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Taiwan Stock Exchange Corporation Directions for Lead Securities Underwriters Mandated to Assist Primary Listed Companies in Complying with ROC Laws and Regulations and the Taiwan Stock Exchange Corporation Rules Related to TWSE Listing  CH

Amended Date: 2014.10.27
1      These Directions are specially adopted pursuant to Article 28-2 of the TWSE Rules Governing Review of Securities Listings ("Review Rules") and Article 6-1 of the TWSE Rules for Regulating Primary Listed Foreign Issuers, to regulate the scope of duties of a lead securities underwriter assisting a TWSE primary listed company in complying with ROC securities-related laws and regulations and relevant TWSE rules and the content of the mandate contract.
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2     A lead securities underwriter assisting a TWSE primary listed company in complying with ROC laws and regulations shall perform the following duties:
  1. Provide relevant suggestions in a timely manner to assist the TWSE primary listed company in complying with ROC securities-related laws and regulations and the TWSE rules, bylaws, public announcements, and listing contract.
  2. When the TWSE conducts reviews of financial reports, analysis and management of material events, and other supervisory procedures concerning the TWSE primary listed company, the lead securities underwriter shall fully comply with requests by the TWSE in conducting relevant operations.
  3. Assist the TWSE primary listed company in giving relevant explanations to the TWSE.
  4. Ensure that the TWSE primary listed company performs its undertakings made to the TWSE at the time it became listed on the TWSE. If it is discovered that the TWSE primary listed company has failed to fulfill any undertaking, the lead securities underwriter shall immediately notify the TWSE.
  5. Assist the directors, supervisors, general manager, spokesperson, deputy spokesperson, financial officer, accounting officer, research and development officer, and internal audit officer of the TWSE primary listed company to understand relevant legal liabilities.
  6. Collect information that has a material effect on the shareholders equity or securities price of the TWSE primary listed company from mass media coverage at the places where the company has its major operations, and assist the company in publicly disclosing relevant material information. If it is discovered that the TWSE primary listed company is unable to make a timely disclosure of material information, the lead securities underwriter shall immediately notify the TWSE.
3     The mandate contract entered into between the lead securities underwriter and the TWSE primary listed company shall include at least the following matters:
  1. The duration of the mandate contract shall be from the initial TWSE listing date of the stock of the TWSE primary listed company to the 2 subsequent account years. If the case being handled is a case under Article 6, paragraph 1, subparagraphs 1 to 3 of the Regulations Governing the Offering and Issuance of Securities by Foreign Issuers ("Foreign Issuer Regulations"), the duration shall be from the year when the offering is completed to the 2 subsequent accounting years.
  2. Before publishing material information, holding press conferences regarding material information, or publicly announcing and filing financial reports in accordance with requirements, the TWSE primary listed company shall notify the lead securities underwriter, and may consult with the lead securities underwriter when necessary. The lead securities underwriter shall be obligated to faithfully maintain the confidentiality of any undisclosed information of the TWSE primary listed company that it has learned.
  3. When the lead securities underwriter makes a request to access or read relevant information in accordance with TWSE requirements or the stipulations of the mandate contract, the TWSE primary listed company shall cooperate with the request.
  4. When the lead securities underwriter assists the TWSE primary listed company in legal compliance pursuant to the mandate contract, it shall exercise the due care of a good administrator. If any matter attributable to the lead securities underwriter results in a breach of the mandate contract, the lead securities underwriter shall be held liable for damages for any injury caused to the TWSE primary listed company (including, but not limited to, any default penalty, change of trading method, suspension of trading, or delisting imposed on the TWSE primary listed company by the TWSE).
4     A TWSE primary listed company may not terminate the mandate contract with the lead securities underwriter before the expiration of the mandate contract except for reason of a failure by the original lead securities underwriter to perform the mandate contract, a material dispute between the parties on the performance of the mandate contract, or other legitimate reasons submitted to the TWSE for approval, and termination of the mandate contract shall require the approval of the TWSE.
    A TWSE primary listed company applying to the TWSE pursuant to the preceding paragraph to terminate the mandate contract with the original lead securities underwriter shall state in writing the reasons for the termination and the name of the succeeding securities underwriter that will continue to assist in legal compliance, and attach a written undertaking by the succeeding securities underwriter committing it to bear the obligations of lead securities underwriter, and the new mandate contract. The duration of the new mandate contract shall not be shorter than the remaining duration of the original mandate contract.
    The succeeding securities underwriter referred to in the preceding paragraph shall comply with Article 28-2, paragraph 1 of the Review Rules.
    The relevant provisions of these Directions shall apply when a TWSE primary listed company mandates another securities underwriter to assist in legal compliance pursuant to paragraph 2.
    If a TWSE primary listed company fails to mandate another securities underwriter to assist in legal compliance pursuant to paragraphs 2 and 3, and such a mandate is required for the initial TWSE listing of stock, it is deemed to have "breached an undertaking made at the time of the application for TWSE listing." The TWSE may report the breach to the competent authority for recordation pursuant to Article 50-3, paragraph 1, subparagraph 6 of the Operating Rules of the Taiwan Stock Exchange Corporation, and then suspend the TWSE trading of the securities of the TWSE primary listed company. If such a mandate is required for the handling of a case under Article 6, paragraph 1, subparagraphs 1 to 3 of the Foreign Issuer Regulations after TWSE listing, the TWSE may take dispositive measures pursuant to Chapter III of the TWSE Rules for Regulating Primary Listed Foreign Issuers.
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5     A lead securities underwriter may not resign before the expiration of the mandate contract except in the case of a merger, demerger, or business transfer, or when the competent authority voids its permit, approves its dissolution, or orders it to cease business, or for another legitimate reason, and only with the approval of the TWSE.
    A lead securities underwriter applying to the TWSE for resignation under the preceding paragraph shall state in writing the reasons for the resignation and the name of the qualified succeeding securities underwriter that will continue to assist in legal compliance, jointly signed by the new and the original securities underwriters, and attach a letter of consent by the TWSE primary listed company, and the undertaking by the new securities underwriter to bear the obligations of lead securities underwriter, and the new mandate contract.
    When the TWSE has given approval for a lead securities underwriter to resign, the succeeding securities underwriter that continues to assist in legal compliance shall be subject to all relevant provisions of these Directions.
6     A lead securities underwriter and a succeeding securities underwriter shall, during the period when they are mandated by a TWSE primary listed company to assist in legal compliance, retain relevant documents, working papers, or data in connection with the assistance process. The TWSE may requisition and review these when necessary.
    If a securities underwriter violates these Directions, the TWSE may requisition and review documents, working papers, or data referred to in the preceding paragraph, and may, pursuant to the TWSE Regulations for Handling Deficiencies in an Evaluation Report or Other Related Information Submitted by a Securities Underwriter, issue a demerit or refuse for a certain time period to accept assessment reports produced by that securities underwriter.
7     These Directions, and any amendments hereto, shall be publicly announced and implemented after submission to and recordation by the competent authority.