The Taiwan Monthly

Trading Policies

Exchangeable preferred stock - the new choice for Taiwan investment and foreign investing management

To fulfill issuers’ funding needs as well as provide multiple investment options for investor, the TWSE will introduce a new investing tool, exchangeable preferred stock (“EPS”) on June 6, 2022.

 

In launching of this stock type, the TWSE announced the amendment of “Principles for Assignment of Ticker Symbols in the Republic of China Securities Markets” on May 4, 2022.

 

The TWSE also promulgated the supervision of overseas Chinese, foreign nationals and mainland area investors who invest in exchangeable preferred stocks as below:

1. The issuer has, or may have, a legal limitation in which a ceiling is imposed on the percentage of share ownership of stocks. This applies to two groups of investors, foreign nationals and/or mainland area investors. If this limitation applies to the issuer, this rule must be followed as well as applied to EPS.
2. When the underlying stock has a legal limitation in which a ceiling is imposed on the percentage of share ownership of the stock, and still applies to the specific groups as mentioned.    
   1. Once a request is made to exchange EPS to the underlying stocks by any overseas Chinese, foreign national or mainland area investor, the TDCC reviews the application to confirm if the limitation has been reached or not. If yes, then the TDCC will refuse the application.
   2. In the circumstance that the issuer redeems the EPS, the TDCC still checks overseas Chinese, foreign national and mainland area investors for the ceiling in the share percentage of underlying stock. If the TDCC denies the redemption of these groups, then the issuer must pay cash to redeem the EPS from foreign nationals and/or mainland area investors.

For further inquiries, please contact Mr. Chen at rickychen@twse.com.tw.