The Taiwan Stock Exchange (TWSE) and the over-the-counter Taipei Exchange (TPEX) on Saturday announced new listing requirements, aiming to allow more flexibility for enterprises, especially start-ups, to gain access to greater capital.
The new requirements would allow companies with sizable net value, large revenue and sound cash flows to seek an initial public offering (IPO) on the local bourses, regardless of whether their businesses are profitable, the exchanges said in their statements.
The move comes after a fledgling subsidiary of Hon Hai Precision Industry Co (鴻海精密) last month obtained a speedy approval from China’s securities regulator to launch an IPO on the Shanghai Stock Exchange, which has raised concerns that other Taiwanese companies might also spin off units to list in China.
Hong Kong also has incentives to attract foreign companies to its equity market.
In the past, if companies with paid-in capital of at least NT$600 million (US$20.6 million) wanted to list on the local bourses, they not only had to be profitable, but also had to be increasingly profitable over successive years and could not have accumulated losses.
However, based on amendments to the Rules Governing Review of Securities Listings (有價證券上市審查準則), TWSE said companies would qualify to be listed on the local main board if they are valued at more than NT$5 billion, with revenue exceeding NT$5 billion in the most recent fiscal year that is higher than the previous year, have a positive cash flow for the past one year, and have a net value accounting for two-thirds of paid-in capital and above. Companies that are valued at more than NT$6 billion, with revenue exceeding NT$3 billion in the most recent fiscal year that is higher than the previous year and with a net value accounting for two-thirds of paid-in capital and above, would also qualify.
On the over-the-counter market, TPEX said companies with a net value of more than NT$600 million and no less than two-thirds of paid-in capital, with revenue of more than NT$2 billion in the most recent fiscal year that is higher than the previous year, and with a positive cash flow in the past one year, would also be eligible to be listed.
The two exchanges said that in light of economic developments and industrial trends, the new requirements are aimed at supporting small businesses and firms in the innovative sectors as many of them have yet to turn a profit, but have great potential for development.
The new listing requirements are to take effect today.
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