The Taiwan Stock Exchange Corp (TWSE, 台灣證券交易所) said yesterday that shares of companies listed on Taiwan’s equity markets will no longer be required to have minimum face values of NT$10 (US$0.33) beginning today. After the face value rule is removed, listed or would-be listed companies on the main board, the over-the-counter market and the emerging market will be allowed the flexibility to determine face values based on their own needs, the TWSE said.
The Financial Supervisory Commission said the move to abolish the rule will help internationalize the country’s equity markets and bring them in line with regional markets that have no face-value restrictions.
Many listed companies whose share prices have fallen below NT$10 have urged financial authorities to get rid of the requirement because it hurts them when they want to raise funds.
Financial authorities often urge investors to take these companies’ relatively low share prices into account when the companies try to raise funds, which can discourage further investment.
The GRETAI Securities Market (GTSM, 櫃檯買賣中心) said the added flexibility will help small and medium-sized enterprises (SMEs) gain access to funds.
According to the Ministry of Economic Affairs, the nation has about 1.28 million SMEs.
As for the listed companies that plan to adjust the face value of their shares, trading of their shares will be suspended before the change is completed, the TWSE and the GTSM said.
The Taiwan Stock Exchange cautioned that once the rule is relaxed, investors will have to pay closer attention to a listed company’s return on equity and return on assets, rather than simply its earnings per share or book value per share when evaluating a company.
The exchange said it will establish a special area on its Web site for the disclosure of financial information by listed companies whose shares have a face value other than NT$10 to give investors a clearer picture of the companies’ finances.