Face value requirement for Taiwan shares to be scrapped beginning on Jan. 1, 2014.

January 3, 2014 Leave a comment

Face value requirement for Taiwan shares to be scrapped
Wednesday, January 1, 2014
CNA

Taipei–The Taiwan Stock Exchange (TWSE) said Tuesday that shares of companies listed on Taiwan’s equity markets will no longer be required to have minimum face values of NT$10 (US$0.33) beginning on Jan. 1, 2014.After the face value rule is removed, listed or would-be listed companies on the main board, the over-the-counter (OTC) market and the emerging market will be allowed the flexibility to determine face values based on their own needs, the TWSE said.

The Financial Supervisory Commission, Taiwan’s top financial regulator, said the move to abolish the strict minimum face value rule will help internationalize the country’s equity markets and bring them in line with regional markets that have no face value restrictions.

Many listed companies whose share prices have fallen below NT$10 have long urged financial authorities to get rid of the face value (also known as par value) requirement because it hurts them when they want to raise funds.

Financial authorities often urge investors to take the relatively low share prices of these companies into account when the companies try to raise funds, which can discourage further investment.

The GreTai Securities Market (GRSM), which operates the local OTC market and emerging market, said the added flexibility will help small and medium-sized enterprises (SMEs), the backbone of Taiwan’s economy, gain access to funds.

According to the Ministry of Economic Affairs, Taiwan has about 1.28 million SMEs, representing more than 97 percent of the country’s businesses.

As for the listed companies that plan to adjust the face value of their shares, trading of their shares will be suspended before the change is completed, both the TWSE and the GTSM said.

The Taiwan Stock Exchange cautioned that once the rule is relaxed, investors will have to pay closer attention to a listed company’s return on equity and return on assets rather than simply its earnings per share or book value per share when evaluating a company.

The exchange said it will establish a special area on its website for the disclosure of financial information by listed companies whose shares have a face value other than NT$10 to give investors a clearer picture of the companies’ finances.

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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