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Title：

Taiwan Securities Association Rules Governing Underwriting and Resale of Securities by Securities Firms  CH

Amended Date： 2024.06.27 (Articles 11, 33, 52-2, 73 amended,English version coming soon)
Current English version amended on 2016.04.12 
Article Content Chapter Content Search Article No. Search Legal Basis Amended Article Legislative History Chinese 
   Chapter V Supplementary Provisions
      Section Two Pricing by Book Building
Article 21    In the underwriting of an initial listing on a stock exchange or an OTC market involving previously issued shares or cash capital increase through a new share issue, if the shares are not underwritten through competitive auction, then they shall be underwritten through simultaneous book building and public subscription procedures in compliance with the provisions of Article 21-1. However, the portion offered through public subscription shall not exceed 20 percent of the total number of shares underwritten; provided, that this provision does not apply to a public enterprise, nor does it apply to any other party that applies for an initial listing of shares on a stock exchange or an OTC market in accordance with the provisions of Articles 6 and 6-1 of the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings, or in accordance with the provisions of the Taipei Exchange Supplemental Provisions for Applications by Private Institutions Participating in Public Infrastructure Projects for Over-the-Counter Listing, or in accordance with other acts or regulations.
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Article 21-1    In the underwriting of an initial listing on a stock exchange or an OTC market involving previously issued shares or cash capital increase through a new share issue, if the shares are underwritten through simultaneous book building and public subscription procedures, 10 percent of the number of shares that are required under TWSE or TPEx rules to be publicly sold (less the portion of the shares that are required under applicable laws or regulations to be set aside for subscription by employees of the issuer, and not including any overallotment) shall first be put up for public subscription, and the volume allocated for public subscription shall be adjusted according to the subscription volume.
    If the underwritten subscription volume (defined as the final confirmed total volume of subscriptions that brokers have transmitted to the TWSE by the public subscription deadline) falls short of the volume allocated for public subscription as referred to in the preceding paragraph, the shortfall may be added to the volume to be underwritten through book building, and allocated in that manner. If the subscription volume exceeds by a certain multiple the volume allocated for public subscription, the volume allocated for public subscription shall be adjusted upward in accordance with the following provisions:
  1. If the subscription multiple is at least 10 times but less than 20 times, the amount allocated for public subscription shall be adjusted to 15 percent.
  2. If the subscription multiple is at least 20 times but less than 30 times, the amount allocated for public subscription shall be adjusted to 20 percent.
  3. If the subscription multiple is at least 30 times but less than 40 times, the amount allocated for public subscription shall be adjusted to 25 percent.
  4. If the subscription multiple is 40 times but less than 50 times, the amount allocated for public subscription shall be adjusted to 30 percent.
  5. If the subscription multiple is at least 50 times but less than 60 times, the amount allocated for public subscription shall be adjusted to 35 percent.
  6. If the subscription multiple is at least 60 times but less than 70 times, the amount allocated for public subscription shall be adjusted to 40 percent.
  7. If the subscription multiple is at least 70 times but less than 80 times, the amount allocated for public subscription shall be adjusted to 45 percent.
  8. If the subscription multiple is at least 80 times but less than 90 times, the amount allocated for public subscription shall be adjusted to 50 percent.
  9. If the subscription multiple is at least 90 times but less than 100 times, the amount allocated for public subscription shall be adjusted to 55 percent.10. If the subscription multiple is 100 times or greater, the amount allocated for public subscription shall be adjusted to 60 percent.
    Any remainder, or any preliminary overallotment, shall be underwritten through book building.
    If the post-adjustment volume allocated for public subscription as calculated per any of the subparagraphs of paragraph 2 is not a whole number, the number shall be rounded up to the nearest whole number.
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Article 21-2    When an OTC (or exchange) listed company that is applying to convert to an exchange (or OTC) listing intends to carry out a cash capital increase through a new share issue in order to achieve compliance with standards governing dispersion of equity ownership, the underwriting shall be carried out through public subscription, and the timetable for the procedures shall be subject mutatis mutandis to the provisions of Article 53.
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Article 22    In the following types of securities underwriting cases, the part put up for public sale may be undertaken entirely by book building or partly by book building and partly by public subscription:
  1. cash capital increase through an issue of preferred shares by a company already listed on a stock exchange or an OTC market;
  2. preferred shares with detachable warrants;
  3. corporate bonds with detachable warrants;
  4. offerings of corporate bonds and financial bonds;
  5. offerings of Taiwan depositary receipts;
  6. secondary distributions.
    In underwriting cases under subparagraphs 1 through 4 and subparagraph 6 of the preceding paragraph where part of the securities are allocated by book building and part by public subscription, if the book building and public subscription procedures are carried out simultaneously, the timetable for the procedures shall be subject to mutatis mutandis application of Article 42-1. However, if subscription volume exceeds by a specified multiple the number of units earmarked for public subscription, there is no need to upwardly adjust the public subscription volume or to observe the requirements of Article 42-1, paragraph 1, subparagraph 4, item 2.
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Article 22-1    Where either of the following types of underwriting cases are undertaken through the use of book building, the part put up for public sale shall be underwritten entirely by book building:
  1. underwriting of a public offering by a company already listed on a stock exchange or an OTC market in which the offering involves a cash capital increase through the issue of common shares and the entire offering is put up for underwritten distribution;
  2. underwriting of an offering of beneficial interest securities by a trustee institution, or underwriting of an offering of asset-backed securities by a special-purpose company;
  3. real estate asset trust beneficial interest securities.
Article 22-2    The lead underwriter for an initial listing on a stock exchange or over-the-counter market, or for an initial offering of Taiwan Depositary Receipts, may establish a pre-marketing mechanism as part of its book building process, whereby prior to the official start of book building it shall first seek to determine the demand of key organizations and qualified institutional investors in terms of prices and volumes. A record of information gathered during the pre-marketing period shall be retained in written form for one year, and on electronic media for three years, for reference purposes.
Article 22-3    In an initial offering of Taiwan Depositary Receipts in which part are placed by book building and part by public subscription, the book building and public subscription procedures shall be carried out simultaneously, and 10 percent of the volume that is to be publicly sold shall first be put up for public subscription, and the volume allocated for public subscription shall be adjusted according to the subscription volume.
    If the underwritten subscription volume (defined as the final confirmed total volume of subscriptions that brokers have transmitted to the TWSE by the public subscription deadline) falls short of the volume allocated for public subscription as referred to in the preceding paragraph, the shortfall may be added to the volume to be underwritten through book building, and allocated in that manner. If the subscription volume exceeds by a certain multiple the volume allocated for public subscription, the volume allocated for public subscription shall be adjusted upward in accordance with the following provisions:
  1. If the subscription multiple is at least 15 times but less than 20 times, the amount allocated for public subscription shall be adjusted to 15 percent.
  2. If the subscription multiple is at least 20 times but less than 25 times, the amount allocated for public subscription shall be adjusted to 20 percent.
  3. If the subscription multiple is at least 25 times but less than 30 times, the amount allocated for public subscription shall be adjusted to 25 percent.
  4. If the subscription multiple is at least 30 times but less than 35 times, the amount allocated for public subscription shall be adjusted to 30 percent.
  5. If the subscription ratio is at least 35 times but less than 40 times, the amount allocated for public subscription shall be adjusted to 35 percent.
  6. If the subscription multiple is at least 40 times but less than 45 times, the amount allocated for public subscription shall be adjusted to 40 percent.
  7. If the subscription multiple is at least 45 times but less than 50 times, the amount allocated for public subscription shall be adjusted to 45 percent.
  8. If the subscription multiple is 50 times or more, the amount allocated for public subscription shall be adjusted to 50 percent.
    If the post-adjustment volume allocated for public subscription as calculated per any of the subparagraphs of paragraph 2 is not a whole number, the number shall be rounded up to the nearest whole number.
    In an initial offering of Taiwan Depositary Receipts in which part are placed by book building and part by public subscription, the book building and public subscription procedures shall be carried out simultaneously. The relevant procedures shall be subject mutatis mutandis to the provisions of Article 42-1.
Article 23    A lead underwriter underwriting securities by book building shall first carry out the matters listed in the following subparagraphs. All relevant agreements shall be signed or sealed by the lead underwriter, each co-underwriter, and the issuer (issuing institution), and then reported to the Taiwan Securities Association by the first business day prior to the start of the book building period (or by the second business day in the case of an initial listing on a stock exchange or an OTC market):
  1. formation of the underwriting syndicate by solicitation of co-underwriters;
  2. determination of the total quantity of securities to be offered by book building, and the number of units expected to be sold via overallotment;
  3. estimation of the anticipated offering price range, as determined in consultation with the issuer (issuing institution);
  4. determination of the firm-commitment fee or best-efforts underwriting fee, as determined in consultation with the issuer (issuing institution);
  5. determination of the lot size, in the event that the securities will be offered by public subscription.
  6. the issuer shall provide the securities underwriter with a list of the persons who are disqualified from participating in book building under these Rules.
Article 24    In the underwriting of securities by book building, the lead underwriter shall publish a book building announcement in daily newspapers on the first day on which book building bids are accepted. The content of said announcement shall be reported in hardcopy and electronic media to the Taiwan Securities Association by the first business day prior to the start of the book building period (or by the second business day in the case of an initial listing on a stock exchange or an OTC market), and shall include the items in the following subparagraphs:
  1. The name of the security.
  2. Total number of underwritten units, number of units expected to be sold via overallotment, number of units retained by the securities underwriters for their own accounts, the number of units for public sale, and the number of units for allocation by book building as a proportion of the total number of securities put up for public sale; in the case of an initial listing on a stock exchange or an OTC market involving simultaneous book building and public subscription procedures, the lead underwriter shall also note that it will adjust book building volume on the basis of the number of subscriptions received during the public subscription procedure.
  3. Where securities underwriters collect a book building bid deposit in accordance with the provisions of Article 40, Article 41, Article 42, or Article 42-1, the lead underwriter shall indicate the collection method, who is required to pay it, the amount, and conditions under which the deposit may be confiscated.
  4. Matters relating to the securities underwriters' collection from allotees of the entire amount of advance book building payments in accordance with Article 42-1.
  5. Matters relating to the collection of book building processing fees by securities underwriters in accordance with Article 26.
  6. The names, addresses, and telephone numbers of the underwriters.
  7. The anticipated offering price range. (If a case of an offering prior to an initial listing on a stock exchange or an OTC market involves emerging stock trading, the lower limit of the anticipated offering price range may not be less than 70 percent of the simple arithmetic mean trade price for the 10 business days in which trades have been executed in Emerging Stock trading before the book building agreement has been registered with the Taiwan Securities Association, and relevant explanations shall be attached.)
  8. The manner of disclosure of the prospectus, including: (1) a statement clarifying that the anticipated offering price range as disclosed in the prospectus is an estimate based on information gathered during book building; and (2) an explanation of how to inquire about subsequent offering price revisions.
  9. The securities on offer, and the method, time period, and site for submission of bids.
  10. Parties from whom book building bids will be accepted.
  11. The pricing date (in the case of an initial listing on a stock exchange or an OTC market involving simultaneous book building and public subscription procedures).
  12. Other supplemental items that must be disclosed in order to safeguard the public interest and investors.
    In the section specifying the parties from whom book building bids will be accepted (as set forth under the preceding paragraph), the announcement shall print the relevant provisions of Articles 35, 43, and 43-1, according to the type of securities on offer.
    In an underwriting case involving an initial listing on a stock exchange or an OTC market, when the lead underwriter registers with the Taiwan Securities Association the offering using hardcopy media as required in paragraph 1, it shall also submit a timetable adopted in compliance with the provisions of Article 42-1 and a declaration by the issuing company that it has already held a roadshow in accordance with TWSE or TPEx rules.
    If a declaration is not submitted in accordance with the preceding paragraph or the TWSE or TPEx notifies the Taiwan Securities Association that the issuing company has failed to hold a roadshow in accordance with regulations, the book building shall be postponed.
    In an underwriting case involving an initial issue of Taiwan depositary receipts, when the lead underwriter registers the issue with the Taiwan Securities Association using hardcopy media as required in paragraph 1, it shall also submit an evaluation of whether during the 3 months before the date of registration there has been any unusual movement in the price of the stock represented by the Taiwan depositary receipts.
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Article 25    After registering with the FSC for a public offering and issuance of securities, the underwriting syndicate may provide investors with prospectuses and other relevant materials of the issuing company (issuing institution), begin handling book building bids, and may convene public informational meetings to familiarize investors with the offering.
    If a public informational meetings referred to in the preceding paragraph is held prior to a book build, the underwriters shall provide advisory services to the issuing company (or issuing institution) to publicly announce the estimated probable range of the offering price on the Market Observation Post System (MOPS) or by other means in accordance with applicable laws and regulations, and state that the subsequent final estimated probable range of the offering price shall be the range published in the book building announcement.
    A public informational meeting held by underwriters for an underwriting case involving an initial listing on a stock exchange or OTC market may be held jointly with a roadshow held by the issuing company.
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Article 26    Investors bidding in a book building process shall fill in a book building bid form produced in the prescribed format (see Attachment 2) and submit said form to the securities underwriter for handling.
    The underwriting syndicate may hire a securities broker to accept book building bids for processing as referred to in the preceding paragraph.
    A securities underwriter handling bids may refuse a bid if there has been a violation of the law or of these Rules, or if there is any suspicion of such violations.
    In the underwriting of an offering where the portion put up for public sale is allocated entirely by book building as prescribed by Article 40, or partly by book building and partly by public subscription, the underwriter shall indicate on the book building bid form that the applicant is required to fill in his central depository account number.
    When a securities underwriter accepts a book building bid for processing, it may collect a book building processing fee from the bidder, acting in accordance with the Taiwan Securities Association Rules Governing Securities Underwriters' Allocation of Securities by Book Building.
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Article 27    The maximum quantity actually allocated to any single bidder in the book building process, with the exception of an initial listing of common shares on a stock exchange or an OTC market (which must be allocated in accordance with the provisions of Article 27-1), shall not exceed 10 percent of the portion of the offering that is put up for public sale; for ordinary corporate bonds, financial bonds not involving stock equity, corporate bonds from which the detachable warrants have been detached, real estate asset trust beneficial interest securities, the secondary distribution of beneficial interest securities by a trustee institution, or the secondary distribution of asset-backed securities by a special-purpose company, the amount may not exceed 20 percent of the total quantity underwritten.
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Article 27-1    In a case involving an initial listing of common shares on a stock exchange or an OTC market, regulations governing the volume of securities that may be allocated to any single bidder are as follows:
  1. In a case in which the amount allocated for public subscription is adjusted to 30 percent or less under Article 21-1, the quantity of securities actually allocated to any qualified institutional investor or mainland area institutional investor shall not exceed 10 percent of the quantity underwritten by the allocating underwriters, or 100,000 shares, whichever is higher, provided that the combined quantity of securities actually allocated by the underwriters to any single bidder shall not exceed 10 percent of the portion of the securities put up for public sale to outside parties in the present offering. In a case in which the amount allocated for public subscription exceeds 30 percent, the quantity of securities actually allocated to any qualified institutional investor or mainland area institutional investor shall not exceed 5 percent of the quantity underwritten by the allocating underwriters, or 50,000 shares, whichever is higher, provided that the combined quantity of securities actually allocated by the underwriters to any single bidder shall not exceed 5 percent of the portion of the securities put up for public sale to outside parties in the present offering.
  2. In a case in which the amount allocated for public subscription is adjusted to 30 percent or less under Article 21-1, the quantity of securities actually allocated to any bidder other than a qualified institutional investor shall not exceed 5 percent of the quantity underwritten by the allocating underwriters, or 50,000 shares, whichever is higher, provided that the combined quantity of securities actually allocated by the underwriters to any single bidder shall not exceed 5 percent of the portion of the securities put up for public sale to outside parties in the present offering. In a case in which the amount allocated for public subscription exceeds 30 percent, the quantity of securities actually allocated to any bidder other than a qualified institutional investor shall not exceed 2 percent of the quantity underwritten by the allocating underwriters, or 20,000 shares, whichever is higher, provided that the combined quantity of securities actually allocated by the underwriters to any single bidder shall not exceed 2 percent of the portion of the securities put up for public sale to outside parties in the present offering.
    The term "qualified institutional investors" in subparagraph 2 of the preceding paragraph means domestic and foreign institutional investors and foreign institutional investors, including domestic and foreign banks, insurance companies, bills finance companies, fund management companies, government investment institutions, government funds, mutual funds, unit trusts, investment trust enterprises, and trust enterprises.
    The maximum combined quantity of securities allocated by an underwriter in accordance with paragraph 1, subparagraph 2 to any company that has underwriting business dealings with that underwriter shall not exceed 20 percent of the quantity of securities underwritten by that underwriter.
    The phrase "any company that has underwriting business dealings with that underwriter" in the preceding paragraph means a company for which that underwriter has lead managed an offering within 12 months before the present offering is to be listed on a stock exchange or OTC market, or a company which that underwriter anticipates doing so within the coming three months.
    When an underwriter arranges for specified parties to subscribe to undersubscribed shares or shares that subscribers fail to pay for after allotment, it is exempt from the restrictions of paragraph 1, but such subscriptions are still not allowed to exceed 10 percent of the quantity of securities underwritten by that underwriter, or 100,000 shares, whichever is higher, and the combined total of all shares allotted by the underwriter to the aforementioned specified parties shall not exceed 10 percent of the portion of the offering that is put up for public sale to outside parties.
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Article 28    By submitting a book building bid form to a securities underwriter, an investor is merely expressing the desire to subscribe; likewise, by processing the book building bid form, the underwriter is merely seeking to establish the desire of the investor to subscribe; thus, neither party is bound by the content of the book building bid form, with the exception of the content of the declarations issued under Article 43-1.
    An underwriter may impose on a bidder who submits any false statement a penalty of 30 percent or more of the total price subscribed, but the amount and method of the penalty shall be specified in the book building announcement.
    In the event that the securities underwriter collects a book building bid deposit as prescribed by Article 40, 41, 42, or 42-1, failure by the bidder or subscriber to fulfill his payment obligation within a required time limit shall be handled as prescribed by Article 40, 41, 42, or 42-1.
    After gauging market demand through the bidding process, the lead underwriter shall negotiate the actual offering price with the issuing company (issuing institution) or holder of the securities in question, and a uniform offering price shall be applied to the entire issue.
    The actual offering price as negotiated pursuant to the preceding paragraph shall not fall outside the estimated probable range of the offering price as set forth under paragraph 23, subparagraph 3.
    In an underwriting case involving an initial listing of shares on a stock exchange or an OTC market or an initial issue of Taiwan depositary receipts in which all shares are allocated through book building, if the total number of securities bid for in valid book building bids is insufficient to cover all the securities offered through the book building process in question, then the book building process shall be repeated. However, a single book building process may only be repeated once. If a book building process is being repeated, this fact must be noted when the book building process is reported to the FSC in accordance with Articles 23 and 24.
    In the underwriting of an initial listing of shares on a stock exchange or an OTC market or an initial issue of Taiwan depositary receipts that involves simultaneous book building and public subscription procedures, if the total number of securities bid for in valid book building bids is insufficient to cover all the securities offered through the book building process in question, the book building process shall be repeated, and the TWSE and the Taiwan Securities Association shall be notified by the next business day after day on which acceptance of book building bids comes to a close; a public announcement shall also be published in daily newspapers and on the Taiwan Securities Association's website no later than the second business day after the day on which acceptance of book building bids comes to a close, and brokers shall on that same day make no-interest refunds to subscribers of subscription deposits and prepaid postage for lottery winner notifications (but subscription processing fees will not be refunded).
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Article 29    After negotiating the actual offering price as prescribed by the preceding article, the lead underwriter shall (except when underwriting ordinary corporate bonds, financial bonds, real estate asset trust beneficial interest securities, offerings of beneficial interest securities by trustee institutions, or offerings of asset-backed securities by special-purpose companies) promptly request that each co-underwriter provide detailed information regarding the bidders. After appropriately adjusting the apportionment of securities among co-underwriters, the lead underwriter shall sign underwriting contracts and submit them to the Taiwan Securities Association for recordation. Allocation of securities by book building shall be undertaken as prescribed by the Taiwan Securities Association Rules Governing Securities Underwriters' Allocation of Securities by Book Building.
    After the lead underwriter has informed each member of the underwriting syndicate of the quote based on the actual offering price, the investors shall make payment at that price, and in the agreed amount, before the deadline set by the lead underwriter.
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