The Financial Supervisory Commission (FSC) has rejected a China-based mica powder producer’s application for a primary listing on the over-the-counter market on concerns over its shareholding structure.
The rejection is seen as a blow to efforts by foreign-registered companies, especially those controlled by Chinese, to seek stock market listings in Taiwan.
It also raises speculation that the financial authorities are tightening regulations on listed companies whose shares are traded under ticker symbols beginning with the letter “F,” after recent disputes over Asia Plastics Recycling Holding Ltd (亞塑再生) of such F stocks have damaged investors’ interests and market order.
In a statement posted on Friday on its Web site, the commission said it had rejected Cayman Islands-registered China Crystal New Material Holdings Co’s (中國晶體新材料控股) application for trading its shares under the F-stock group on the GRETAI Securities Market.
“The company’s primary listing application has violated Article 58-1 of the Regulations Governing the Offering and Issuance of Securities by Foreign Issuers (外國發行人募集與發行有價證券處理準則),” the commission said in the statement.
Pursuant to the regulation, China Crystal’s listing has raised concerns that major investors from China have shareholding or capital contribution exceeding 30 percent in, or effective control over, the company.
The commission’s move came hours after the GRETAI Securities Market said it had disqualified and returned the company’s listing application on concerns that Chinese in the company may have effective control over the company.
China Crystal manufactures synthetic mica power, synthetic mica flakes and synthetic strips that are used for the production of pearlescent pigments or fire-proof materials.
Last year, the company — whose flagship subsidiary Youjia Pearlescent Mica Co (友佳珠光雲母) is based in Jiangsu Province — reported NT$602 million (US$20 million) in net profit, or NT$8.01 per share, on sales of NT$1.16 billion, according to the company’s prospectus.
The Chinese company filed its listing application with the GRETAI Securities Market on Oct. 30 last year, planning to issue 64.8 million new common shares for the listing, and passed a review by the GRETAI listing committee in March this year.
However, since then, the company had been asked by financial authorities to provide more documentation about its account receivables, non-performing loan evaluation and gross margin information, before its application was turned down by the commission on Friday last week.
A total of 60 F-stock companies have listed on local bourses since 2010, when US-based power management chip designer Integrated Memory Logic Ltd (安恩科技) debuted its shares on the Taiwan Stock Exchange. More than 80 percent of these companies are controlled by overseas Taiwanese businesses.
Apart from China Crystal, 13 foreign-registered companies are waiting for regulatory approval to trade their shares in Taiwan.
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