Chapter I General Principles |
| Article 1 | These Rules are adopted in accordance with the provisions of Article 28 of the Regulations Governing Securities Firms.
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| Article 2 | These Rules are applicable to the underwriting and re-sale of stocks, corporate bonds, financial bonds, depositary receipts, and any other securities specified by the Financial Supervisory Commission.
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| Article 3 | In the underwriting of securities, a securities underwriter shall conduct such business in accordance with these Rules.
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| Article 3-1 | The lead underwriter shall organize an underwriting syndicate and handle allocation with consideration to the needs of the particular case, and in handling such matters shall not be influenced by the issuing company.
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| Article 4 | In the underwriting of securities, a securities underwriter shall determine the offering price of the securities according to the following methods:
- By competitive auction;
- By book building;
- As resolved by negotiations between the underwriter and the issuing company, issuing institution, or holder of the securities.
The offering price referred to in the preceding paragraph shall refer to the unit price, stock price discount (premium) rate (applicable only where no bid deposit has been collected), coupon rate, conversion (exchange) premium ratio, and yield to put.
"Issuing institution" as used in these Rules refers to an institution that issues beneficial interest securities or asset-backed securities under one of the following circumstances:
- where a trustee institution or a special-purpose company accepts financial assets in trust or in transfer from the originator, and issues beneficial interest securities or asset-backed securities based on those assets;
- where a trustee institution accepts transfer from a principal of real estate or real estate-related rights, and offers real estate asset trust beneficial interest securities to unspecified parties.
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| Article 4-1 | In the underwriting of securities on a firm commitment basis, except where prescribed by other laws and regulations, a securities underwriter shall act as prescribed by the following provisions with respect to the proportion of securities held for its own account, provided, however, that for any units purchased for its own account that remain unsubscribed at the closure of the underwriting period, these restrictions shall not apply:
- In an underwriting case involving cash capital increase, convertible (or exchangeable) corporate bonds, ordinary corporate bonds not handled by negotiated sale, financial bonds not handled by negotiated sale, or Taiwan depositary receipts for exchange (or over-the-counter (OTC)) listed companies, the underwriter shall hold for its own account from 5 percent to 15 percent of the total number of units underwritten;
- In an underwriting case for a cash capital increase by an emerging stock company other than an underwriting case for initial listing on the exchange or OTC market, the underwriter shall hold for its own account from 10 percent to 20 percent of the total number of units underwritten.
- In the underwriting of a cash capital increase for a company that is not exchange (or OTC) listed, the underwriter may hold for its own account a proportion not to exceed 15 percent of the total number of units underwritten;
- In an underwriting case involving preferred shares, preferred shares with warrants, or corporate bonds with warrants for public companies, the underwriter may hold for its own account a proportion not to exceed 15 percent of the total number of units underwritten;
- If a company already listed on a stock exchange or an OTC market, or an emerging stock company, either issues preferred shares and preferred shares with warrants for which the warrant is detachable (“preferred shares with detachable warrants”), corporate bonds and corporate bonds with warrants for which the warrant is detachable (“corporate bonds with detachable warrants”), the underwriter may set respectively the percentage to hold for its own account, provided that the percentage may not exceed 15 percent of the total number of units underwritten;
- In an underwriting case involving a secondary distribution of beneficial interest securities by a trustee institution or a secondary distribution of asset-backed securities by a special purpose company that is not undertaken through negotiated sale, purchases on own account shall not exceed fifteen percent of the total amount underwritten;
- In an underwriting case where an offering of real estate asset trust beneficial interest securities by a trustee institution is not undertaken through negotiated sale, purchases on own account shall not exceed fifteen percent of the total amount underwritten.
In the underwriting cases contemplated under the preceding paragraph, for issues undertaken entirely by book building, each underwriter shall hold for its own account not more than 10 percent of the total number of units underwritten.
Where a public company carrying out a cash capital increase encounters waiver of subscription rights by an existing government-agency shareholder in accordance with the provisions of Article 267, paragraph 3 of the Company Act, the portion thus incorporated into the public underwriting may be excluded when calculating the "total number of units underwritten" set out in paragraph 1, subparagraph 1.
In a case involving an initial listing on a stock exchange (or OTC) market of securities not registered for emerging market trading or a case involving underwriting of an initial issuance of Taiwan Depositary Receipts, if the securities underwriter carries out the underwriting through public sale to outside parties, it shall first set aside 1,000 common shares (or 1,000 units of depositary receipts) from the offering for subscription by the Securities and Futures Investors Protection Center.
Except for underwriting cases involving an OTC company transferring its listing to a stock exchange, or for underwriting cases for which there are other acts and regulations that provide otherwise, if an underwriting case involving an initial listing of shares in common stock on a stock exchange (or OTC) market is carried out on a firm commitment basis, the lead underwriter shall stipulate with the issuing company that the issuing company is to coordinate with its shareholders to provide previously issued shares in common stock (the number thereof to be set at a certain percentage of the total volume of shares to be sold publicly to outside parties in the current underwriting case) to the lead underwriter for the purpose of exercising overallotment during the underwriting period. The related procedures shall be carried out in accordance with the Taiwan Securities Association Rules Governing the Underwriting Procedures to be Followed by Underwriters in Conducting an Initial Listing on a Stock Exchange or Over-the-Counter Market.
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| Article 4-2 | When a securities underwriter conducts an underwriting case for an initial listing on a stock exchange or an OTC market or an underwriting case for a cash capital increase, it shall guide the issuing company to set the price at which the shares will be offered to the public by the means set out below, and shall comply with the Taiwan Securities Association Self-regulatory Rules Governing the Provision of Advisory Services by Underwriter Members to Issuing Companies Offering and Issuing Securities:
- In a case conducted entirely by competitive auction: The subscription price for the successful bidders shall be set in accordance with Article 15. The offering price for the remaining portion after the competitive auction, for the portion subscribed by the underwriter for its own account, and for the price at which the security opens on its first day of listing shall be set in accordance with Articles 16 and 18.
- In a case conducted partly by competitive auction and partly by public subscription: The subscription price for the successful bidders shall be set in accordance with Article 15. The offering price for the public subscription portion and for the price at which the security opens on its first day of listing shall be set in accordance with Articles 17 and 18. /li>
- In a case conducted entirely by book building, or partly by book building and partly by public subscription: The offering price for the book building portion, for the public subscription portion, for the portion subscribed by the underwriter for its own account, and for the price at which the security opens on its first day of listing shall be set in accordance with Article 28.
- In a case conducted entirely by public subscription: The offering price for the public subscription portion, for the portion subscribed by the underwriter for its own account, and for the price at which the security opens on its first day of listing shall be set in accordance with Article 30.
The securities underwriter shall guide the issuing company, when it sets the price for subscription to the securities by employees or by existing shareholders, to do so at the offering prices set for the public subscription portion, for the portion subscribed by the underwriter for its own account, and for the price at which the security opens on its first day of listing based on the provisions of the respective subparagraphs of the preceding paragraph.
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| Article 5 | With the exception of that portion of underwritten units held for its own account in accordance with the preceding article, a securities underwriter carrying out the underwriting of securities (hereinafter, "public sale to outside parties") shall use the following methods to allocate units:
- competitive auction;
- book building;
- public subscription;
- negotiated sale.
The allocation methods described in the preceding paragraph shall be undertaken in accordance with Articles 6, 7, 21, 21-1, 22, 22-1, 22-3, 31 and 52 of these Rules.
When different allocation methods are used in the same underwriting case, the relevant timetable for the procedures from the date of negotiation of placement with specific parties until the distribution date of the securities shall be consistent between the different allocation methods.
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| Article 5-1 | A securities underwriter underwriting securities shall, from the date of public announcement until the end of the day on which the securities are listed, publish a public underwriting announcement on the underwriting securities firm's website, and in a clear and concise form in daily newspapers, and shall do so in accordance with the Taiwan Securities Association Rules Governing the Particulars to be Recorded by Securities Underwriters in Securities Underwriting Announcements.
A securities underwriter underwriting securities shall publish a prospectus on its website, and shall provide prospectuses upon the request of investors.
In a case of underwriting of straight corporate bonds, if the prospective buyers are limited only to professional investors as defined in the Taipei Exchange Rules Governing Management of Foreign Currency Denominated International Bonds, publication on the Taiwan Securities Association Website may be substituted for the publication in daily newspapers referred to in paragraph 1.
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| Article 5-2 | When a securities firm conducts an underwriting case, if a party targeted for allocation is not a government fund or is not a fund account or investment account of an onshore or offshore publicly offered fund, and if the underwriting is conducted by means of book building or negotiated sale, the securities underwriter shall audit whether the ultimate beneficial owner is a party that is prohibited from allocation under Article 36 or Article 43-1, by a means such as a list of ultimate beneficial owners provided by the custodian institution or a declaration thereby that the ultimate beneficial owner is not a party prohibited from allocation.
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| Article 5-3 | When a securities firm conducts an underwriting case, it may not utilize anyone who is not an employee of the securities firm to solicit business, nor may it pay any unreasonable commission.
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