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Companies rush to launch IPOs by year-end to avoid capital gains tax

The China Post news staff--Several enterprises are rushing to launch initial public offerings (IPO) of their shares on the local securities markets by the end of the year, as major investors in IPO shares floated next year should be subject to a 15-percent capital gains tax to become effective starting Jan. 1, 2013, according to market sources.

Statistics compiled by the Taiwan Stock Exchange Corp. and GreTai Securities Market (or the Over-the-Counter Market, OTC) showed that there will be a total of 19 enterprises launching IPOs on the local bourse or the OTC market by the end of the year, with five of them to be launched by the end of November and 14 by the end of December.

Major investors in IPO shares launched in 2013 and after will face a 15-percent capital gains tax that will take effect on Jan. 1, 2013. This in turn will undermine the willingness of local enterprises to make IPOs on the local stock exchange market or the OTC market and thus prompt them to do the job by the end of this year, market insiders said.

So far this month, several IPOs were launched, including Taiwan Taxi, Intai Harowaer Enterprise Co., Ltd. and Eastern Technologies Holding Ltd. There will be five more IPOs to be realized by the end of November, including Calin Technology Ltd. on the local bourse, and four others to be listed on the OTC market, including ThinTech Materials Technologies (a supplier of thin film sputtering target products), Xu Yuan Packaging Technology (a maker of shrink sleeve machinery and shrink film), TSW Pacific Corp. (a maker of security products) and Hakers Enterprise Co., Ltd. (a contract supplier of garment products).

Stock underwriters noted that the launch of IPOs will peak in December, when five IPOs are scheduled to be listed on the local bourse and nine on the OTC market.

Noteworthy is that a real estate development company invested in mainland China by Taiwan's ASE Group is slated to make its IPO on the local bourse on Dec. 7, and MassMutual Mercuries Life Insurance will debut its listing on the bourse on Dec. 18.

Meanwhile, biotech firms including Glyconex Inc., Taiwan Liposome Corp. and Cowealth Medical Holdings will list their IPO stocks on the OTC market in December. The Eslite Spectrum Corp., an affiliate under the Eslite Group, is also expected to launch its IPO on the OTC market by the end of this year, according to market sources.

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