Newsletter
Multi-level capital markets: Taiwan FSC announced two "new boards" to be launched by Taiwan Stock Exchange and Taipei Exchange
In December 2020, the Financial Supervisory Commission (''FSC'') officially announced two proposed new boards – "Taiwan Innovation Board" ("TIB") and Strategic New Board (戰略新板, provisional translation/no official English translation, "Strategic New Board") – to be launched by the Taiwan Stock Exchange (''TWSE'') and Taipei Exchange (''TPEx''), respectively, by the third quarter of 2021 under the current multi-level capital market framework as new fundraising routes for emerging/innovative enterprises, with a hope to expand Taiwan's capital markets. The proposed two new boards as announced by the FSC's newsletter are outlined as follows:
(i) Simplified public offering process:
Applicants may adopt the simplified public offering process to reduce preparation costs and time and thereby be able to accelerate entry into the capital markets.
(ii) Suitable listing criteria and requirements for applicants with different conditions:
The TIB is contemplating to have three categories of listing criteria depending on market capitalization and the nature of the operations of the applicants, while there would be no quantitative requirements for the Strategic New Board. Applicants may choose the appropriate segment of capital markets that suits their own conditions for listing.
(iii) Investors should be limited to "qualified investors":
As the applicants should be generally still at a relatively early stage of development, the investment risk would be relatively high. For investor protection, it is proposed that persons eligible for investment in the stocks listed on such new boards be limited to professional/institutional investors, qualified entities or funds, or individuals with more than two years' experience in securities investment and with net assets of NT$10 million or more or with average income of NT$1.5 million in the most recent two years.
(iv) Lead underwriters are expected to provide counseling services to assist post-listing compliance:
By taking reference to the concept of "sponsors" of other countries, it is proposed that the lead underwriters continue to provide counseling services during the listing period in order to assist listed enterprises with legal compliance and to improve corporate governance.
With the recent policies and trends that encourage innovative startups and emerging enterprises, the concept of "multi-level capital markets" is once again a hot topic and surging trend recently. Therefore, the above-mentioned new policy deserves continuous attention. If you wish to further understand the legal aspects and policy trends regarding funding routes for startups and emerging enterprises as well as capital markets, please feel free to contact our Capital Markets practice group.