Section Three Pricing by Negotiation |
| Article 30 | Unless the determination of the offering price for underwritten securities is undertaken as prescribed in Section One or Two, a reference price shall be determined in accordance with another reasonable pricing method. Thereupon the underwriter shall resolve the offering price by negotiations with the issuing company (issuing institution) or the holder of said securities.
Prior to an initial listing on a stock exchange (or OTC) market, underwriting shall give adequate consideration to the company's most recent financial status, and in addition to setting the offering price on the basis of information gathered during book building, prices on the Emerging Stock Market over the preceding month, and a research report furnished by the lead and co-underwriters, a reasonable explanation of the offering price shall also be provided. In the case of underwriting employing book building, the offering price 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 after the book building agreement has been registered with the Taiwan Securities Association. If there is a difference of 50 percent between the offering price and the closing price on the Emerging Stock Market for the business day preceding the pricing date, a concrete explanation of the reasons for the pricing shall be provided.
When an underwriting case handled by a foreign issuer involving a primary listing on a stock exchange or OTC market is a case of application for listing on the stock exchange or OTC market under the guidance of a securities firm, the offering price shall be set on the basis of information gathered during book building, and a research report furnished by the lead and co-underwriters, and a reasonable explanation of the offering price shall be provided
In an underwriting case involving cash capital increase by an emerging stock company, the offering price shall be set not lower than the net value per share as reported in the financial report for the most recent fiscal period, audited and attested or reviewed by a CPA, and shall take into consideration the average price calculated by dividing the sum of the trading value of the common shares of that emerging stock as shown in the Emerging Stock Computerized Price Negotiation and Click System on each day for a period of 30 business days immediately before the submission of the underwriting contract to the Association for recordation, by the sum of the numbers of shares traded on each business day, and a reasonable explanation of the offering price shall be provided.
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| Article 31 | An underwriting case involving the offering of 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, may be undertaken entirely or partly by negotiated sale. The offering price shall be determined as prescribed by Article 30.
The underwriting of call (put) warrants shall be undertaken entirely by negotiated sale.
An underwriting case involving a secondary distribution by a public enterprise may be undertaken entirely or partly by negotiated sale if units are released to the general public. The method of allocation shall be determined by negotiations between the securities underwriter and the government agency that regulates the government-owned enterprise in question.
In an underwriting case involving an initial listing of shares in common stock on a stock exchange or OTC market through competitive auction, if an overallotment is exercised, those shares allocated via overallotment shall be sold by means of negotiated sale at an offering price determined in accordance with the provisions of Article 16, 17, or 18.
In an underwriting case involving a public enterprise (or any other party acting 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) that conducts an initial offering of shares in common stock on a stock exchange or an OTC market and allocates the entire amount of said shares through public subscription, if an overallotment is exercised, the overallotment may be handled by means of negotiated sale. The offering price shall be the same as that applying to shares allocated through public subscription.
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| Article 32 | Except when permission is granted by the competent authority for the securities industry, in an underwriting case conducted by means of negotiated sale, the quantity allocated to an individual subscriber shall be regulated as follows:
- In a case of underwriting of ordinary corporate bonds and financial bonds not involving stock equity, the quantity allocated to an individual subscriber may not exceed 50 percent of the total quantity of securities in that underwriting case. This restriction does not apply, however, if the subscriber is an insurance company and the subscription will serve as an investment instrument of an investment-linked insurance product. If the subscribers are limited only to professional investors as defined in the Taipei Exchange Rules Governing Management of Foreign Currency Denominated International Bonds, the quantity allocated to an individual subscriber may not exceed 80 percent of the total quantity of securities in that underwriting case. This restriction does not apply, however, if the subscriber is a government fund.
- In a case of underwriting of corporate bonds from which the detachable warrants have been detached, the quantity allocated to an individual investor may not exceed 50 percent of the total quantity of the securities in that underwriting case.
- Not more than 20 percent of the total quantity of securities offered may be allocated to an individual subscriber in cases involving real estate asset trust beneficial interest securities, a secondary distribution of beneficial interest securities by a trustee institution, or a secondary distribution of asset-backed securities by a special-purpose company, provided that this restriction does not apply to a holder that is an independent professional investor. "Independent professional investor" means a juristic person or an institution under Article 13, paragraph 1, subparagraph 1 of the Real Estate Securitization Act, or a fund under Article 13, paragraph 1, subparagraph 2 of the same Act, and one that is neither an originator under the Financial Asset Securitization Act, nor an interested party thereof, nor an affiliated enterprise under the Company Act.
- In a case involving call (put) warrants or corporate bonds with warrants, not more than 10 percent of the total quantity of securities shall be allocated to an individual subscriber.
If the securities referred to in the preceding paragraph are divided into different classes for issuance, the total volume of an underwritten offering shall be calculated as the total volume of a given single class of securities after the issue has been separated into different tranches.
In an underwriting case conducted in accordance with the provisions of Article 31, paragraph 4, the number of units actually allocated to any individual subscriber shall not exceed 10 percent of the combined total of the portion of the offering put up for public sale to outside parties plus units allocated via overallotment; for a case conducted in accordance with the provisions of Article 31, paragraph 5, the number of units actually allocated to any individual subscriber shall not exceed 10 percent of the total number of units put up for negotiated sale, and the provisions of Article 27-1 shall be observed.
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