Full Delivery Shares Explained: Essential Trading Systems and Risks to Know Before Investing

Definition and Meaning of Full Settlement Shares

Full settlement shares are a unique settlement system in the Taiwan stock market. When a listed company’s per-share net value falls below the face value of 5 yuan due to poor management, financial difficulties, or major violations, the stock will be classified as a full settlement share. In simple terms, full settlement shares mean that investors must pay the full purchase amount when buying such stocks, and cannot reduce the capital threshold through credit transactions like margin trading and securities lending.

Main Features of Full Settlement Shares

Compared to ordinary shares, the meaning of full settlement shares is not just a change in settlement method but also represents multiple restrictions:

Signal of Deteriorating Financial Condition. When a stock is classified as a full settlement share, it usually reflects significant operational difficulties or issues in financial statements. The long-term per-share net value below 5 yuan is a key indicator.

Change in Trading Mechanism. These stocks cannot be used for margin trading or securities lending. They are traded once every 30 minutes, with a trading method completely different from ordinary shares. Both buyers and sellers need to communicate with the broker in advance.

How to Buy Full Settlement Shares? Trading Process Analysis

Purchase Steps

Investors interested in buying full settlement shares must first understand the meaning and complexity of the trading mechanism. The specific process includes:

First, transfer the entire purchase funds (including handling fees) to the broker’s designated settlement account, ensuring sufficient remaining balance to prevent shortages. Provide the stock code and number of shares to the broker, who will handle the order placement. If the funds are not fully used on the same day, they are usually refunded to the individual account before 3:30 PM.

Selling Steps

Selling full settlement shares requires prior application for “reserved stocks,” which means freezing the number of shares to be sold in advance. Investors must call the broker to apply (some brokers allow operation via app), and the broker will record the call. After the application is completed, investors can place their sell orders themselves. If the order is not executed on the same day, they need to re-reserve the stocks for selling the next day.

How to Check the List of Full Settlement Shares

Taiwan investors can log in to the official website of the Taiwan Stock Exchange, select the “Trading Information” option, and access the “Change Trading” feature to view the latest list and detailed information of full settlement shares.

When Can Full Settlement Shares Return to Ordinary Stock Status

Being classified as a full settlement share is not a permanent judgment. When the company’s operations improve and financial indicators recover, there is a chance to exit the full settlement status.

Conditions for Rejuvenation of Listed Companies: Consecutive two quarters with per-share net value exceeding 5 yuan, and shareholder equity maintaining above 300 million yuan for two consecutive quarters.

Conditions for Rejuvenation of OTC Companies: Occurrence of a single quarter with a per-share net value above 5 yuan and positive growth in shareholder equity.

Once the conditions are met, the Taiwan Stock Exchange will review after collecting the company’s quarterly reports. The review announcement will be published, and the stock will revert to normal trading the next day.

Risks and Precautions of Investing in Full Settlement Shares

High-Risk Investment Target. Full settlement shares indicate that the company has major issues in management, finance, or legal matters, making them high-risk assets. Investors should thoroughly assess their risk tolerance before investing.

High Volatility. Stocks with a per-share net value near 5 yuan experience especially large fluctuations because of the switch in trading methods. Short-term volatility can be intense. When margin trading is replaced by full settlement, stocks may even face continuous limit-downs.

No Dividends or Rights Issues. Unlike ordinary shares, full settlement shares do not distribute dividends or offer rights issues. Investors can only hope for a turnaround that restores the stock to ordinary share status.

Lack of Liquidity. Full settlement shares are traded once every 30 minutes, with fewer buyers and sellers, making it easy to encounter a lack of trading counterparts. This increases trading difficulty and costs.

Complex Trading Process. Compared to the convenience and speed of ordinary stock trading, buying and selling full settlement shares require multiple communications with brokers, making the process complex and time-consuming. It is not suitable for frequent trading strategies.

Investors must fully understand the meaning, trading characteristics, and potential risks of full settlement shares before deciding to participate. Proceed cautiously after thorough evaluation.