Practice Analysis of the Taiwan IPO by Foreign Entities
Date Issued
2010
Date
2010
Author(s)
Chen, Hui-Min
Abstract
Practice analysis of the Taiwan IPO by foreign entities
Summary
In the past few years, a tendency toward The Three Links has come, which results in a fundamental change in the relationship between China and Taiwan because of Kuomintang’s (KMT) winning the elections, financial crisis, globalization of capital market, and globalization economy and global competition. Especially, the key of the economy co-development between China and Taiwan are the linkage of capital and resources. It is an important development trend that internationalization of the Taiwan capital market will attract global capital and overseas Taiwanese to join the Taiwan market, and speed up the economic growth and development in Taiwan. The object of this report is to investigate the application practices of foreign enterprises to seek IPO in Taiwan stock exchange markets and survey the attributes and satisfactions of the foreign enterprises owned by overseas Taiwanese. This report was prepared by interviewing securities corporations, surveying with questionnaires and cases studies, and the conclusion are as follow.
First of all, the major recommendations that we obtained from the interview with securities corporations are: 1. to relax the restrictions on locations of a listing entity; 2. to revoke the rule of NT$10 par value per common share; 3. to revise the identification standards of indirect listing (e.g. if a foreign enterprise has more offshore operation comparing its business in Taiwan, the enterprise should not be considered as pursuing an indirect listing in Taiwan); 4. to classify the securities underwriters pursuant to proper standards; 5. the competent authorities may consider inviting those high-quality companies in which Chinese-shareholders own less than 30% interests, or revise the calculation of Chinese-shareholders shareholding percentage by looking through the ultimate individual shareholders’ nationality.
Secondly, with regard to the survey and investigation on the attributes and satisfactions of foreign enterprises, we found that: 1. most of the sample enterprises are from China and most of them are middle size companies in various industries; 2. the sample enterprises are satisfied with the Taiwan capital market intermediate institutions, reasonable fees of TSEC and the refinance regime in Taiwan capital market; 3. after an overall consideration to the regulations of Taiwan capital market, the foreign enterprises are strongly willing to have their stocks be listed on stock exchange markets in Taiwan.
Finally, on the basis of the cases studies, we found that the pre-listing process for foreign enterprises is complicated, so the foreign enterprises shall be well prepared and intermediate institution such as securities underwriters and CPA firms should take more responsibilities in the IPO process. In addition, the China government’s restrictions on economy and foreign exchange may hold Chinese enterprises back from seeking IPO in Taiwan. Therefore, the Taiwan government shall have an overall planning to streamline the IPO process for foreign enterprises (especially, those owned by overseas Taiwanese) so as to speed up the economic growth in Taiwan.
Subjects
IPO
SDGs
Type
thesis
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