The government is considering establishing a new trading platform to make it easier for small and medium-sized enterprises (SMEs) to raise funds for expansion, Financial Supervisory Commission (FSC) Chairman Huang Tien-mu (黃天牧) said yesterday.
The commission is studying how to create a new fundraising channel for smaller firms, as President Tsai Ing-wen (蔡英文) in her inaugural address on Wednesday pledged to adopt more flexible financial policies and use more diverse means to meet companies’ demand for funding, Huang told a meeting of the legislature’s Finance Committee in Taipei.
Taiwan has four public fundraising channels: the Taiwan Stock Exchange (TWSE), the Taipei Exchange (TPEX), the TPEX’s emerging stock market and the Go Incubation Board for Startup and Acceleration Firms (GISA), Huang said.
“We will study if we need to create another set of requirements or to loosen existing rules to make it easier for SMEs to go public,” he said.
The TWSE and the TPEX have a set of financial criteria for companies applying for listing, such as profitability, net value, revenue and cash flow. Companies recommended by the government, such as promising biotech firms, do not have to abide by such strict criteria.
The emerging stock market, a preparatory board for listing on the nation’s two main bourses, has no set financial criteria, but requires companies to submit at least two recommendation letters from securities firms for share listing, while companies applying to trade on the GISA needs recommendations by the government.
The commission said it is still studying whether it should let SMEs and start-ups trade on a separate and independent platform, with only professional investors, or those who have net assets of more than NT$30 million (US$1 million), allowed to buy or sell such shares, the Securities and Futures Bureau said.
Huang also talked about the two major challenges facing the financial industry this year: low interest rates and information security.
The commission would draw up a road map to enhance financial institutions’ information security management for the next four years, he said.
The commission is monitoring four life insurers whose equity-to-asset ratio last month dropped below the required 3 percent, he said.
The equity-to-asset ratio is a measure of solvency, and it is calculated by dividing total shareholders' equity by the total assets of the company. The higher the ratio, the less leveraged the company is, meaning that a larger percentage of its assets are owned by the company and its investors.
The four life insurers are: Hontai Life Insurance Co (宏泰人壽) whose equity-to-asset ratio was 0.53 percent as of the end of March; Chunghwa Post Co (中華郵政) with a ratio of 2.21 percent; Shin Kong Life Insurance Co (新光人壽) with a ratio of 2.33 percent; and Mercuries Life Insurance Co (三商美邦人壽保險) with a ratio of 2.77 percent, the commission’s data showed.
The insurers need to submit an improvement plan to their board of directors, the commission said.
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