The Taiwan Monthly

Listed Companies and Initial Public Offerings

The TWSE Announced Revisions to the Profitability Standards and Post-Listing Supervision Regulations for Companies Whose Shares Have No Par Value or Whose Par Value Is Not NT$10 per Share

In response to the development of diversified capital structures in the market, and considering that it is relatively difficult for companies whose shares have no par value or whose par value is not NT$10 per share to meet the profitability threshold in their listing applications, thus causing an imbalance between such companies and companies with a par value of NT$10 per share, the TWSE has revised eight regulations, including the “Rules Governing Review of Securities Listings,” “Supplementary Provisions to the Rules for Review of Securities Listings” and
“Operating Rules of the Taiwan Stock Exchange Corporation” with the key revision as
follows:

 

The profitability threshold of issuing companies applying for domestic listing is a certain ratio of the pre-tax profit divided by the share capital. If the shares of an issuing company have no par value, according to paragraph 2, Article 156 of the Company Act, the proceeds from the shares should be fully capitalized; therefore, at the same issue price, the financial statements of a non-par-value share issuer will show a larger share capital amount than that of a NT$10-par-value share issuer. For shares with a par value other than NT$10, the portion of the proceeds above the par value is recognized as capital surplus, and the amount of the share capital will vary depending on the par value. This makes it difficult for companies whose shares have no par value or whose par value is not NT$10 per share to meet the profitability standard, thus causing an imbalance between such companies and companies with a par value of NT$10 per share. After referring to and adopting the supervisory framework of the regulatory authority for public companies, an addition is made to the regulations that for companies whose shares have no par value or whose par
value per share is not NT$10, when calculating their profitability or relevant financial ratios, the annual net asset value shall be used instead of the share capital, and the ratios shall be halved.

 

The revised regulations helped enhance the inclusiveness of the capital market towards companies with different par values per share. In the future, the TWSE will continue to improve relevant regulations in response to the development of the capital market.

 

For further information, please contact Mr. Chou at 1267@twse.com.tw