The Financial Supervisory Commission (FSC) is considering expediting listed companies’ share issuance proposals to enhance efficiency in local capital markets, the commission said yesterday.
Listed companies must apply to the FSC before issuing new shares and often have to take into account rule changes, Securities and Futures Bureau Deputy Director Kuo Chia-chun (郭佳君) told a news conference in Taipei.
However, the commission is considering allowing firms to file applications covering multiple issuances within two years, Kuo said.
Under the proposed mechanism, a firm would need to report the total number of shares it is planning to issue and the total amount of funds it is planning to raise in the next two years, Kuo said.
If the commission approves the plan, the firm could issue multiple batches of shares without having to apply individually, Kuo said.
The mechanism would boost efficiency in the local capital markets by shortening issuance procedures from three months to one-and-a-half months, Kuo told the Taipei Times by telephone.
Under the current rules, it usually takes underwriters about one month to evaluate a company’s issuance plan, while reviews of issuance applications take another 17 days on average, Kuo said.
Eventually, it takes the company about one-and-a-half months to negotiate with shareholders that are willing to acquire the new shares, he added.
Under the new mechanism, approvals would cover multiple issuances and underwriters would not have to evaluate every single issuance plan, Kuo said.
However, the new mechanism would only apply to two types of listed companies: Firms with operation scales and capital expenditures above a certain limit and firms whose product development takes a longer time, Kuo said, adding that semiconductor firms and biotech companies would likely fall into the two groups.
The main reason that not all listed companies could benefit from the eased rules is that market regulators, including the Taiwan Stock Exchange, the Taipei Exchange and the FSC, would have to be more stringent in reviewing proposals by eligible firms, taking into account their financial files as well as their business outlook for the next two years, Kuo said.
Although there is no ban on listed companies posting red numbers that wish to issue new shares, regulators are usually more cautiously when reviewing their applications and demand business improvement plans, Kuo said.
Regulators would likely be more careful when reviewing applications that involve a firm’s future outlook, she said.
Based on the experiences with similar mechanisms implemented by regulators in the US, Japan and South Korea, the FSC would only open its new mechanism to certain companies, Kuo said.
The FSC would finish drafting the plan next quarter, Kuo said.
New share issuances raised a total of NT$58.5 billion (US$2.11 billion) in the first half of this year, up 99 percent from NT$29.3 billion a year earlier, FSC data showed.
Among 147 firms that issued new shares in 2019 or last year, 18 companies conducted more than one issuance, the data showed.
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