Since its establishment in 1994, the Taipei Exchange (TPEx) has grown to be a well-renowned member of the World Federation of Exchanges, ranking in the top 10 in bond trading value. Moreover, as one of the best exchanges that nurture promising startups and micro-enterprises, TPEx has put Taiwan in the top 4 leading countries in corporate governance by the Asian Corporate Governance Associations.
For years, small and medium-sized enterprises (SMEs) in Taiwan have been at the bottom of the pyramid in accessing funding from the capital markets. On 20 July 2021, TPEx inaugurated the Pioneer Stock Board (PSB) to make it easier for small and medium enterprises in the innovative industry to get funding from the capital market.
In the rapidly growing world of IoT, this is a crucial step in boosting tech advancement in a region. Better yet, it’s a step that will boost the adoption of innovative technologies such as AI, augmented reality, fintech, and 5G. For example, faster 5G adoption will enable quicker, more secure, and more efficient access to online services such as e-commerce, e-learning, and even online entertainment on platforms such as the casino online GGBet.
These futuristic sentiments were echoed by Premier Su Tseng-chang, who stated that the initiative to support innovative enterprises is the driving force in economic transformation. PSB is part of a larger multi-tier market that has been in the works for just over 27 years, and it joins the likes of the Main Board, the Emerging Stock Board (ESB), and Go Incubation Board for Startup and Acceleration Firms (GISA).
What is Required to Join the PSB?
There are six kinds of industries in the strategic and innovative field that are eligible to apply for membership in the PSB. These include digital and information technology, cybersecurity, biotechnology, green & renewable energy, national defense, and critical supply chain industries.
Belonging to any of these six categories of innovative industries is pretty much all that is needed to qualify for membership. Moreover, the applicants may be pre-profit businesses that are just starting their operations but have completed the public launch procedures. And by the way, even foreign companies can opt-in on this promising deal. But then, the company must have at least two written recommendations from advisory recommending firms with the leading firm submitting the Financial Material Event Checklist of the applicants.
The PSB model is meant to support all SMEs, including those in the incubation stage. Additionally, the company must have legally appointed independent directors. If no directors have been appointed at the submission of the application, the company must pledge to appoint the directors at their first stakeholders’ meeting after registration. This level of flexibility is sure to draw several companies in the innovation space to register and have the opportunity to improve their turnover.
The Journey Has Just Started
Completing registration with Pioneer Stock Board is the first step to being part of an elaborate network of companies that are going to fast-track Taiwan’s economy as an innovation hub. To protect the newly signed-up companies, potential investors must meet specific criteria.
For example, they must be juristic persons with a financial profile exceeding NT$50 million if they have some experience in financial products or NT$20 billion if they are high net-worth individuals. Even institutional investors and venture capital enterprises can be investors. On the other hand, attracting investors needs some assurance of the reliability of the companies – and that’s what the RSFs come in.
After confirming the validity of all the company claims and documents, they go a step further and provide liquidity for the company’s subscribed PSB stocks, providing a cushion for both investors and the sponsored companies. All in all, The PSB membership typically lasts 6 months, after which the companies will transfer membership to ESB, where they will be members for two more months.
A Solid Foundation to a Brighter, More Innovative Future
As of mid-July, there were 268 companies registered on ESB and 787 on the TPEx Main Board. This number is set to go up significantly with PSB now in place. Thanks to the advisory recommending securities firms carry out due diligence and offering liquidity to the companies, investors are now much more open to financing the innovative industry.
With the PSB bringing on board all kinds of innovation-oriented companies, we will be seeing a completely new Taiwan just a few years down the line. This initiative by TPEx is truly transformative, and the future that it promises is one full of possibilities for Taiwan and its neighbors.