Section Three Allocation by Public Subscription |
| Article 52 | The following offerings shall be undertaken by public subscription:
- in the underwriting of an offering carried out other than as prescribed in Article 6 paragraph 2, Article 22, Article 22-1 subparagraph 2 or 3, or Article 31, or in the underwriting of a cash capital increase by a company listed on a stock exchange or an OTC market in which not all shares are put up for underwritten distribution: the portion put up for public sale that must be offered entirely by public subscription;
- in the underwriting of an offering as prescribed in Article 7, where the portion put up for public sale is offered partly by competitive auction: any remaining portion that must be offered by public subscription;
- in the underwriting of an offering as prescribed in Articles 21 and 22, where the portion put up for public sale is offered partly by book building: any remaining portion that must be offered by public subscription;
- in the underwriting of an offering as prescribed in Article 31 paragraph 1, where a part is offered by negotiated sale: any remaining portion that must be undertaken by public subscription;
- an initial offering on a stock exchange or an OTC market (conducted by a public enterprise, or by any other party acting in accordance with other acts or regulations), in which: (1) a public sale to outside parties conducted in connection therewith as required under Article 6 is not undertaken by competitive auction; or (2) a book building process is employed as prescribed under Article 21.
- 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 on a stock exchange or an OTC market, where the entire amount of said shares are allocated through public subscription: those shares allocated via overallotment, if not allocated by means of negotiated sale, must be allocated through public subscription.
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| Article 52-1 | In an underwriting case where an initial listing on a stock exchange or an OTC market or an initial issue of Taiwan depositary receipts involves simultaneous book building and public subscription procedures, the lead underwriter shall publish a public subscription announcement in daily newspapers on the business day immediately preceding the day on which it begins accepting subscriptions, and shall concurrently publish a book building announcement (prepared in accordance with the provisions of Article 24) in daily newspapers on the three business days before it begins accepting subscriptions. The content of the announcements shall be reported in hardcopy and electronic media to the Taiwan Securities Association, and shall include the items in the following subparagraphs:
- Public subscription period.
- Matters requiring attention regarding the rights and obligations of subscribers, as follows:
- Subscribers need to have a trading account, a central depository account, and a bank account.
- Subscribers need to enter into a contract with a transfer bank.
- When submitting a bid, a subscriber must have a sufficient bank balance to cover the subscription processing fee, postage for lottery winner notification, and the subscription payment (calculated on the basis of the ceiling for the anticipated book building price range).
- 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.
- If the subscription deadlines for multiple securities underwriting cases fall on the same day and a subscriber has submitted bids for more than one of them, funds shall be withdrawn from the subscriber's bank account in an amount equal to the sum of the subscription processing fees, postage for lottery winner notifications, and subscription payments for all securities that have been subscribed for.
- A subscriber may not submit duplicated subscriptions.
- Subscribers shall be advised to make a careful evaluation prior to subscribing, for once they are selected as lottery winners they may not abandon a subscription and request a refund.
- The procedure for payment of refunds to non-lottery winners, and to lottery winners when the actual offering price is lower than the maximum anticipated book building price.
- How to direct inquiries regarding subscriptions and lottery winner lists.
- The deadline for payment of subscription processing fees, postage for lottery winner notifications, and subscription payments.
- How the volume allocated for public subscription will be adjusted when subscriptions (defined as the final confirmed total volume of subscriptions that brokers have transmitted to the TWSE by the public subscription deadline) exceed the volume allocated for public subscription by a specified multiple.
- The date on which the offering price will be set.
- The date on which the securities are scheduled for listing on a stock exchange or an OTC market.
- If the bids submitted during the book building are too few for the setting of a price, the book building process shall be repeated. The TWSE will not carry out a public drawing of lots, and brokers shall make no-interest refunds to bidders of prepaid postage for lottery winner notifications and securities subscription payments on the second business day following the subscription deadline, but subscription processing fees will not be refunded.
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| Article 53 | With the exceptions of cases of the underwriting of initial listing on a stock exchange or OTC market or initial issue of Taiwan Depositary Receipts that are conducted by simultaneous book building and public subscription procedures, and of cases of public sale to outside parties that are conducted partly by competitive auction and partly by public subscription, an underwriter handling an offering by public subscription shall, after registering the underwriting contract with the Taiwan Securities Association, observe the following schedule in handling matters relating to subscriptions, bid deposits, and postage for lottery winner notifications:
- Day One: Publish an underwriting announcement and commence subscription.
- Day Three: Subscription period closes. Deadline for subscriber's payment of subscription processing fee, subscription payment, and postage expense for lottery winner notification to the designated bank.
- Day Four: Date of deduction of subscription processing fees, subscription payments, and postage for lottery winner notifications. Broker's bank undertakes matters regarding deduction of subscribers' subscription processing fees, subscription payments, and postage for lottery winner notifications.
- Day Five: Date of public drawing of lots. The TWSE undertakes drawing. TWSE produces and sends report of winner information to each broker. TWSE compiles and reports the information to the lead underwriter for provision to subscribers for their review.
- Day Six: Date of settlement of subscription processing fees, subscription payments, and postage expense for lottery winner notifications.
Brokers make no-interest refunds to non-lottery winners of bid deposits and prepaid postage for lottery winner notifications; the subscription processing fees of non-lottery winners are not returned.
Underwriter shall send lottery winner notifications and prospectuses (or subscription forms) to lottery winners by express registered mail or by electronic means.
The subscriber shall, on any given day during the subscription period between 09:00 and 14:00, fill-in a subscription form (formatted as in Attachment 7) at the business premises of the broker or entrust the broker by phone to fill in such a form, or shall, during the subscription period before 14:00 on the day of the deadline, fill in and submit a subscription form via the Internet.
Every day during the subscription period until the deadline, the broker shall compile up until the previous day and place the subscription information in the trading room as a reference for subscribers or for voice or computer query.
If any of the dates set forth in paragraph 1 subparagraphs 2, 3, 4, and 5 falls on a weekend, regular holiday, or bank holiday, it shall be postponed by one day, and the dates that follow shall be moved forward accordingly.
The dates specified under paragraph 1 may be changed if necessary by applying for approval with the Taiwan Securities Association.
The Taiwan Securities Association shall prescribe the standard for the postage expense for lottery winner notification. A securities firm shall be responsible for compensation for any loss to the lottery winner resulting from problems in service of the lottery winner announcement; provided, however, that this provision shall not apply where the securities firm was not negligent.
The procedures related to the allocation of securities by public subscription by securities firms as prescribed by paragraph 1 shall be separately prescribed by the Taiwan Securities Association.
If the number of units subscribed does not exceed the number of units to be sold, all qualified subscribers shall be deemed lottery winners, and a public drawing of lots shall be unnecessary.
After the subscriber has commissioned subscription with a broker, the subscription form shall not be withdrawn or changed.
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| Article 54 | Subscribers in a public subscription by a securities firm shall be restricted to ROC nationals.
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| Article 55 | The lead underwriter shall be responsible for publishing an underwriting announcement. A broker shall make said underwriting announcement and subscription forms available to investors for free upon request at it business premises, and may download the underwriting announcement from the Taiwan Securities Association website or photocopy it from a newspaper. The subscription form declaration may be photocopied or printed in equivalent dimensions by investors for the purpose of undertaking subscription.
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| Article 56 | A subscriber may use only one broker to subscribe to any given security offered through public subscription, and shall not undertake duplicated subscription [via multiple brokers]. Each subscriber is restricted to subscribing to one lot. The processing fee is NT$20 per subscription. The receiving broker shall notify the subscriber's bank to deduct the fee from the subscriber account on the dates prescribed in Articles 42-1 and 53.
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| Article 57 | (Deleted)
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| Article 58 | A broker shall not undertake subscription for a subscriber to whom any of the following conditions apply. If a broker has already accepted subscription, the subscription shall be cancelled:
- Has not opened a trading account, electronic transfer custodial account, or central depository account with the broker undertaking consigned subscription;
- Has not signed a consignment contract with the bank designated by the broker regarding matters related to the deduction of funds regarding the public subscription;
- Has not undertaken subscription within the allotted time;
- Has not filled in fully or truthfully the required items in the subscription consignment contract;
- Has neither signed nor sealed the subscription consignment contract. This provision shall not apply to those who undertake subscription by telephone or Internet;
- The balance in the subscriber bank account for payment by wire transfer is less than the sum of the subscription processing fees, subscription payment, and postage expense for lottery winner notification;
- Has used, or fraudulently used, the name of another person.
The broker shall duly verify [whether] the preceding conditions [exist].
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| Article 59 | After being consigned to undertake subscription, a broker shall, on a daily basis, input data from the subscription forms into the TWSE's computer system by batch file transmission or terminal key-in. Before the drawing, data from subscriptions where the processing fee, subscription payment, or postage expense for lottery winner notification cannot be deducted on schedule due to insufficient bank funds and data from duplicated subscriptions shall be excluded, and fees already deducted shall not be returned.
On the date of the public drawing of lots, a list of qualified and unqualified subscribers as set forth under the preceding paragraph shall be made available by the TWSE for review at the TWSE and the business premises of the lead underwriter and brokers (the list at each broker's place of business shall include only the names of subscribers who have subscribed through that particular broker).
Where there has been duplicated subscription as set forth under paragraph 1, the subscriber shall be notified by the underwriter by registered letter or by electronic means within one week of the closure of the offering period.
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| Article 60 | Where subscription volume exceeds the number of securities to be sold, the TWSE shall undertake a computerized public drawing of lots among qualified subscriptions. The TWSE shall invite representatives of the Taiwan Securities Association, related groups, and the issuer to jointly monitor the lottery.
When undertaking the public drawing of lots, the TWSE shall ask the monitors to draw the lots.
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| Article 61 | For a firm commitment offering by public subscription, where subscriptions fall short of the number of units put up for sale, the underwriting syndicate may either place the remainder with a specific party or purchase the remainder on its own account.
Where purchase of units by the underwriting syndicate on its own account as referred to in the preceding paragraph is prohibited by other laws or regulations, or is in connection with an offering by a company that is not listed on a stock exchange or an OTC market, the syndicate may be exempted from the provisions in the preceding paragraph relating to purchase of units on its own account, and such units may be placed by the underwriting syndicate with a specific party.
Where the underwriting syndicate places securities with a specific party, as referred to in the preceding paragraphs 1 and 2, only the parties listed in Article 35 shall participate in said placement.
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| Article 62 | Where a company already listed on a stock exchange or an OTC market, or an emerging stock company, either carries out a cash capital increase or issues corporate bonds or Taiwan Depositary Receipts that are allocated through public subscription, after subscription, payment of bid deposits, and lottery winner notification have been completed as prescribed by Article 53 paragraph 1, the securities firms and relevant departments shall undertake listing on a stock exchange or an OTC market, carrying out the following related work within the following deadlines:
- Day Seven: Deadline for placement with specific party;
- Day Eight:
Underwriter carries out underwriting on standby commitment basis.
Issuer uses share payment certificates to apply with the TWSE or the TPEx for listing on a stock exchange or an OTC market, or registration as an emerging stock.
- Day Nine:
Complete compilation of shareholders' (creditors') register.
Issuer transfers share payment certificates to the TDCC.
- Day Ten: Listing of securities on a stock exchange or an OTC market, or registration as an emerging stock, is publicly announced.
- Day Eleven:
Securities electronically transferred from the TDCC to the subscriber's central depository account.
Securities listed on a stock exchange or an OTC market, or registered as an emerging stock.
If a date set forth in the above subparagraphs falls on a weekend, regular holiday, or bank holiday, the deadline shall be postponed by one day, and the dates that follow shall be moved forward accordingly.
The dates specified under paragraph 1 may be changed if necessary by applying for approval with the Taiwan Securities Association.
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| Article 63 | In the underwriting of an initial listing on a stock exchange or an OTC market using previously issued shares, where said shares are allocated through public subscription, after subscription, payment of bid deposits, and lottery winner notification have been completed as prescribed by Article 53 paragraph 1, the securities firms and relevant departments shall undertake the following work within the following times regarding listing on a stock exchange or an OTC market:
- Day Seven: Deadline for placement with specific party;
- Day Eight:
- Underwriter carries out underwriting on standby commitment basis.
- Company applying for listing on a stock exchange or an OTC market applies with the TWSE or the TPEx for listing on a stock exchange or an OTC market;
- Day Nine:
- Complete compilation of shareholders' register;
- Company applying for listing on a stock exchange or an OTC market transfers share payment certificates to the TDCC.
- Day Ten: Listing of shares on a stock exchange or an OTC market is publicly announced.
- Day Eleven;
- Securities electronically transferred from the TDCC to the subscriber's central depository account;
- Shares listed on a stock exchange or an OTC market.
If a date set forth in the preceding paragraph falls on a weekend, regular holiday, or bank holiday, it shall be postponed by one day, and the dates that follow shall be moved forward accordingly.
The dates specified under paragraph 1 may be changed if necessary by applying for approval with the Taiwan Securities Association.
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| Article 64 | For a secondary distribution by public subscription, after subscription, payment of bid deposits, and lottery winner notification have been completed as prescribed by Article 53 paragraph 1, the securities firms and relevant departments shall undertake the following work:
- Day Seven: Deadline for placing with a specific party;
- Day Eight: Underwriter carries out underwriting on standby commitment basis.
- Day Nine: Bearer of securities transfers them to TDCC;
- Day Ten: Securities electronically transferred by TDCC to purchaser's central depository account. Purchaser may engage in trading of the securities.
If a date set for the preceding paragraph falls on a weekend, regular holiday, or bank holiday, it shall be postponed by one day, and the dates that follow shall be moved forward accordingly.
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| Article 65 | Where a company not listed on a stock exchange or an OTC market allocates shares through public subscription in an offering that involves cash capital increase, after subscription, payment of bid deposits, and lottery winner notification have been completed as prescribed by Article 53 paragraph 1, the underwriter shall either make placement with a specific party on Day Eight or underwrite on standby commitment basis on Day Nine, and after the securities have been produced by the issuer, the lead underwriter shall, together with the issuer, send the securities to the TDCC for deposit into the purchaser's central depository account, or may distribute the securities as prescribed mutatis mutandis in Article 75.
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| Article 66 | Upon completion of the lottery, the TWSE shall print out the daily underwriting report, publicly announce it, and transmit it in the form of an electronic file to securities underwriters.
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| Article 67 | After the selection of lottery winners, if it is discovered that a winner has not opened or has subsequently closed the trading account, electronic transfer bank account, or central depository account, such that subsequent work cannot be undertaken, the lottery winner shall be disqualified, and the underwriter shall place the securities of such winner with another party or shall purchase such securities on its own account as prescribed by Article 61.
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| Article 68 | The lottery monitors shall monitor the following matters on the day of the drawing:
- whether the lottery representatives are undertaking the operating procedures as prescribed by regulation;
- maintenance of order at the premises of the lottery drawing.
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| Article 69 | When undertaking the computerized public drawing of lots, the TWSE may choose to undertake the lottery using several computer terminals in simultaneous operation depending on the number of qualified participants or the quantity of sales.
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| Article 70 | Securities firms shall, after the public announcement of the lottery winners, keep records relating to ordinary subscriptions for 30 days and records regarding unqualified subscribers or lottery winners for 90 days. However, the FSC and Taiwan Securities Association may extend these times in consideration of the needs at the time.
The TWSE shall keep subscription records on file for five years after the bid opening.
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| Article 71 | Articles 37 and 38 shall apply mutatis mutandis to offerings by public subscription.
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