spokesperson or acting spokesperson to a press conference by the trading day next following the occurrence of the event or the broadcast media report, to provide explanations to the news media. Foreign companies can use video conference. </li></ul><ul><li>The issuer could authorize attorney to help the issuer to enter information (the content should be in Chinese ). </li></ul>Irregular Information Reporting
<ul><li>Auto-matching: Monday ~ Friday 9:00am － 1:30 pm </li></ul><ul><li>Negotiation trading: </li></ul><ul><li>Monday ~ Friday 9:00am － 3:00 pm </li></ul>Trading hours <ul><li> 7 % Limits based on opening reference price </li></ul>Daily price fluctuation <ul><li>Computerized auto matching </li></ul><ul><ul><li>Price priority + time priority </li></ul></ul><ul><ul><li>25 seconds matching round </li></ul></ul><ul><ul><li>Daily Price fluctuation with 7% limits </li></ul></ul><ul><li>Negotiation trading </li></ul><ul><ul><li>Between two securities dealers or b/w securities dealer & investors who trade 100,000 shares or more per order </li></ul></ul><ul><ul><li>Same price fluctuation limits </li></ul></ul>Market Peculiarities <ul><li>Auto-matching: 1,000 shares or multiples (regular) 500,000 shares or above (lot trade) </li></ul><ul><li>Negotiation trading: 100,000 shares or above </li></ul>Trading unit <ul><li>T+2 in netting base </li></ul>Settlement & Delivery
Listing procedures for Regular Stock An issuer decides to list on GTSM Registers as Emerging Stock for 6 months Submits listing application & related document to the Listing Exam. Dept . GTSM conducts formal document reviews without on-site audits Hearing by Listing Committee Review of listing application by L.E. Dept. GTSM Board Meeting Approval GTSM Submits Results to SFB ListingCeremony Successful listed in GTSM Approval
Entity 申請主體 <ul><li>Company limited by shares, organized and incorporated in accordance with the laws of a foreign country and do not contravene the “Act Governing Relations between Peoples of the Taiwan Area and the Mainland Area” 台灣地區與大陸地區人民關係條例 and related regulations. </li></ul><ul><li>Registered share, and common stock not list on other stock market. </li></ul>
Recommending Securities Firms/Underwriter 推薦證券商 <ul><li>The issuer is recommended in writing by two or more securities firms, one of them shall be designated as the lead recommending securities firm. 主辦推薦證券商 . </li></ul><ul><li>The lead RSF shall be the Compliance Advisor of the issuer and help the issue to obey the ROC Securities and Exchange Act, related regulations and the contract with GTSM within the year of listing till 2 fiscal years. </li></ul>
Change of Recommending Securities Firm <ul><li>If the issuer has changed its lead RSF, the newly appointed lead RSF should take over the advisory work and apply for GreTai listing on behalf of the foreign issuer after another six months on the Emerging Stock Board. </li></ul><ul><li>The purpose of such requirements is to make sure that the newly appointed RSF understands the situations of the foreign issuer well before making listing application on its behalf. </li></ul>
Operating History 設立年限 <ul><li>The issuer shall have been incorporated and registered under the regulations for no less than two full fiscal years. </li></ul><ul><li>If company A from Silicon Valley wishes to list in Taiwan, it may establish a holding company B (in places such as the Cayman Islands) and list company B. There is no operation history requirement for company B, as long as the subsidiary company, Company A, has operated more than 2 years. </li></ul>
Profit Test 獲利能力 <ul><li>a minimum consolidated income before tax 合併稅前純益 of NTD 4 million in the recent fiscal year. </li></ul><ul><li>the ratio of income before tax against the shareholder's equity on the final accounts: </li></ul><ul><ul><li>--4% or higher for the most recent fiscal year, no accumulated loss on final account. 無累積虧損 </li></ul></ul><ul><ul><li>--3% or higher for each of the past two fiscal years. </li></ul></ul><ul><ul><li>--the average for the last two fiscal years is 3% or higher and the profitability in the most recent year is better year-on-year. </li></ul></ul>CPA and Financial Report <ul><li>Same as Emerging Stock </li></ul>
Shareholder‘s Equity 股東權益 <ul><li>The shareholder's equity as audited and certified for the most recent period by a CPA is valued as equivalent to NT$100 million or more. </li></ul>Attorney 代理人 <ul><li>Same as Emerging Stock </li></ul>
Shareholding Spread 股權分散 <ul><li>10% or 5,000,000 shares (whichever is smaller) to be held by at least 300 shareholders holding from 1,000 shares to 50,000 shares. </li></ul>Lockup 股票集中保管 <ul><li>Directors, supervisors & major shareholders (holding>10%) should deposit their holding into TDCC. </li></ul><ul><li>Duration is 1 years at most. 50% can be withdrawn after 6 months. </li></ul>
Negative Listing Criteria 不宜上櫃條款 <ul><li>Against specific article of the Securities and Exchange Act </li></ul><ul><li>Finance or business cannot be independent </li></ul><ul><li>Significant abnormal transaction </li></ul><ul><li>Has committed any act in violation of the principle of honesty and good faith in the last 3 years; </li></ul><ul><li>Unable to independently perform their functions. </li></ul><ul><li>GreTai deems it improper </li></ul>
Corporate Governance 公司治理 <ul><li>The issuer shall have at least 3 independent directors and independent directors are more than 1/5 of the number of total board directors. One of independent directors must have household registration in ROC. </li></ul><ul><li>The issuer shall prepare self-evaluation report regarding corporate governance and the underwriter shall assess the issuer’s self-evaluation report and prepared the assessment report. </li></ul>
Investment Holding Company 投資控股公司 <ul><li>Definition </li></ul><ul><ul><li>Directly holds more than 50 % of the issued voting shares or has made a capital contribution of more then 50 %; </li></ul></ul><ul><ul><li>Indirectly through its subsidiary holds more than 50 % of the issued voting shares or has made a capital contribution of more then 50 %; or </li></ul></ul><ul><ul><li>Directly, and indirectly through its subsidiaries, holds more than 50 % of the issued voting shares or has made a capital contribution of more then 50 %. </li></ul></ul><ul><li>70 % of the operating income as reported in the investment holding company’s consolidated financial statements shall come from the held companies. </li></ul><ul><li>Holds one or more non-professional investment companies that hold no shares in applicant company. </li></ul>
Due Diligence 專案查核 <ul><li>In the period of listing examination, GTSM only requires due diligence of documents, but GTSM’s on-site due diligence is currently required for the IPO of domestic companies. </li></ul><ul><li>During listing examination and after listing, the company should accept CPA or professional instrument’s special inspection in some special case. </li></ul>
Above Fees collected shall be > NT$100,000 and < NT$450,000 . Initial examination fee: NT$500,000 Listing Fees 掛牌費用 0.0025% More than NT$3 billion 0.005% More than NT$2 billion to NT$3 billion 0.01% More than NT$1 billion to NT$2 billion 0.02% More than NT$500 million to NT$1 billion 0.03% NT$300 million to NT$500 million 0.04 % NT$300 million or less Annual Listing Fee Total Par Value of Shares Traded
<ul><li>In order to encourage the openness of information flow in the securities market so as to prevent insider trading, GTSM requires listed companies to disclose their financial and operational information periodically or irregularly. </li></ul><ul><li>GTSM also requires listed companies to announce material information through the MOPS within a certain time after events occur, or after events are reported in the media. </li></ul><ul><li>To provide investors with more convenient and timely information, GTSM has created a simplified version of MOPS. </li></ul>Purposes
Listing Supervision Overview <ul><li>Implementation of Fair Disclosures </li></ul><ul><li>Improve in accounting transparency </li></ul><ul><ul><li>Information disclosure </li></ul></ul><ul><ul><li>Routine and exceptional administration regarding listed companies </li></ul></ul><ul><ul><li>Execute disciplinary action of GTSM </li></ul></ul><ul><li>Tighten Market Surveillance </li></ul><ul><li>Collate and Announce Data of Listed Companies </li></ul>
Information Disclosure for Listed Companies <ul><li>Prompt Disclosure : Material Information </li></ul><ul><li>Monthly </li></ul><ul><ul><li>Operating revenue (Foreign Listed exempted) </li></ul></ul><ul><ul><li>Balance of endorsements and loans of funds </li></ul></ul><ul><ul><li>Information on derivatives trading </li></ul></ul><ul><li>Quarterly </li></ul><ul><ul><li>Financial report </li></ul></ul><ul><li>Web Site: mops.tse.com.tw </li></ul>
Material information 重大訊息 <ul><li>Matters having material effect on company finances or business including but not limited to: </li></ul><ul><ul><li>Suspension of work </li></ul></ul><ul><ul><li>Change of main management or ownership, contentious or non contentious attorney </li></ul></ul><ul><ul><li>Important memorandum or strategic alliance or plan </li></ul></ul><ul><ul><li>Merger, spin-off, acquisition </li></ul></ul><ul><ul><li>Bankruptcy, checks rebounds </li></ul></ul><ul><ul><li>Lawsuit or litigation ….The regulations outline 49 (36 for Emerging) types of material information for foreign issuers </li></ul></ul><ul><li>Inputting the content of the information into MOPS before the next day of the event occurrence, or the mass media reportage, the press release </li></ul><ul><li>A breach penalty of NT$30,000 </li></ul>
Press Conference Regarding Material Information 重大訊息說明記者會 <ul><li>Press Conference Regarding Material Information: The company shall promptly dispatch a spokesperson or acting spokesperson to a press conference by the trading day next following the occurrence of the event or the broadcast media report, to provide explanations to the news media. Foreign companies can use video conference. </li></ul><ul><li>The regulations outline 26 (13 for Emerging) types of criteria for foreign issuers to hold a press conference. </li></ul>
Financial Reports <ul><li>Filing Deadlines: </li></ul><ul><ul><li>Annual report -- 4/30 </li></ul></ul><ul><ul><li>First Quarter report -- 4/30 (domestic) 5/31 (foreign) </li></ul></ul><ul><ul><li>First Half Year Report -- 8/31 (domestic) 9/30 (foreign) </li></ul></ul><ul><ul><li>Consolidated First Half Year Report -- 9/30 </li></ul></ul><ul><ul><li>Third Quarter Report -- 10/31 (domestic) 11/30 (foreign) </li></ul></ul><ul><li>Filing CPA’s opinion and major financial reports online and send a full hardcopy to GTSM. </li></ul>
Routine and Exceptional Administration <ul><li>Exceptional Administration </li></ul><ul><ul><li>Perform after companies have “Critical Events” </li></ul></ul><ul><ul><li>Critical Events: </li></ul></ul><ul><ul><ul><li>Dishonor of checks due to insufficient deposits </li></ul></ul></ul><ul><ul><ul><li>Liquidation of insider’s stocks by bank </li></ul></ul></ul><ul><ul><ul><li>Implementation of plan for the offering stock or bond seriously delayed or change substantially </li></ul></ul></ul><ul><ul><li>Analyze Critical Events to understand the impact to the company. Foreign company should accept GTSM appointed CPA or professional instrument’s special inspection in some special case. </li></ul></ul>
Disciplinary Action of GTSM <ul><li>Penalty </li></ul><ul><ul><li>Upon violation of information disclosure rules </li></ul></ul><ul><li>Set as altered-trading-method category </li></ul><ul><ul><li>Net worth lower than 50% of paid-in capital </li></ul></ul><ul><ul><li>CPA issues a qualified audit report </li></ul></ul><ul><ul><li>Dishonor of checks due to insufficient deposits </li></ul></ul><ul><li>Termination of trading </li></ul><ul><ul><li>Fails to file financial report on time </li></ul></ul><ul><ul><li>CPA issues an audit report containing a disclaimer of opinion or an adverse opinion </li></ul></ul><ul><li>Delist from GTSM </li></ul><ul><ul><li>Adjudicated bankrupt by a court </li></ul></ul><ul><ul><li>Negative net worth </li></ul></ul>
A healthy and orderly market should be able to protect investors’ rights and privileges and suppress manipulation and insider trading. In accordance with the regulations of Market Surveillance, GTSM discloses information on a daily basis about abnormal securities trading in order to alert investors and protect investors’ rights. GTSM may take disciplinary measures, as defined in the regulations, to constrain abnormal market behavior and prevent possible damage to the market. Market Surveillance of GTSM
On-line Surveillance <ul><li>Operates during trading hours (9:00~13:30) </li></ul><ul><li>Computer system detects abnormal securities automatically (On-line Automatic Detecting System) </li></ul><ul><li>Main detecting targets: </li></ul><ul><ul><li>Price fluctuation : over 9%, difference between GTSM index over 5% </li></ul></ul><ul><ul><li>Price movement: over 6%, difference between GTSM index over 4% </li></ul></ul><ul><ul><li>Turnover rate :over 10% </li></ul></ul><ul><ul><li>Trading volume : over 10,000 units </li></ul></ul>
On-line Surveillance <ul><li>Consequent measures, after the abnormal securities found, include: </li></ul><ul><ul><li>Real time analyze (e.g. contiguous price moving, trading concentration … ) </li></ul></ul><ul><ul><li>Browse market-prevailed information by Cyber-Browsing System </li></ul></ul><ul><ul><li>Inform related company to clarify or justify critical information on MOPS </li></ul></ul><ul><ul><li>Notify brokerage firm to watch out the transaction of abnormal customers and prevent their default </li></ul></ul>
<ul><li>Operates after trading hours </li></ul><ul><li>Main projects: </li></ul><ul><ul><li>Notify brokerage firm to watch out the transaction and prevent customers’ default (by written notice) </li></ul></ul><ul><ul><li>Declare warning name-list of certain securities that meet with alarming criteria </li></ul></ul><ul><ul><li>Undertake necessary countermeasures on certain securities that meet with special disposal criteria </li></ul></ul>Off-line Surveillance
<ul><li>Warning Information Securities </li></ul><ul><li>Targeting items: </li></ul><ul><ul><li>Price movement </li></ul></ul><ul><ul><li>Trading volume </li></ul></ul><ul><ul><li>Turnover rate </li></ul></ul><ul><ul><li>PER, PBR </li></ul></ul><ul><li>Countermeasures: </li></ul><ul><ul><li>Declare warning name-list of targeted securities </li></ul></ul><ul><ul><li>Preliminary analysis </li></ul></ul>Off-line Surveillance
<ul><li>Special Disposal Securities 處置股票 </li></ul><ul><li>Been declared as Attention Security 注意股票 for certain amount of days within a certain day period </li></ul><ul><li>Countermeasures: </li></ul><ul><ul><li>Manually matching 人工撮合 with prolonged time interval </li></ul></ul><ul><ul><li>Requiring pre-funding and securities pre-collected 預收款券 </li></ul></ul><ul><ul><li>Imposing restriction upon total daily order volume </li></ul></ul><ul><ul><li>Suspending trading </li></ul></ul>Off-line Surveillance
Types of Illegal Transactions <ul><li>Market manipulation </li></ul><ul><ul><li>Fail to perform settlement </li></ul></ul><ul><ul><li>Matched orders </li></ul></ul><ul><ul><li>Artificial raising, lowering or fixing price </li></ul></ul><ul><ul><li>Wash sale (create brisk trading impression) </li></ul></ul><ul><ul><li>Spread rumors or false information </li></ul></ul>
What is Insider Trading? <ul><li>Article 157-1 of the Securities and Exchange Act stipulates that "upon learning any information which will have a material impact on the price of an issuing company's securities, and prior to the public disclosure of such information or within 12 hours after its public disclosure, the person holding such information shall not purchase or sell shares of the company which are listed on an exchange or an over-the-counter market, or any other equity-type security of the company. </li></ul>
What is Insider? <ul><li>Director, supervisor, and/or managerial officer of the company, and/or a person designated to exercise powers as representative. </li></ul><ul><li>Shareholders holding more than 10% of the shares of the company (“Substantial Shareholder”) . </li></ul><ul><li>Any person who has obtained the information by reason of occupational or controlling relationship with the company. For example, employees, attorneys or accountants. </li></ul><ul><li>Employees or shareholders of a holding company who learn information about a subsidiary </li></ul><ul><li>A person who, though no longer among those listed in (one of) the preceding statuses, has only lost such status within the last 6 months. </li></ul><ul><li>Any person who has obtained the information from any of the persons named in the preceding statuses. </li></ul>
<ul><li>At least 3 days prior to transfer, insiders must register their intention of transferring shares that have satisfied the holding period requirement and within the daily transfer allowance ratio following registration, However, this requirement shall not apply to transfers totaling less than 10,000 shares per exchange day. </li></ul><ul><li>File a report of the changes in the number of shares they held during the preceding month </li></ul><ul><li>The insiders shall file, by the fifth day of each month, a report with the issuer of the changes in the number of shares they held during the preceding month. </li></ul><ul><li>The issuer shall compile and file such report of changes by the fifteenth day of each month. </li></ul>Insider’s Registration for Transfers 申報持股轉讓