| Title： |
Taiwan Stock Exchange Corporation Rules Governing the Repurchase of TWSE Listed Securities by Foreign Issuers(2011.10.27) |
| Date： |
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Chapter I General Principles
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| Article 1 | These Rules are adopted pursuant to Article 4-1 of the TWSE Rules Governing Contracts for the Listing of Foreign Stocks, and Article 4-1 of the TWSE Rules Governing the Listing of Taiwan depositary receipts.
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| Article 2 | The scope of securities that a foreign issuer may repurchase on the TWSE centralized securities market pursuant to these Rules refers to shares listed for trading on the TWSE by a TWSE primary listed company, and to Taiwan depositary receipts (TDRs) issued in Taiwan and listed for trading on the TWSE by a TWSE secondary listed company.
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| Article 3 | Insofar as there is no conflict with the laws and regulations of the country where it is registered and the country where it is listed, a foreign issuer may repurchase its own shares on the TWSE centralized securities market upon the approval of a majority of the directors present at a board of directors meeting attended by two-thirds or more of the directors.
A resolution of the board of directors under the preceding paragraph and the status of implementation thereof shall be reported to the next following shareholders meeting. The same shall apply to any failure to repurchase the TWSE listed securities for any reason.
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| Article 4 | A foreign issuer who has not applied for registration with the TWSE pursuant to the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals and the TWSE Operating Rules may not buy back its TWSE listed securities on the TWSE centralized securities market.
A foreign issuer who has not carried out public announcement and filing pursuant to these Rules may not buy back its TWSE listed securities on the TWSE centralized securities market.
A foreign issuer shall faithfully implement the repurchase of its TWSE listed securities in accordance with the repurchase quantity and price indicated in its filing pursuant to these Rules.
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| Article 5 | When a foreign issuer repurchases its TWSE listed securities, any securities held by its affiliated enterprises as defined under the laws of the country where it is registered and the country where it is listed, or by its directors, supervisors, managerial officers, and their spouses and minor children, or held under the names of others, may not be sold during the period of the company's repurchase.
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| Article 6 | When a foreign issuer repurchases its TWSE listed securities, it shall input into the Market Observation Post System (MOPS) the information and content required under Articles 10, 11, 13, 17, 18 and 19.
If the foreign issuer has input the information into the Market Observation Post System (MOPS) pursuant to the preceding paragraph, the public announcements required under Article 19, paragraph 1, Article 11, and Article 12 need not be published in newspapers.
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| Article 7 | The quantity of TWSE listed securities that a foreign issuer may repurchase daily basis may not exceed one-third of the total quantity of the planned repurchase, and the foreign issuer may not provide price quotations prior to the beginning of trading hours, and shall appoint not more than two securities brokers to conduct the repurchase.
A TWSE primary listed company repurchasing its own shares shall not be subject to the restriction regarding the number of shares repurchased specified in the preceding paragraph where the number of shares repurchased is not more than 200,000 shares per day.
If the quantity of Taiwan depositary receipts that a TWSE secondary listed company repurchases per day does not exceed 200,000 units, the company need not be subject to the restriction on repurchase quantity in paragraph 1.
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| Article 8 | A foreign issuer repurchasing its TWSE listed securities shall make the repurchase through the automated computer trading system of the TWSE centralized securities exchange market, and may not repurchase its TWSE listed securities by means of block trading, odd-lot trading, reverse auction, auction, or after-market fixed-price trading.
Chapter II TWSE Primary Listed Companies
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Chapter II TWSE Primary Listed Companies
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| Article 9 | A TWSE primary listed company may repurchase its shares on the TWSE centralized securities exchange market only in any of the following circumstances:
- For the purpose of transferring shares to its employees.
- For the purpose of equity conversion in coordination with the issuance of corporate bonds with warrants, preferred shares with warrants, convertible corporate bonds, convertible preferred shares, or share subscription warrants.
- As required to maintain the company's credit or shareholders' equity, and provided that the repurchased shares are cancelled.
The quantity of shares repurchased by the company under the preceding paragraph may not exceed 10 percent of the total number of issued shares of the company. The total monetary amount of the repurchased shares may not exceed the amount of retained earnings, less any earnings to be distributed by resolution already made by the board of directors or the shareholders meeting, and the amount of any realized capital reserve as follows:
- Gain on disposal of assets that has not yet been transferred to the retained earnings account.
- The income derived from the issue of new shares at a premium and from endowments received by the company, however, if endowments received consist of the company's own shares, the income shall not be counted until the shares have been resold.
Calculation of the monetary amount of shares that may be repurchased by the company under the preceding paragraph shall be based on the duly published financial report for the latest period audited or reviewed by a CPA prior to the board of directors resolution. The financial report must have been issued an unqualified audit opinion or standard review opinion by the CPA. However, if, due to considerations of long-term investment holdings and associated investment profit and loss on such holdings, the financial report was calculated based on a financial report of an invested company that was not audited or reviewed by a CPA, and was issued a qualified opinion by the CPA, this restriction shall not apply.
Shares repurchased by a TWSE primary listed company under paragraph 1 shall be transferred within 3 years from the date of repurchase, with the exception of shares under subparagraph 3 thereof, which shall be canceled within 6 months from the date of the repurchase. Any shares not transferred within the time limit shall be deemed not to have been issued by the company, and the shares shall be canceled.
Shares repurchased by a TWSE primary listed company under paragraph 1 may not be pledged. Before transfer, shareholder's rights may not be enjoyed in the shares. A TWSE primary listed company that cancels shares under paragraph 4 shall, within seven business days after completing the cancellation operations, report to the TWSE by filing a registration form for the cancellation of stock repurchased by a TWSE primary listed company, and related documentation.
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| Article 10 | A TWSE primary listed company that repurchases its shares on the TWSE centralized securities exchange market shall, within two days from the day on which the resolution is made at a meeting of the board of directors, announce the repurchase, and report the following particulars to the Financial Supervisory Commission (“Competent Authority”), Executive Yuan:
- Purpose of the repurchase of shares.
- Type of shares to be repurchased.
- Ceiling on the total monetary amount of the repurchase.
- Planned repurchase period and quantity.
- Repurchase price range.
- Repurchase method.
- Quantity of the company’s shares already held at the time of reporting.
- Any repurchases of the company’s shares within three years prior to the time of reporting.
- Any repurchases that have been reported but not completed.
- Minutes of the board of directors meeting that resolved for the share repurchase.
- Rules for Transfer of Shares provided in Article 13 of these Rules.
- Rules for Conversion of Shares or Rules for Subscription of Shares provided in Article 15 of these Rules.
- Declaration that the financial state of the company was considered at the meeting of the board of directors and that the maintenance of the company’s capital will not be affected by the repurchase.
- Appraisal opinion by a CPA or securities underwriter on the reasonableness of the share repurchase price.
- Other particulars specified by the Competent Authority.
A TWSE primary listed company reporting to the Competent Authority pursuant to the preceding paragraph shall also attach the provisions regarding share repurchase in the laws and regulations of the country where it is registered and attach its articles of incorporation, and shall explain the basis for the share repurchase, transfer, and cancellation, and the follow-up measures to be taken upon the expiration of the repurchase period or completion of the repurchase.
Within two months from the day of expiration of the reporting period for the planned repurchase, the TWSE primary listed company may, by approval of the majority of directors present at a board meeting attended by at least two-thirds of the directors, amend the originally reported purpose of the repurchase by filing a report with the Competent Authority. Reporting documents filed pursuant to these Rules shall be prepared in the prescribed format and submitted in bound form (the format of the reporting documents shall be as shown in Attachments 1 to 6). The same shall apply to any subsequent supplemental filings.
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| Article 11 | Whenever the cumulative number of shares repurchased by a TWSE primary listed company reaches 2 percent of the shares issued by the company or the cumulative monetary amount of shares repurchased reaches NT$300 million, the company shall, within 2 days from the day of the occurrence of the fact, make a public announcement of the repurchase date, quantity, share type, and price.
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| Article 12 | A TWSE primary listed company repurchasing its own shares shall complete the repurchase within 2 months from the reporting date specified in Article 10 hereof, and within 5 days from the expiration of that period or completion of the repurchase, it shall submit a report to the Competent Authority and announce the status of execution of the repurchase. If execution of the repurchase has not been completed upon the expiration of the period and if execution of another repurchase is required, another repurchase proposal shall be submitted to a meeting of the board of directors for a resolution.
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| Article 13 | A TWSE primary listed company that, under the circumstances described in Article 9, paragraph 1, subparagraph 1, repurchases its own shares for the purpose of transferring them to its employees, shall first adopt Rules for Transfer of Shares.
The rules for Transfer of Shares referred to in the preceding paragraph shall specify the following particulars:
- Type of shares to be transferred, a description of the rights attaching thereto, and any restrictions on such rights.
- Transfer period.
- Eligibility requirements for transferees.
- Procedures for the transfer of shares.
- Agreed transfer price per share. The price may not be less than the average actual repurchase price of the shares unless, prior to transfer, either the number of the company's issued shares increases (in which case a price adjustment commensurate to the ratio of the increase in issued shares is allowed) or the company is allowed under the provisions of Article 14 to transfer shares to employees at less than the average actual repurchase price.
- Rights and obligations subsequent to the transfer.
- Other relevant rights and obligations of the company and its employees.
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| Article 14 | To transfer shares to employees at less than the average actual repurchase price, a TWSE primary listed company must have obtained the consent of at least two-thirds of the voting rights present at the most recent shareholders meeting attended by shareholders representing a majority of the total issued shares, and must have listed and explained the following matters in the notice of reasons for that shareholders meeting; it may not raise the matter by means of an extraordinary motion:
- The proposed transfer price, the discount percentage, the basis of its calculation, and the reasonableness thereof.
- The number of shares to be transferred, the purpose, and the reasonableness thereof.
- Eligibility requirements for employees to subscribe to the shares, and the number of shares they are allowed to subscribe for.
- Factors affecting shareholders' equity:
- The expensable amount, and dilution of the company's earnings per share.
- An explanation of what financial burden will be imposed on the company by transferring the shares to employees at less than the average actual repurchase price.
The cumulative number of shares that have been approved by all past and the present shareholders meetings for transfer to employees, and furthermore have already been transferred, pursuant to the preceding paragraph may not exceed 5 percent of the total number of issued shares of the company, and the cumulative number of shares subscribed by any single employee may not exceed 0.5 percent of the total number of issued shares of the company. Matters that a TWSE primary listed company is required by paragraph 1 to submit for a shareholders meeting resolution shall be set out in its articles of incorporation.
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| Article 15 | A TWSE primary listed company that intends, under the circumstances described in Article 9, paragraph 1, subparagraph 2, to repurchase its shares for the purpose of equity conversion, shall specifically provide for it in the Rules for Conversion of Shares or the Rules for Subscription of Shares.
Chapter III TWSE Secondary Listed Companies
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Chapter III TWSE Secondary Listed Companies
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| Article 16 | A TWSE secondary listed company shall redeem the stock represented by all Taiwan depositary receipts that it repurchases pursuant to these Rules, and shall cancel the shares pursuant to the laws and regulations of the country where it is registered within 6 months from the date of repurchase. For the redeemed amount of the repurchased Taiwan depositary receipts, the TWSE secondary listed company may not re-issue Taiwan depositary receipts for listed trading pursuant to Article 28, paragraph 4 of the TWSE Rules Governing Review of Securities Listings.
A TWSE secondary listed company canceling shares pursuant to the preceding paragraph shall, within 7 business days from the completion of the cancellation, report to the TWSE by submitting documentary proof of share redemption provided by the Taiwan central securities depository, and documentary proof of share cancellation provided by its competent authority in the country where it is registered. If the laws and regulations of the country where it is registered do not require application for share cancellation with the competent authority of the company, the TWSE secondary listed company shall report to the TWSE by submitting other documents sufficient to prove, and a declaration by the company stating, that the shares have been canceled.
The quantity of Taiwan depositary receipts repurchased under paragraph 1 may not exceed 10 percent of the total quantity of issued Taiwan depositary receipts.
A TWSE secondary listed company and its shareholders may not, during the period for the repurchase of Taiwan depositary receipts or within one month after the expiration of the repurchase period or completion of the repurchase, re-issue within the amount that has been redeemed, or re-issue within the scheduled issuance period and permitted number of units for issue under a shelf registration, Taiwan depositary receipts pursuant to Article 28, paragraph 4 of the TWSE Rules Governing Review of Securities Listings.
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| Article 17 | A TWSE secondary listed company repurchasing Taiwan depositary receipts on the TWSE centralized securities exchange market shall, within two days of the date on which the resolution for repurchase is made at a meeting of the board of directors, publicly announce the following matters on the Market Observation Post System (MOPS), and report to the TWSE by submitting the downloaded data and relevant documentation.
- Date and method of resolution.
- Purpose of the repurchase of Taiwan depositary receipts (share redemption and cancellation).
- Ceiling on the total monetary amount of the repurchase of Taiwan depositary receipts.
- Planned repurchase period and quantity.
- Repurchase price range.
- Repurchase method.
- Percentage ratio of the units planned to be repurchased to the total number of already-issued Taiwan depositary receipts (%).
- Any repurchase of Taiwan depositary receipts during the most recent 3 years prior to the date of resolution.
- Planned or actual date for the cancellation of the shares.
- Other matters as required by the TWSE.
When making the public announcement pursuant to the preceding paragraph, the TWSE secondary listed company shall also report or change the insider data on MOPS. The TWSE secondary listed company shall faithfully implement the repurchase of the Taiwan depositary receipts in accordance with the repurchase quantity and price indicated in its filing under paragraph 1.
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| Article 18 | Whenever the cumulative number of Taiwan depositary receipts repurchased by a TWSE secondary listed company reaches 2 percent of the Taiwan depositary receipts issued by the company, or the repurchase of Taiwan depositary receipts results in the number of outstanding units being less than 12 million units, the company shall, within 2 days from the day of the occurrence of the fact, make an announcement of the repurchase date, quantity, and price on the TWSE Market Observation Post System (MOPS).
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| Article 19 | A TWSE secondary listed company repurchasing its own Taiwan depositary receipts shall complete the repurchase within 2 months from the public announcement date specified in Article 17, and, upon expiration of that period or within 5 days form completion of the repurchase, it shall publicly announce the status of execution of the repurchase by the method specified in Article 17 and report to the TWSE by submitting the downloaded data and relevant documentation. If execution of the repurchase has not been completed upon expiration of the period and if execution of another repurchase is required, another repurchase proposal shall be submitted to a meeting of the board of directors for a resolution.
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Chapter IV Supplementary Provisions |
| Article 20 | These Rules, and any amendments hereto, shall be publicly announced and enter into force upon submission to and approval by the Competent Authority.
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