Companies in the agricultural sector will have to overcome challenges such as asset values, plant variety rights and other barriers before they can list on the local market to raise capital and expand their business, Ernst & Young Taiwan said in a forum yesterday.
Several firms in southern Taiwan, where most agricultural crops are concentrated, have expressed an interest in listing on the smaller Emerging Stock Market and a planned startup board as the government encourages the move to promote small and medium-sized enterprises.
“The listing process for such companies would be complicated and time-consuming because it is difficult to evaluate biological assets, which may suffer a serious blow when a major disaster or epidemic strikes,” Calvin Chen (陳正初), a partner of assurance services at Ernst & Young Taiwan, told a seminar in Greater Kaohsiung.
Biological assets include plants (eg, vegetables, crops, vineyards, trees and orchards) and animals (eg, goats, sheep, cows, buffaloes and fish). These assets keep transforming as they grow, degenerate and reproduce, making it difficult to measure quantitative and qualitative changes, Chen said.
Their ever-changing nature could be a barrier to a company’s plans for an initial public offering, he said.
Moreover, while Taiwanese firms possess advanced agricultural know-how and economically viable plant varieties, many are small in capital and production scale, Chen said.
The Financial Supervisory Commission has announced plans to draw up a mechanism by the end of the year that will allow small businesses to raise capital in the over-the-counter market to help boost creative and refined agricultural industries.
Only firms with capital of NT$50 million (US$1.67 million) or less can apply to trade on the startup board. Their shares cannot be traded on the open market.
Tai Ling Biotech Inc (台霖生物科技), a Greater Tainan-based orchid grower and an affiliate of Taiwan Tea Corp (台灣農林), plans to seek IPO approval on the Emerging Stock Market next year, chief executive Peter Liu (劉祐甫) said. With NT$400 million in capital, Tai Ling has pioneered techniques in orchid cultivation with state-of-the-art technology, Liu said.
Joben Biomedical Co (喬本生醫), a supplier of “Taiwanofungus,” a highly valued medicinal mushroom said to boost a person’s immune system, plans to trade shares on the Emerging Stock Market in the first quarter of next year, company vice president Chia Tung-an (賈銅安) said.
Joben, headquartered in Pingtung County, has NT$280 million in capital and is confident of growing its business after listing given its knowhow and quality control, Chia said.
Ernst & Young Taiwan chairman James Wang (王金來) said that interested companies might need about three years before they can meet all listing requirements on capital adequacy, accounting transparency and management credibility.
Wang declined to comment on the startup board since the regulator has yet to disclose details. The FSC said last month it expects 70 companies to list on the startup board next year and raise a total of NT$210 million.