1 Foreign Issuer Applying for Listing on Taiwan GTSM and Emerging Stock Market June 12, 2008 June 12, 2008
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1
Foreign Issuer Applying for Listing on Taiwan
GTSM and Emerging Stock Market
June 12, 2008June 12, 2008
2
OUTLINE
1.1. Snapshot of Taiwan’s EconomySnapshot of Taiwan’s Economy
2.2. The Status of Taiwan’s Capital MarketThe Status of Taiwan’s Capital Market
3.3. The History & Characteristics of GTSM The History & Characteristics of GTSM Securities MarketSecurities Market
4.4. Emerging Stock Board RegistrationEmerging Stock Board Registration
5.5. Regular Stock Board ListingRegular Stock Board Listing
6.6. ConclusionConclusion
3
Snapshot of Taiwan’s EconomySnapshot of Taiwan’s Economy
4
Introduction
Since the 1997 Asian financial crisis, the Taiwan Since the 1997 Asian financial crisis, the Taiwan
economy has confronted a number of challenges, economy has confronted a number of challenges,
including, among others, the rise of the Chinese including, among others, the rise of the Chinese
economy, the burst of the dot-com bubble in 2000, economy, the burst of the dot-com bubble in 2000,
and SARS. In response to these challenges, Taiwan and SARS. In response to these challenges, Taiwan
has undertaken financial reforms and economic has undertaken financial reforms and economic
transformation, and emerged stronger.transformation, and emerged stronger.
5
Economic Performance
Average growth rate of the economy for the past four Average growth rate of the economy for the past four years (2004-2007) was 5.2%, compared with 4.7% for years (2004-2007) was 5.2%, compared with 4.7% for Korea, one of its most important competitors. The Korea, one of its most important competitors. The economy is expected to grow at 4.5% in 2008 amid economy is expected to grow at 4.5% in 2008 amid growing global concerns about recession. growing global concerns about recession.
The subprime mortgage problem has had relatively The subprime mortgage problem has had relatively limited effect on the economy. The FSC put subprime limited effect on the economy. The FSC put subprime loss at US$741mn, as per yearend 2007. loss at US$741mn, as per yearend 2007.
The economy is fundamentally strong. The economy is fundamentally strong.
6
Economic Performance
Although it imports 98% of energy, and global energy prices Although it imports 98% of energy, and global energy prices have been significantly rising recently, Taiwan has been able have been significantly rising recently, Taiwan has been able to maintain price stability. e.g. the CPI growth remains less 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 than 1% in 2001-06, while it rose to 1.8% in 2007 due to the surge in global raw material prices. surge in global raw material prices.
The unemployment rate peaked at 5.17% in 2002 due to rapid The unemployment rate peaked at 5.17% in 2002 due to rapid migration of labor intensive manufacturing industry to China migration of labor intensive manufacturing industry to China and dot com bubble. It is now at the six year low rate of 3.9% 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 as a result of economic growth and various government policy of job creation.of job creation.
7
Latest Indicators
GDP Growth Rate [2008forecast ]: 4.78% GDP Growth Rate [2008forecast ]: 4.78%
GNP [ 2007 ] : 12,933,890million NT dollars GNP [ 2007 ] : 12,933,890million NT dollars
Per Capita GNP [ 2007 ] Per Capita GNP [ 2007 ] ： ： 566,566NT dollars 566,566NT dollars
CPI Change Rate : 3.86% (Apr. 2008) CPI Change Rate : 3.86% (Apr. 2008) (compared with t(compared with the same month last year)he same month last year)
WPI Change Rate : 6.18% (Apr. 2008) WPI Change Rate : 6.18% (Apr. 2008) (compared with t(compared with the same month last year)he same month last year)
Unemployment Rate : 3.81% (Apr. 2008) Unemployment Rate : 3.81% (Apr. 2008)
The economic growth of 2008 is forecasted to 4.53%. The economic growth of 2008 is forecasted to 4.53%.
8
SWOT Analysis of Taiwan’s Economy
Weakness
Threat
Strength
‧ Efficiency of Full Government
‧ Geographic center
‧ Research and development capabilities
‧ Rising market opportunities in the BRI
Cs
‧Rise of the BRICs and formation of regi
onal trading blocs: Hollowing-out (?) an
d 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 m
arket changes.
9
the 144th member of the World Trade Organization (WTO)the 144th member of the World Trade Organization (WTO) Taiwan’s overall competitiveness ranked 13, IMD’s report, Taiwan’s overall competitiveness ranked 13, IMD’s report,
“World Competitiveness, 2008 ” “World Competitiveness, 2008 ” Rank the top 5 competitive countries according to the WEF Rank the top 5 competitive countries according to the WEF
Global Competitiveness Report 2005-2006Global Competitiveness Report 2005-2006 By the end of Mar. 2008, the foreign exchange reserves hit By the end of Mar. 2008, the foreign exchange reserves hit
US$286.86 billionUS$286.86 billion
Taiwan’s Momentum
10
Prospects Speed up the direct transportation across the strait. Speed up the direct transportation across the strait. Relax the upper limit of 40% net value for Taiwanese businesses Relax the upper limit of 40% net value for Taiwanese businesses
investing in Mainland China.investing in Mainland China. Study the amendment of“The statues of relationship between the Study the amendment of“The statues of relationship between the
people in Taiwan and Mainland China” and establish as early as people in Taiwan and Mainland China” and establish as early as possible the cross strait currency exchange mechanism.possible the cross strait currency exchange mechanism.
Aggressively open the door for tourists from Mainland China to Aggressively open the door for tourists from Mainland China to visit Taiwan and invest real estate property.visit Taiwan and invest real estate property.
Sign the memorandum of cross strait financial market Sign the memorandum of cross strait financial market collaboration, allow capital to Mainland Chinacollaboration, allow capital to Mainland China
11
The Status of Taiwan’s Capital MarketThe Status of Taiwan’s Capital Market
12
Structure of Taiwan’s Securities Market
R egu lar S u perv ised
S tocks Em ergingS tock
DepositaryReceipt
W arrant
Derivatives
Gov'tBonds
Financia lBonds
S tra ightB on ds
ConvertableBonds
CorporateBonds
ForeignBonds
D er ivatives
BondsS tocks
D epos itaryReceipt
W arrant
D eriva tives B onds
E x ch an g eT S E
GRETAIS ecu rities M arket
FuturesTA I FEX
S ecurities & FuturesBureau
Financial S upervisory Com m ission
13
The Status of Taiwan’s Capital Market Knowledge of the manufacturing sector and particularly the information Knowledge of the manufacturing sector and particularly the information
technology companies technology companies Top 10 industries by market capitalization and trading values (End of 2007))
Industry Market Cap.％ Industry Trading Values %
1 Semiconductor 17.742 1 Semiconductor 25.257
2 Financial&Banking 13.374 2 Photonics 13.973
3 Photonics 8.967 3 PC 8.783
4 Electronic 8.547 4 Net Work 8.082
5 PC 7.737 5 Financial&Banking 5.709
6 Net Work 5.042 6 Electronic 5.285
7 Energy 4.51 7 Transportation 4.709
8 Component 4.185 8 Component 4.707
9 Steel 3.498 9 Plastic 2.887
10 Transportation 2.679 10 Steel 2.594
14
Enhancing the Confidence of Foreigners
Foreign ownership of Taiwan stocks as a percentage of total market capitalization 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.rose from 22.18% at the end of 2004 to 31.1% at the end of 2007.
Year Foreign ownership of Taiwan stocks(%)
The cumulated net inward remittance by Foreign Institutional Investors (US$ bn)
2003 21.46 66.34
2004 22.18 80.09
2005 30.25 108.95
2006 31.90 130.61
2007 31.10 137.60
Apr.2008 31.10 153.20
15
Total Accumulated Net Inward Remittance
Enhancing the Confidence of Foreigners
153.2137.6
130.6
109.0
80.1
66.3
43.041.431.422.9
11.19.39.06.34.3
0.0
40.0
80.0
120.0
160.0
1994 1996 1998 2000 2002 2004 2006 Apr-08
Abolished the screening system for qualified foreign institutional investors (QFII)
Source: FSC
Unit: US$ billion
16
The percentage of foreign ownership of Taiwan stocks is growiThe percentage of foreign ownership of Taiwan stocks is growing not only in TSEC, but also in GTSM. ng not only in TSEC, but also in GTSM.
MSCI Taiwan Index including GTSM companies:MSCI Taiwan Index including GTSM companies:
Foreign Capital also Flowing in GTSM
PowerchipPowerchip (5346(5346 力晶力晶 )) SemiconductorSemiconductor
VIS VIS (5347)(5347) 世界先進世界先進 )) SemiconductorSemiconductor
ProMOSProMOS (5387(5387 茂德茂德 )) SemiconductorSemiconductor
MOTECHMOTECH (6244(6244 茂迪茂迪 )) OptoelectronicOptoelectronic
KGIKGI (6008(6008 中信證中信證 ) ) FinanceFinance
FIRICHFIRICH (8076(8076 伍豐伍豐 ) ) Computer & Peripheral Computer & Peripheral EquipmentEquipment
SASSAS (5483(5483 中美晶中美晶 )) SemiconductorSemiconductor
Wafer WorksWafer Works (6182(6182 合晶合晶 )) SemiconductorSemiconductor
17
Foreign Holding of GTSM Stock
Foreign ownership of GTSM stocks
(%)
Trading percentage by Foreign ownership
(%)
Trading values by Foreign ownership
(NT 100 million)
2003 8.82 3.69 1,517.9
2004 6.89 5.01 3,476.0
2005 8.68 5.92 3,744.2
2006 9.36 5.26 5,391.2
2007 9.66 4.26 7,264.6
18
Corporate Governance Taiwan's ranking in corporate governance rise to 4th place in the Taiwan's ranking in corporate governance rise to 4th place in the
“Asia Corporate Governance report 2007” published in 2007 by Asia “Asia Corporate Governance report 2007” published in 2007 by Asia Corporate Governance Association.Corporate Governance Association.
Corporate governance provides a firm foundation for the Corporate governance provides a firm foundation for the development of financial markets. A good corporate governance development of financial markets. A good corporate governance mechanism improves the health of the corporate sector and mechanism improves the health of the corporate sector and enhancing competitiveness. enhancing competitiveness.
GTSM has extensive experience in promoting corporate governance GTSM has extensive experience in promoting corporate governance and creating a positive corporate governance culture. and creating a positive corporate governance culture.
Based on the latest OECD Principles of Corporate Governance, Based on the latest OECD Principles of Corporate Governance, GTSM requires listing companies focus on Board functions, non GTSM requires listing companies focus on Board functions, non arms-length transactions, supervisory responsibilities for corporate arms-length transactions, supervisory responsibilities for corporate governance, and corporate social responsibility. governance, and corporate social responsibility.
19
The History and CharacteristicsThe History and Characteristics of GreTai Securities Market of GreTai Securities Market
20
Importance of Taiwan’s Alternative Market
SME SME -Take major part of industry composition-Take major part of industry composition-Entrepreneurship-Entrepreneurship Taiwanese want to be their own boss rather than work for othersTaiwanese want to be their own boss rather than work for others
Industry UpgradeIndustry Upgrade-Shift from Labor to Capital Intensive-Shift from Labor to Capital Intensive
Direct Financing vs. Indirect FinancingDirect Financing vs. Indirect Financing
Securities Market Segmentation and CoordinationSecurities Market Segmentation and CoordinationGTSM plays a role as an effective fund-raising channel for the medium and small GTSM plays a role as an effective fund-raising channel for the medium and small business. business.
TSENT$120MN
TDCCNT$60MN
TSANT$165MN
21
GTSM’s Basics GTSM’s Basics 14 years old 14 years old Non-profit organization with no stock ownership and membershiNon-profit organization with no stock ownership and membershi
pp Quasi official, market-orientedQuasi official, market-oriented
Each 1/3 of board member designated by SFB, appointed by major donators, and third-party respectively
Full time executive
3 markets3 markets Equities – Regular, Supervised and Emerging stocks, DRs, ETFs and warra
nts Bond – Government bonds, financial bonds, foreign bonds, corporate bonds, c
onvertible bonds Financial Derivatives – Corporate bond asset swaps, forward rate agreemen
t, index derivatives
StaffStaff 240
14 years old 14 years old Non-profit organization with no stock ownership and membershiNon-profit organization with no stock ownership and membershi
pp Quasi official, market-orientedQuasi official, market-oriented
Each 1/3 of board member designated by SFB, appointed by major donators, and third-party respectively
Full time executive
3 markets3 markets Equities – Regular, Supervised and Emerging stocks, DRs, ETFs and warra
nts Bond – Government bonds, financial bonds, foreign bonds, corporate bonds, c
onvertible bonds Financial Derivatives – Corporate bond asset swaps, forward rate agreemen
t, index derivatives
StaffStaff 240
22
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.
SeniorEVP
SeniorEVP
23
History of GTSM Nov. 1, 1994Nov. 1, 1994 Established as a Government Designated OrganizationEstablished as a Government Designated Organization Dec. 1994Dec. 1994 QFII Allowed to InvestQFII Allowed to Invest Sep. 1995Sep. 1995 Trading Rules RevisedTrading Rules Revised Jan. 1998Jan. 1998 Margin Trading Allowed Margin Trading Allowed July 24, 2000July 24, 2000 Electronic Bond Trading System (EBTS)Electronic Bond Trading System (EBTS) Jan. 1, 2002Jan. 1, 2002 Emerging Stock Market EstablishedEmerging Stock Market Established May 2002May 2002 Joined IOSCO as an Affiliate MemberJoined IOSCO as an Affiliate Member Dec, 2003Dec, 2003 Hosted 2nd Asia Pacific New Market ForumHosted 2nd Asia Pacific New Market Forum Nov. 2004Nov. 2004 Hosted 1st Int’l Bond Market ConferenceHosted 1st Int’l Bond Market Conference Mar. 2006Mar. 2006 Hosted 2nd Int’l Bond Market ConferenceHosted 2nd Int’l Bond Market Conference Sep. 2006Sep. 2006 Listing of Taiwan’s First Foreign Currency-Denominated BondListing of Taiwan’s First Foreign Currency-Denominated Bond Nov. 2006Nov. 2006 First GTSM Int’l Bond “Formosa Bond” ListingFirst GTSM Int’l Bond “Formosa Bond” Listing
Embarked Overseas Taiwan Bond Market RoadshowsEmbarked Overseas Taiwan Bond Market Roadshows May 2007May 2007 Embarked Overseas GTSM Corporate RoadshowsEmbarked Overseas GTSM Corporate Roadshows Nov. 2007Nov. 2007 US Treasury Bond Quote System Go Online US Treasury Bond Quote System Go Online
Hosted 3rd Int’l Bond Market ConferenceHosted 3rd Int’l Bond Market Conference
24
Beginner’s Strategies “Follower” Philosophy Position ourselves as a gateway market Cooperate and coordinate with the stock exchange Create own characteristics in market role OTC no longer stands for Over-the-Counter, but Over-the-
Computer
Enlarge the Market ScaleProviding high-quality service and enhancing efficiency Laying great emphasis on market efficiencyImproving the liquidityIncreasing the incentives for issuers to list
25
No. of Listed Companies 1998~2007
462531 584
638 669 697 691 688 698
176264 300 333 384 423 466 503
437
547531
613726
831
10921194
1022
124512191163
917
0
200
400
600
800
1000
1200
1400
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007Year
No.No. of TSEC Listed No. of GTSM Listed Total
26
Listed Companies by Industrial Sectors
INDUSTRIAL SECTOR Number INDUSTRIAL SECTOR Number
Electronic Parts & Components 100 Iron & Steel 11Semiconductor 62 Supervised Stocks 11Computer & Peripheral Equipment 47 Textiles 10Optoelectronic 42 Finance 8Communications and Internet 32 Trading and Consumers' Goods 8Information Service 32 Plastics 6Other Electronic 32 Shipping & Transportation 5Others 26 Tourism 5Electric Machinery 25 Oil, Gas and Electricity 4Biotechnology & Medical Care 24 Foods 2Electronic Products Distribution 23 Rubber 2Chemical 15 Electrical & Cable 1Building Material & Construction 15 TOTAL 548
as of April 30, 2008
27
Higher Turnover
2003 4.99 197.45 190.82 42.34 73.11 210.20 58.04 104.642004 7.17 254.38 177.46 59.19 94.94 171.41 75.81 113.542005 13.24 262.65 131.36 53.07 98.77 164.50 49.42 111.992006 24.50 333.34 142.20 56.24 130.00 207.72 54.67 118.302007 32.91 382.81 153.28 75.45 129.81 170.53 67.93 140.07
LSEEmergingStock
Tokyo
Taiwan
HK KoreaSinga-poreGTSM TSE
Higher P/E
2003 42.20 35.47 24.76 18.96 614.10 10.06 24.87 23.39 18.292004 14.16 11.79 12.58 18.73 39.00 15.84 16.60 20.79 14.692005 35.45 27.81 17.55 15.57 45.80 10.98 15.37 20.87 13.972006 42.04 22.77 18.98 17.37 36.00 11.40 13.92 22.49 13.372007 17.97 15.94 15.31 22.47 26.70 16.84 14.74 25.30 11.83
Taiwan
HK Korea Singapore LSEEmergingStock
Tokyo NasdaqGTSM TSE
28
1999 2000 2001 2002 2003 2004 2005 2006 2007 May-08
77.3 124.5 168.3 349.4 641.5 1,284.8 504.5
7142.6 16530.1 9536.8 11,269.0 8,270.6 13,901.8 12,819.6 20,681.9 34,564.4 19,324.5
Avg. Daily TurnoverNT$ Million
29
P/E ratio
15.94
16.01
16.53
17.34
17.64
18.77
18.83
19.41
20.88
22.66
24.43
25.58
28.68
0 5 10 15 20 25 30 35
Average
Others
Oil, Gas and Electricity
Other Electronic
Electric Machinery
Chemical
I nformation Service
Electronic Parts & Components
Plastics
Trading and Consumers' Goods
Biotechnology & Medical Care
Optoelectronic
Communications and I nternet
Higher P/E Ratios
End of 2007End of 2007
30
Individual investors’ Individual investors’ active participation andactive participation andmore than 85% of totalmore than 85% of totalmarket trading volume to market trading volume to high tech related Sectorshigh tech related Sectors
Retailer89.36%
FII
5.01%Dealers
1.62%
SITC
4.01%
Finance5.85%
Optoelectronic10.59%
Semiconductor36.42%
Computer &Peripheral16.30%
Others23.07%
Electronic Parts& Components
5.43%
Communications and Internet
2.34%
Retailer investors Retailer investors
dominate the marketdominate the market
Stock Trading Values of Major SectorsJan.~Apr. 2008
Breakdown of Trading Values for InvestorsJan.~Apr. 2008
31
Characteristics of GTSM
Multiple Trading Approaches
1. Computerized Auto Matching
2. Negotiation Trading
3. Off-Exchange Transaction
32
GTSM Regular Stock
(As end of May 2008) 551 Listed companies Listed companies
Market Capitalization： NT1,766 bn
Daily Trading Value: NT$19.45 bn
Daily Trading Values in 2007: NT$ 34.56 bn
Historical High: NT$ 109.4 bn July 26, 2007
33
Companies Listing on GreTai Regular Board
2938
4174
102105
97
83
5640
40
547
4179
114
176
264300
333384
423466
503531
143
110
87
0
100
200
300
400
500
600
700
94 95 96 97 98 99 00 01 02 03 04 05 06 07
New Listed
Number of Yr-end Listing
34
Trading Values & Market Cap. on GreTai Regular Board
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
94 95 96 97 98 99 00 01 02 03 04 05 06 07
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Trading values(NT$billion)
Market Cap(NT$billion)
35
GTSM Examples of Corporate Growth Industry Average The year of
listingFive years later
Golf Metal Wood Capital 5.8 8.6
Revenue 20.26 42.57
Profit 2.84 5.62
Number of employees 379 496
Solar Energy Capital 9.43 18.84
Revenue 10.69 68.22
Profit 0.56 12.24
Number of employees 246 636
LCD-back Light
Capital 10.29 32.76
Revenue 52.55 164.14
Profit 4.28 10.86
Number of employees 1095 2161
Unit: NT 100 million
36
Bond - Primary Market
US:NT$=$32.5
20,00040,00060,00080,000
100,000120,000140,000160,000180,000
USD Million
98' 99' 00' 01' 02' 03' 04' 05' 06 07
Taiwan Bond Market OutstandingsGovernment Bonds Corporate Bonds Financial Debenture Foreign BondsConvertible Bonds ABS & MBS
Bond market size has grown at average 7% annually for the past 5 years
37
Bond - Issuance Composition
CorporateBonds17%
FinancialDebenture
11%
Foreign Bonds1%
ConvertibleBonds
4% ABS/MBS3%
GovernmentBonds65%
Government bond accounts for the largest portion (2007)
38
Bond -Trading Status -Trading Status
*Total buy and sell amount among brokers and clients. * EBTS = Electronic Bond Trading System
USD:NTD=1:32.5
Currently, over 90% outright trading are through GreTai’s EBTS
Daily Average Trading Amount*
05,000
10,00015,00020,00025,00030,00035,000
US$
mill
ion
0%
20%
40%
60%
80%
100%
OP/OS 822 1,877 6,683 7,484 16,282 17,096 30,590 20,923 11,589
RP/RS 5,125 5,891 8,319 9,076 9,446 10,071 12,024 13,005 12,340
EBTS/Outright% 0 3% 23% 82% 89% 91% 94% 94% 94%
1999 2000 2001 2002 2003 2004 2005 2006 2007
39
Ongoing Missions of GTSM
Global Semiconductor ETF, ISO CG ETFGlobal Semiconductor ETF, ISO CG ETF Taiwan Supervision Center Taiwan Supervision Center 監理中心監理中心 Operational Property Service Platform Operational Property Service Platform 營業用資產營業用資產
服務平台服務平台 VCs Startups IPO VCs Startups IPO 創投投資標的上櫃創投投資標的上櫃 Agricultural Technology IPOAgricultural Technology IPO 農業技術上櫃農業技術上櫃 Development international cooperation Development international cooperation
-Asia Bond Trading Platform 亞洲債券交易平台
40
Goal
The purpose of this project is to assist these Taiwanese Enterprises listing in Tai
wan including Primary listing or Secondary listing.
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 T
aiwan GTSM and Emerging Stock Market .
Amending statutes and assisting corporations to list Most overseas corporations listed by issuing Taiwan Depository Receipts (TDR
s) in the past. Upon amendment of relevant statutes, overseas companies will be
allowed to launch primary listings, a much simplified process.
123 Plan for Attracting Overseas Companies
41
Listing on GTSM’s AdvantagesListing on GTSM’s Advantages Very favorable PE valuations for Silicon Valley SME to
raise capital for funding organic growth and sustainable
development. .
Economic and efficient way close to high-tech and
knowledge-based clusters.
A platform quickly raise the issuer’s reputation.
Much easier channel for SPO in stock market.
Attracting outstanding employee and institutional investors.
42
Emerging Stock Board RegistrationEmerging Stock Board Registration
43
Purposes of Emerging Stock BoardPurposes of Emerging Stock Board For Investors:
–To establish a legal trading platform for unlisted public companies–To provide investors an legal, safe, visible market
For Issuers:–To raise capital for funding organic growth–To be familiar with Corporate Governance and market rules–To increase visibility to investor public and business partners–To upgrade as a listed company
For GTSM:–To maintain a fair and orderly market for SMEs trading–To provide vital support for the SMEs to upgrade to TSEC/GTSM–To enhance the competitive capability of TW capital market
44
Companies Registering on Emerging Stock BoardCompanies Registering on Emerging Stock Board
180
227 4247 90
230257
350
245 246172
02 03 04 05 06 07
Number of new registered
Number of yr-end registered
45
Emerging Stock #
Newly
RegisteredMoved to
TSECMoved to
GTSMTerminated Registration
Market Cap
(US$ Bn)
Avg. Mkt. Cap
(US$ Mn)
2002 172 296 34 110 * 0 8.43 49.01
2003 245 180 21 83 3 14.25 58.16
2004 350 227 12 87 22 17.65 50.42
2005 257 42 7 55 73 23.00 89.49
2006 230 47 3 35 36 22.46 97.65
2007 246 90 17 35 22 18.49 75.16
*Include companies applied in 2001, but listed directly in GTSM, 2002
Companies Registering on Emerging Stock BoardCompanies Registering on Emerging Stock Board
46
Annual Trading Values of Emerging StockAnnual Trading Values of Emerging Stock
19.17430.99 42.07
86.308
159.09
317.35
36.028
0
50
100
150
200
250
300
350
2002 2003 2004 2005 2006 2007 Apr. 2008
Trading Values(NT$bn)
47
Market PeculiaritiesMarket Peculiarities
Market for not-listed-yet corp.
Quote-driven
Negotiation-based trading（ market maker always
as counterpart） No Daily price fluctuation
48
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 recordsMarket quotes and trading info.
Market Trading MechanismMarket Trading Mechanism
49
Trading Stipulations-1Trading Stipulations-1Trading hours Monday ~ Friday 9:00am － 3:00 pm
Daily price fluctuation No limits
Market maker’s quotes and investor’s orders
Market maker’s quotes shall be firm priced and only on the stocks they recommended.
Tick ： NT$0.01 （ Min. ） Investor’s order shall be limit order.
Trading unit
Negotiation trading via GTSM Emerging Stock Quoting and Trading Platform :
－ The minimum quoting unit is 1,000 shares and minimum trading unit is 1 share.
－ Trading quotes shall be based on a trading unit or integral multiples.
Counter Negotiation: － Every trading shall meet the minimum amount of
100,000 shares.
50
Trading Stipulations-2Trading Stipulations-2
Order execution
No auto-execution system, and GTSM never involve in orders matching.
Only market makers are entitled to trigger the process of order execution.
Market makers have the obligation to execute the incoming orders if the orders meet or enter into the price range of their quotes.
Quotes and market transactions disclosure
Market maker’s best bid/offer is disclosed on the GTSM quoting and trading platform, and so is on the GTSM’s website.
Through GTSM’s website, the public can inquire all posted quotes and market prices information.
51
Trading Stipulations-3Trading Stipulations-3
Margin trading Not permitted.
Broker’s commission Negotiable, and with a cap ratio of 0.5% of settled
trading value.
Cyclic settlement period
T ( RTGS; specially on bilateral agreement) or T+2 ( market regular )
Delivery
Negotiation trading via GTSM Emerging Stock Quoting and Trading Platform :
-via TDCC book-entry system. Counter Negotiation: -via TDCC book-entry system or on bilateral
arrangement.
52
Foreign Investment Related IssuesForeign Investment Related Issues
Market Participation Via FINI and FIDI system.
Tax levy on emerging stock holding and transactions (for domestic stock)
Capital gains tax: exempt. Transaction tax : 0.3% of trade value (only on sellers). Dividend, interest & other income : fitted into income
tax and relative rank ratios （ for residents ） and 20% WHT （ on foreign nationals ） .
Foreign investment limitations
Except for very few particular industries still with foreigner ownership caps, the emerging stock companies are generally with no restrictions on foreigner ownership.
53
Registering procedures for Emerging StockRegistering procedures for Emerging Stock
An issuer decides to register
as Emerging Stock
An issuer decides to register
as Emerging Stock
Appointment of at least 2
recommending securities firms
Appointment of at least 2
recommending securities firms
Restructuring, preparation of Accountants’
Report
Restructuring, preparation of Accountants’
Report
Lead RSF submits application & related document
to the Listing Exam. Dept,
GTSM
Lead RSF submits application & related document
to the Listing Exam. Dept,
GTSM
GTSM announces approval &
discloses issuer’sinformation
GTSM announces approval &
discloses issuer’sinformation
GTSM conducts basic
document reviews.
GTSM conducts basic
document reviews.
RSFs begin making quotation and
trading
RSFs begin making quotation and
trading
At least5 business days
3 business days
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EntityEntity申請主體申請主體Company limited by shares, organized and incorporated in Company limited by shares, organized and incorporated in
accordance with the laws of a foreign country and do not caccordance with the laws of a foreign country and do not contravene the “Act of Governing Relations between Peopleontravene the “Act of Governing Relations between Peoples of the Taiwan Area and the Mainland Area” (s of the Taiwan Area and the Mainland Area” ( 台灣地區台灣地區與大陸地區人民關係條例與大陸地區人民關係條例 ) and related regulations.) and related regulations.
Registered share, and common stock not list on the other fRegistered share, and common stock not list on the other foreign stock market.oreign stock market.
Company has a consultant agreement Company has a consultant agreement 輔導契約 輔導契約 with secwith securities firm.urities firm.
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Recommending Securities Firm/UnderwriterRecommending Securities Firm/Underwriter推薦證券商推薦證券商 The issuer is recommended in writing by two or more securities firThe issuer is recommended in writing by two or more securities fir
ms, one of them shall be designated as lead recommending securitims, one of them shall be designated as lead recommending securities firm. es firm. 主辦推薦證券商主辦推薦證券商
RSFs should subscribe not less than 3% of the total number of sharRSFs 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 of the applicant company and shall not be less than 500,000 shares. es.
-provided that if 3% of the total number of shares exceed 1.5 mill-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 ion shares, not less than 1.5 million shares shall be allocated for subscription by the securities firmssubscription by the securities firms
Each recommending securities firm shall severally underwrite not lEach recommending securities firm shall severally underwrite not less than 100,000 shares. ess than 100,000 shares.
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Professional Agent for Stock AffairsProfessional Agent for Stock Affairs股務代理機構股務代理機構 The issuer has established a professional agent for stock The issuer has established a professional agent for stock
affairs or stock affairs unit in Taipei to process stock affairs or stock affairs unit in Taipei to process stock affairs.affairs.
AttorneyAttorney代理人代理人 The issuer shall authorize at least one contentious or non conThe issuer shall authorize at least one contentious or non con
tentious attorney tentious attorney 訴訟或非訟代理人 訴訟或非訟代理人 who lives in Taiwan who lives in Taiwan to help the issuer to enter information into the Market Obserto help the issuer to enter information into the Market Observation Post System (MOPS), submit documents and so on.vation Post System (MOPS), submit documents and so on.
57
Market Observance Post SystemMarket Observance Post System （（ MOPSMOPS ））公開資訊觀測站公開資訊觀測站
To ensure that investors have complete and timely material To ensure that investors have complete and timely material information on all listed companies, GTSM and TSEC have information on all listed companies, GTSM and TSEC have established the Market Observation Post System (MOPS), established the Market Observation Post System (MOPS), an information disclosure platform. All public-held an information disclosure platform. All public-held companies (including TSEC/GTSM listed/registered companies (including TSEC/GTSM listed/registered companies) are required by law to publish basic relevant companies) are required by law to publish basic relevant information such as company profile, operational revenue, information such as company profile, operational revenue, financial reports, mergers and acquisitions, convening of financial reports, mergers and acquisitions, convening of shareholders meetings, stock dividends and any other shareholders meetings, stock dividends and any other matters which affect companies. matters which affect companies.
58
CPA and Financial ReportsCPA and Financial Reports簽證會計師和財務報告編製簽證會計師和財務報告編製 The issuer’s financial reports shall be audited by the CPA of Taiwan The issuer’s financial reports shall be audited by the CPA of Taiwan
or international accounting firm in alliance with CPA of Taiwan. Thor international accounting firm in alliance with CPA of Taiwan. The final audit report shall be issued by the CPA of Taiwan and withoue final audit report shall be issued by the CPA of Taiwan and without reference to any other accountant's audit.t reference to any other accountant's audit.
The financial reports shall be denominated in NTD and prepared in The financial reports shall be denominated in NTD and prepared in Chinese that may be accompanied by an English version. Chinese that may be accompanied by an English version.
The issuer’s financial reports shall be consolidated financial reports The issuer’s financial reports shall be consolidated financial reports and comparing two consecutive periods. (and comparing two consecutive periods. ( 兩期對照兩期對照 ) )
In accordance with one of the following principles:In accordance with one of the following principles:ROC GAAP, US GAAP and IFRS.ROC GAAP, US GAAP and IFRS.
For accounting principles other than the Taiwan GAAP, the major diFor accounting principles other than the Taiwan GAAP, the major differences in items and amount should be disclosed. fferences in items and amount should be disclosed.
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Commitment Commitment 應承諾遵守事項應承諾遵守事項 The issuer shall commit to obey the ROC Securities & ExchaThe issuer shall commit to obey the ROC Securities & Excha
nge Act and related regulations. nge Act and related regulations. Court with jurisdiction over an action Court with jurisdiction over an action 訴訟管轄法院訴訟管轄法院 is the Tis the T
aiwan Taipei district court. aiwan Taipei district court. CPA or professional instrument’s special inspectionCPA or professional instrument’s special inspection 專案檢專案檢查查 . .
Delivery by book-entry form Delivery by book-entry form 帳簿劃撥帳簿劃撥 . . Foreign issuers shall include shareholders protection matters iForeign issuers shall include shareholders protection matters i
n its Articles of Incorporationn its Articles of Incorporation 公司章程 公司章程 or organizational dor organizational documents.ocuments.
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Total Par Value of Shares Traded Annual Trading Fee
NT$300 million or less 0.02 %
NT$300 million to NT$500 million 0.015%
More than NT$500 million to NT$1 billion 0.01%
More than NT$1 billion to NT$2 billion 0.005%
More than NT$2 billion to NT$3 billion 0.0025%
More than NT$3 billion 0.00125%
Above Fees collected shall be > NT$50,000 and < NT$225,000Above Fees collected shall be > NT$50,000 and < NT$225,000.
Initial registration handling fee: NT$20,000Initial registration handling fee: NT$20,000
Registration FeesRegistration Fees
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OthersOthers
The stocks and bonds issued by the issuer could have been issThe stocks and bonds issued by the issuer could have been iss
ued in intangible form ued in intangible form 得得無實體發行無實體發行 . .
Par value per share will be denominated in NTD 10.Par value per share will be denominated in NTD 10.
No need for operations in Taiwan.No need for operations in Taiwan.
Issuer should convene shareholder’s meeting in Taiwan,Issuer should convene shareholder’s meeting in Taiwan,, provprov
ided it does not violate the law of the registered country. If laided it does not violate the law of the registered country. If la
w prohibit it hold outside the country, issuer should have in plw prohibit it hold outside the country, issuer should have in pl
ace a proxy or correspondence voting system. ace a proxy or correspondence voting system.
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Emerging Stock SupervisionEmerging Stock Supervision
63
Regular Information ReportingRegular Information Reporting
Consolidated Financial report Consolidated Financial report (In Chinese version)(In Chinese version)
Annual /semi-annual financial report
by end of April / end of June plus 75 days Annual reportAnnual reportby the shareholders' meeting
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Irregular Information ReportingIrregular Information Reporting
Material (Price-Sensitive) Information : Inputting the content Material (Price-Sensitive) Information : Inputting the content or explanations of the information into the MOPS before the or explanations of the information into the MOPS before the commencement of trading hours of the trading day next commencement of trading hours of the trading day next following the date of occurrence of the event.following the date of occurrence of the event.
Press Conference Regarding Material Information: The Press Conference Regarding Material Information: The company shall promptly dispatch a spokesperson or acting company shall promptly dispatch a spokesperson or acting spokesperson to a press conference by the trading day next spokesperson to a press conference by the trading day next following the occurrence of the event or the broadcast media following the occurrence of the event or the broadcast media report, to provide explanations to the news media. Foreign report, to provide explanations to the news media. Foreign companies can use video conference.companies can use video conference.
The issuer could authorize attorney to help the issuer to enter The issuer could authorize attorney to help the issuer to enter information (the content should be in Chinese ).information (the content should be in Chinese ).
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Regular Stock Board ListingRegular Stock Board Listing
66
Market Peculiarities
Computerized auto matching Price priority + time priority 25 seconds matching roundDaily Price fluctuation with 7% limits
Negotiation tradingBetween two securities dealers or b/w securities dealer & investors who trade 100,000 shares or more per orderSame price fluctuation limits
Trading hours
Auto-matching: Monday ~ Friday 9:00am － 1:30 pm
Negotiation trading: Monday ~ Friday 9:00am － 3:00 pm
Daily price fluctuation
7 % Limits based on opening reference price
Trading unit Auto-matching: 1,000 shares or multiples (regular)
500,000 shares or above (lot trade) Negotiation trading: 100,000 shares or above
Settlement & Delivery
T+2 in netting base
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Listing procedures for Regular StockListing procedures for Regular Stock
An issuer decides to list
on GTSM
An issuer decides to list
on GTSM
Registers as Emerging Stock
for 6 months
Registers as Emerging Stock
for 6 months
Submits listing application &
related document to the Listing Exam. Dept.
Submits listing application &
related document to the Listing Exam. Dept.
GTSM conducts formal
document reviewswithout
on-site audits
GTSM conducts formal
document reviewswithout
on-site audits
Hearing by Listing
Committee
Hearing by Listing
Committee
Review of listing
application by L.E. Dept.
Review of listing
application by L.E. Dept.
GTSMBoard Meeting
GTSMBoard Meeting
Approval
GTSM Submits Results to
SFB
GTSM Submits Results to
SFB
ListingCeremonySuccessful
listed in GTSM
ListingCeremonySuccessful
listed in GTSM
Approval
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Entity Entity 申請主體申請主體Company limited by shares, organized and incorporated in Company limited by shares, organized and incorporated in
accordance with the laws of a foreign country and do not coaccordance with the laws of a foreign country and do not contravene the “Act Governing Relations between Peoples of ntravene the “Act Governing Relations between Peoples of the Taiwan Area and the Mainland Area” the Taiwan Area and the Mainland Area” 台灣地區與大陸台灣地區與大陸地區人民關係條例 地區人民關係條例 and related regulations.and related regulations.
Registered share, and Registered share, and commoncommon stock not list on other stock stock not list on other stock market.market.
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Recommending Securities Firms/Underwriter Recommending Securities Firms/Underwriter
推薦證券商推薦證券商 The issuer is recommended in writing by two or more securiThe issuer is recommended in writing by two or more securi
ties firms, one of them shall be designated as the lead recomties firms, one of them shall be designated as the lead recommending securities firm. mending securities firm. 主辦推薦證券商主辦推薦證券商 . .
The lead RSF shall be the Compliance Advisor of the issuer The lead RSF shall be the Compliance Advisor of the issuer and help the issue to obey the ROC Securities and Exchange and help the issue to obey the ROC Securities and Exchange Act, related regulations and the contract with GTSM within tAct, related regulations and the contract with GTSM within the year of listing till 2 fiscal years. he year of listing till 2 fiscal years.
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Change of Recommending Securities FirmChange of Recommending Securities Firm
If the issuer has changed its lead RSF, the newly appointIf the issuer has changed its lead RSF, the newly appointed lead RSF should take over the advisory work and apped lead RSF should take over the advisory work and apply for GreTai listing on behalf of the foreign issuer after ly for GreTai listing on behalf of the foreign issuer after another six months on the Emerging Stock Board. another six months on the Emerging Stock Board.
The purpose of such requirements is to make sure that thThe purpose of such requirements is to make sure that the newly appointed RSF understands the situations of the e newly appointed RSF understands the situations of the foreign issuer well before making listing application on foreign issuer well before making listing application on its behalf. its behalf.
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Operating History Operating History 設立年限設立年限 The issuer shall have been incorporated and registered The issuer shall have been incorporated and registered
under the regulations for no less than two full fiscal years.under the regulations for no less than two full fiscal years. If company A from Silicon Valley wishes to list in If company A from Silicon Valley wishes to list in
Taiwan, it may establish a holding company B (in places Taiwan, it may establish a holding company B (in places such as the Cayman Islands) and list company B. There is such as the Cayman Islands) and list company B. There is no operation history requirement for company B, as long no operation history requirement for company B, as long as the subsidiary company, Company A, has operated as the subsidiary company, Company A, has operated more than 2 years.more than 2 years.
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Profit Test Profit Test 獲利能力獲利能力 a minimum consolidated income before taxa minimum consolidated income before tax 合併稅前純益 合併稅前純益 of Nof N
TD 4 million in the recent fiscal year.TD 4 million in the recent fiscal year. the ratio of income before tax against the shareholder's equity on tthe ratio of income before tax against the shareholder's equity on t
he final accounts:he final accounts:
--4% or higher for the most recent fiscal year, no accumulated lo--4% or higher for the most recent fiscal year, no accumulated loss on final account.ss on final account. 無累積虧損無累積虧損
--3% or higher for each of the past two fiscal years.--3% or higher for each of the past two fiscal years.
--the average for the last two fiscal years is 3% or higher and the --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.profitability in the most recent year is better year-on-year.
CPA and Financial ReportCPA and Financial ReportSame as Emerging StockSame as Emerging Stock
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Shareholder‘s Equity Shareholder‘s Equity 股東權益股東權益 The shareholder's equity as audited and certified for the most The shareholder's equity as audited and certified for the most
recent period by a CPA is valued as equivalent to NT$100 recent period by a CPA is valued as equivalent to NT$100
million or more.million or more.
AttorneyAttorney代理人代理人 Same as Emerging StockSame as Emerging Stock
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Shareholding Spread Shareholding Spread 股權分散股權分散 10% or 5,000,000 shares (whichever is smaller) to be held by at 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.least 300 shareholders holding from 1,000 shares to 50,000 shares.
Lockup Lockup 股票集中保管股票集中保管 Directors, supervisors & major shareholders (holding>10%) Directors, supervisors & major shareholders (holding>10%)
should deposit their holding into TDCC. should deposit their holding into TDCC.
Duration is 1 years at most. 50% can be withdrawn after 6 Duration is 1 years at most. 50% can be withdrawn after 6
months.months.
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Negative Listing CriteriaNegative Listing Criteria 不宜上櫃條款不宜上櫃條款
1.1.Against specific article of the Securities and Exchange Against specific article of the Securities and Exchange Act Act
2.2.Finance or business cannot be independentFinance or business cannot be independent3.3.Significant abnormal transaction Significant abnormal transaction 4.4.Has committed any act in violation of the principle of hHas committed any act in violation of the principle of h
onesty and good faith in the last 3 years; onesty and good faith in the last 3 years; 5.5.Unable to independently perform their functions. Unable to independently perform their functions. 6.6.GreTai deems it improperGreTai deems it improper
76
Corporate Governance Corporate Governance 公司治理公司治理 The issuer shall have at least 3 independent directors and The issuer shall have at least 3 independent directors and
independent directors are more than 1/5 of the number of total independent directors are more than 1/5 of the number of total board directors. One of independent directors must have board directors. One of independent directors must have household registration in ROC. household registration in ROC.
The issuer shall prepare self-evaluation report regarding The issuer shall prepare self-evaluation report regarding corporate governance and the underwriter shall assess the corporate governance and the underwriter shall assess the issuer’s self-evaluation report and prepared the assessment issuer’s self-evaluation report and prepared the assessment report. report.
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Investment Holding Company Investment Holding Company 投資控股公司投資控股公司 DefinitionDefinition
1.1. Directly holds more than 50 % of the issued voting shares or has made a Directly holds more than 50 % of the issued voting shares or has made a capital contribution of more then 50 %;capital contribution of more then 50 %;
2.2. Indirectly through its subsidiary holds more than 50 % of the issued voting Indirectly through its subsidiary holds more than 50 % of the issued voting shares or has made a capital contribution of more then 50 %; orshares or has made a capital contribution of more then 50 %; or
3.3. Directly, and indirectly through its subsidiaries, holds more than 50 % of the 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 %.issued voting shares or has made a capital contribution of more then 50 %.
70 % of the operating income as reported in the investment 70 % of the operating income as reported in the investment holding company’s consolidated financial statements shall holding company’s consolidated financial statements shall come from the held companies.come from the held companies.
Holds one or more non-professional investment companies Holds one or more non-professional investment companies that hold no shares in applicant company.that hold no shares in applicant company.
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Due DiligenceDue Diligence專案查核專案查核In the period of listing examination, GTSM only requires In the period of listing examination, GTSM only requires
due diligence of documents, but GTSM’s on-site due due diligence of documents, but GTSM’s on-site due diligence is currently required for the IPO of domestic diligence is currently required for the IPO of domestic companies. companies.
During listing examination and after listing, the company During listing examination and after listing, the company should accept CPA or professional instrument’s special should accept CPA or professional instrument’s special inspection in some special case.inspection in some special case.
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Total Par Value of Shares Traded Annual Listing Fee
NT$300 million or less 0.04 %
NT$300 million to NT$500 million 0.03%
More than NT$500 million to NT$1 billion 0.02%
More than NT$1 billion to NT$2 billion 0.01%
More than NT$2 billion to NT$3 billion 0.005%
More than NT$3 billion 0.0025%
Above Fees collected shall be > NT$100,000 and < NT$450,000Above Fees collected shall be > NT$100,000 and < NT$450,000.
Initial examination fee: NT$500,000Initial examination fee: NT$500,000
Listing Fees Listing Fees 掛牌費用掛牌費用
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Regular Stock Board SupervisionRegular Stock Board Supervision
81
PurposesPurposes
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.
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.
To provide investors with more convenient and timely information, GTSM has created a simplified version of MOPS.
82
Listing Supervision OverviewListing Supervision Overview
Implementation of Fair DisclosuresImplementation of Fair Disclosures Improve in accounting transparencyImprove in accounting transparency
Information disclosure Routine and exceptional administration regarding listed
companies Execute disciplinary action of GTSM
Tighten Market SurveillanceTighten Market Surveillance Collate and Announce Data of Listed CompaniesCollate and Announce Data of Listed Companies
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Information Disclosure for Listed CompaniesInformation Disclosure for Listed Companies
Prompt Disclosure : Material InformationPrompt Disclosure : Material Information MonthlyMonthly
Operating revenue (Foreign Listed exempted) Balance of endorsements and loans of funds Information on derivatives trading
QuarterlyQuarterly Financial reportFinancial report
Web Site: Web Site: mops.tse.com.twmops.tse.com.tw
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Material informationMaterial information重大訊息重大訊息
Matters having material effect on company finances or business Matters having material effect on company finances or business including but not limited to:including but not limited to: Suspension of work Change of main management or ownership, contentious or non contentious
attorney Important memorandum or strategic alliance or plan Merger, spin-off, acquisition Bankruptcy, checks rebounds Lawsuit or litigation ….The regulations outline 49 (36 for Emerging) types
of material information for foreign issuers Inputting the content of the information into MOPS before the next Inputting the content of the information into MOPS before the next
day of the event occurrence, or the mass media reportage, the press day of the event occurrence, or the mass media reportage, the press releaserelease
A breach penalty of NT$30,000A breach penalty of NT$30,000
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Press Conference Regarding Material InformationPress Conference Regarding Material Information重大訊息說明記者會重大訊息說明記者會
Press Conference Regarding Material Information: Press Conference Regarding Material Information: The company shall promptly dispatch a spokesperson The company shall promptly dispatch a spokesperson or acting spokesperson to a press conference by the or acting spokesperson to a press conference by the trading day next following the occurrence of the event trading day next following the occurrence of the event or the broadcast media report, to provide explanations or the broadcast media report, to provide explanations to the news media. Foreign companies can use video to the news media. Foreign companies can use video conference.conference.
The regulations outline 26 (13 for Emerging) types of The regulations outline 26 (13 for Emerging) types of criteria for foreign issuers to hold a press conference.criteria for foreign issuers to hold a press conference.
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Financial ReportsFinancial Reports
Filing Deadlines:Filing Deadlines: Annual report -- 4/30 First Quarter report -- 4/30 (domestic) 5/31 (foreign) First Half Year Report -- 8/31 (domestic) 9/30 (foreign) Consolidated First Half Year Report -- 9/30 Third Quarter Report -- 10/31 (domestic) 11/30 (foreign)
Filing CPA’s opinion and major financial reports online Filing CPA’s opinion and major financial reports online and send a full hardcopy to GTSM.and send a full hardcopy to GTSM.
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Routine and Exceptional AdministrationRoutine and Exceptional Administration
Exceptional AdministrationExceptional Administration Perform after companies have “Critical Events” Critical Events:
Dishonor of checks due to insufficient depositsDishonor of checks due to insufficient deposits Liquidation of insider’s stocks by bankLiquidation of insider’s stocks by bank Implementation of plan for the offering stock or bond Implementation of plan for the offering stock or bond
seriously delayed or change substantiallyseriously delayed or change substantially 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.
88
Disciplinary Action of GTSMDisciplinary Action of GTSM
PenaltyPenalty Upon violation of information disclosure rules
Set as altered-trading-method categorySet as altered-trading-method category Net worth lower than 50% of paid-in capital CPA issues a qualified audit report Dishonor of checks due to insufficient deposits
Termination of tradingTermination of trading Fails to file financial report on time CPA issues an audit report containing a disclaimer of opinion or an adverse
opinion Delist from GTSMDelist from GTSM
Adjudicated bankrupt by a court Negative net worth
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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 GTSMMarket Surveillance of GTSM
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On-line SurveillanceOn-line Surveillance
Operates during trading hours (9:00~13:30)Operates during trading hours (9:00~13:30)Computer system detects abnormal securities Computer system detects abnormal securities
automatically (On-line Automatic Detecting System)automatically (On-line Automatic Detecting System)Main detecting targets:Main detecting targets:
Price fluctuation : over 9%, difference between GTSM index over 5%
Price movement: over 6%, difference between GTSM index over 4%
Turnover rate :over 10%Trading volume : over 10,000 units
91
On-line SurveillanceOn-line Surveillance
Consequent measures, after the abnormal securities Consequent measures, after the abnormal securities found, include:found, include: Real time analyze (e.g. contiguous price moving, trading
concentration … ) Browse market-prevailed information by Cyber-Browsing
System Inform related company to clarify or justify critical
information on MOPS Notify brokerage firm to watch out the transaction of
abnormal customers and prevent their default
92
Operates after trading hoursOperates after trading hoursMain projects:Main projects:
Notify brokerage firm to watch out the transaction and prevent customers’ default (by written notice)
Declare warning name-list of certain securities that meet with alarming criteria
Undertake necessary countermeasures on certain securities that meet with special disposal criteria
Off-line SurveillanceOff-line Surveillance
93
Warning Information SecuritiesWarning Information Securities Targeting items:Targeting items:
Price movementPrice movement Trading volumeTrading volume Turnover rateTurnover rate PER, PBRPER, PBR
Countermeasures:Countermeasures: Declare warning name-list of targeted securitiesDeclare warning name-list of targeted securities Preliminary analysisPreliminary analysis
Off-line SurveillanceOff-line Surveillance
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Special Disposal Securities Special Disposal Securities 處置股票 處置股票 Been declared as Attention Security Been declared as Attention Security 注意股票 注意股票 for for
certain amount of days within a certain day periodcertain amount of days within a certain day period Countermeasures:Countermeasures:
Manually matching Manually matching 人工撮合人工撮合 with prolonged time intervwith prolonged time interval al
Requiring pre-funding and securities pre-collectedRequiring pre-funding and securities pre-collected 預收款預收款券券
Imposing restriction upon total daily order volumeImposing restriction upon total daily order volume Suspending tradingSuspending trading
Off-line SurveillanceOff-line Surveillance
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Types of Illegal TransactionsTypes of Illegal Transactions
Market manipulationMarket manipulation Fail to perform settlement Matched orders Artificial raising, lowering or fixing price Wash sale (create brisk trading impression) Spread rumors or false information
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What is Insider Trading?What is Insider Trading?
Article 157-1 of the Securities and Exchange Act Article 157-1 of the Securities and Exchange Act stipulates that "upon learning any information which stipulates that "upon learning any information which will have a material impact on the price of an issuing will have a material impact on the price of an issuing company's securities, and prior to the public company's securities, and prior to the public disclosure of such information or within 12 hours disclosure of such information or within 12 hours after its public disclosure, the person holding such after its public disclosure, the person holding such information shall not purchase or sell shares of the information shall not purchase or sell shares of the company which are listed on an exchange or an over-company which are listed on an exchange or an over-the-counter market, or any other equity-type security the-counter market, or any other equity-type security of the company. of the company.
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What is Insider?What is Insider?
Director, supervisor, and/or managerial officer of the company, Director, supervisor, and/or managerial officer of the company, and/or a person designated to exercise powers as representative.and/or a person designated to exercise powers as representative.
Shareholders holding more than 10% of the shares of the Shareholders holding more than 10% of the shares of the company (“Substantial Shareholder”) .company (“Substantial Shareholder”) .
Any person who has obtained the information by reason of Any person who has obtained the information by reason of occupational or controlling relationship with the company.occupational or controlling relationship with the company. For For example, employees, attorneys or accountants.example, employees, attorneys or accountants.
Employees or shareholders of a holding company who learn Employees or shareholders of a holding company who learn information about a subsidiary information about a subsidiary
A person who, though no longer among those listed in (one of) A person who, though no longer among those listed in (one of) the preceding statuses, has only lost such status within the last 6 the preceding statuses, has only lost such status within the last 6 months. months.
Any person who has obtained the information from any of the Any person who has obtained the information from any of the persons named in the preceding statuses. persons named in the preceding statuses.
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At least 3 days prior to transfer, insiders must register their At least 3 days prior to transfer, insiders must register their intention of transferring shares that have satisfied the holding intention of transferring shares that have satisfied the holding period requirement and within the daily transfer allowance ratio period requirement and within the daily transfer allowance ratio following registration, However, this requirement shall not following registration, However, this requirement shall not apply to transfers totaling less than 10,000 shares per exchange apply to transfers totaling less than 10,000 shares per exchange day. day.
File a report of the changes in the number of shares they held File a report of the changes in the number of shares they held during the preceding monthduring the preceding month
The insiders shall file, by the fifth day of each month, a report 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 with the issuer of the changes in the number of shares they held during the preceding month.during the preceding month.
The issuer shall compile and file such report of changes by the The issuer shall compile and file such report of changes by the fifteenth day of each month. fifteenth day of each month.
Insider’s Registration for TransferInsider’s Registration for Transferss
申報持股轉讓申報持股轉讓
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ConclusionConclusion
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Thank You !!!Thank You !!!
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