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Taiwan Stock Exchange Corporation Rules Governing Stabilization of Trades of Listed Securities  CH

Amended Date: 2004.08.03
Article 1     These Rules are established pursuant to Paragraph 3, Article 26 of the Regulations Governing Securities Firms for the smooth accomplishment of the objective of offering and issuance of securities.
Article 2     For the purposes of these Rules, stabilization of trades means purchase by the bookrunner and the joint bookrunner of the same issued securities from the centralized securities exchange market during the period when stabilization of trades is permitted in order to successfully accomplish the objective of offering and issuance of securities.
    For the purposes of the preceding paragraph, the term "purchase" means purchases and confirmed purchase of securities at the centralized securities exchange market.
Article 3     Stabilization is allowed for the following underwriting activities:
  1. In case of cash capital increase, all relevant shares are offered for underwriting and placement via book building.
  2. In case of public offer according to Paragraph 3, Article 22 of the Securities and Exchange Act, all relevant shares are offered for placement via book building.
Article 4     In stabilization, the bookrunner shall be a key party to the transaction. A bookrunner without a dealing department may appoint another securities firm to engage in the stabilization.
    Securities firms acting as bookrunner and joint bookrunner shall not sell the same securities to be underwritten by them during the period when stabilization is permitted, except when the selling price is higher than the offering price.
Article 5     The purchase price of a stabilization arrangement shall not be higher than the offering price.
Article 6     The period when stabilization is permitted shall be subject to the following requirements:
  1. For cash capital increase where all relevant shares are offered for underwriting and placement via book building, the period starts on the first day when payment of shares offered to third parties becomes due and ends on the day prior to the day of listing of certificate of payment of shares.
  2. For public offer according to Paragraph 3, Article 22 of the Securities and Exchange Act where all relevant shares are offered for placement via book building, the period starts on the first day when payment of shares offered to third parties becomes due and ends on the day prior to the day of distribution of share certificates.
Article 7     The bookrunner shall complete and submit for and on behalf of itself and the joint bookrunner the application form (in the form consistent with Schedule 1) to the TWSE with copy to the Financial Supervisory Commission, Executive Yuan (the "Competent Authority") the day prior to the period when stabilization is permitted as prescribed in the preceding article:
    The application form in the preceding paragraph shall include the following information:
  1. The bookrunner engaging in the stabilization and its place of business;
  2. Names and types of securities subject to stabilization;
  3. Place of the stabilization;
  4. Timing, scheduled period and start date of the stabilization;
  5. Total funds projected for the stabilization;
  6. Details of trading at the centralized securities exchange market by the bookrunner and joint bookrunner during the 10 days prior to commencement of the period when stabilization is permitted; and
  7. Other matters required by the Competent Authority.
Article 8     The bookrunner engaging in stabilization shall keep records of the stabilizing trades on a per-trade and per-day basis and produce and submit a stabilization summary report (in the form consistent with Schedule 2) during the stabilization period to the TWSE with copy to the Competent Authority.
    The report in the preceding paragraph shall include the following information:
  1. Number and price of purchased securities that are confirmed;
  2. Number and price of purchased securities;
  3. Number and price of purchased securities that are not confirmed; and
  4. Other matters required by the Competent Authority.
Article 9     A copy of the stabilization application form and report under Articles 7 and 8 as filed with the TWSE shall be furnished to the Taiwan Securities Association, Securities and Futures Institute, and other organizations appointed by the Competent Authority for public review for a period of not less than 30 days.
Article 10     The TWSE shall disclose information about the purchases and confirmed purchases in stabilization of the previous day on the Market Information System at the centralized securities exchange market.
Article 11     These Rules shall come into force as of the date of publication.