Section One Pricing by Competitive Auction |
| Article 6 | In the underwriting cases prior to an initial listing on a stock exchange or an OTC market involving previously issued shares or cash capital increase through a new share issue (except for cases involving conversion of OTC (or exchange) listed stocks into exchange (or OTC) listed stocks), and in the underwriting of a cash capital increase by a company already listed on a stock exchange or an OTC market in which all shares are put up for underwritten distribution, where underwriting is not carried out using the book building method, the shares shall be offered through competitive auction; provided, however, that this provision does not apply to a public enterprise or 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.
In the underwriting of convertible corporate bonds or corporate bonds with warrants, and in a secondary distribution carried out in accordance with the provisions of Article 22 paragraph 3 of the Securities and Exchange Act (hereinafter, "secondary distribution"), the securities may be offered through competitive auction.
|
Info |
| Article 7 | In the underwriting of securities issued through competitive auction as prescribed in the preceding article, except where the issuer is a government-owned enterprise or another party for which there are other acts or regulations that provide otherwise, underwriting of that portion of the offering put up for public sale to outside parties shall be handled in accordance with the following provisions:
- In an underwriting case involving an initial listing of shares on a stock exchange or an OTC market, the shares may be offered either entirely through competitive auction, or through a combination of competitive auction and public subscription. However, the portion allocated through public subscription shall not exceed 20 percent of the total number of shares underwritten.
- In the underwriting of an offering of convertible bonds, or of warrants that have been detached from preferred shares with detachable warrants or warrants that have been detached from corporate bonds with detachable warrants, or in the underwriting of a cash capital increase by a company already listed on a stock exchange or an OTC market in which all units are put up for underwritten distribution, all units shall be offered through competitive auction.
- In an underwriting case involving the offering of corporate bonds with warrants or an underwriting case involving a secondary distribution, the units may be offered either entirely through competitive auction, or through a combination of competitive auction and public subscription.
|
Info |
| Article 8 | In the underwriting of securities offered through competitive auction, the lead underwriter shall first prepare documentation determining the particulars listed in the subparagraphs below. After being signed or sealed by the lead underwriter and co-underwriters and the issuer of the securities, said documentation shall be reported to the Taiwan Securities Association three business days before the commencement date of the tender:
- the total number of underwritten units, number of units expected to be sold via overallotment, number of units held by the securities underwriter for its own account as prescribed by Article 4-1, the number of units offered by competitive auction, minimum bidding unit, and maximum bid quantity per bid form;
- the minimum offering price as resolved by negotiation with the issuer;
- the firm-commitment fee or best-efforts underwriting fee, as resolved by negotiation with the issuer;
- the unit size of lots offered through public subscription;
- the names of the members of the underwriting syndicate, and the amount of securities apportioned to each, as specified by Article 7;
- except for the initial listing of shares on a stock exchange or an OTC market, the method of allocating among the members of the underwriting syndicate any units that remain unsubscribed after conclusion of competitive auction;
- the date(s) of competitive auction and the time(s) for submitting and opening bids, as agreed in consultation with the Taiwan Securities Association.
- the issuer shall provide the securities underwriter with a list of the persons who are disqualified from participating in the tender and negotiated sale pursuant to Article 36 and Article 73, paragraph 5.
The minimum offering price in subparagraph 2 of the preceding paragraph shall comply with the following requirements:
- In an underwriting case involving an initial listing on a stock exchange or an OTC market, its upper limit shall be 70 percent of the simple arithmetic mean of the average trade prices, after factoring out ex-rights trading in connection with issuance of stock dividends (or ex-rights trading in connection with capital reduction) and ex-dividend trading, of the 30 business days on which trades have been executed before the filing of the competitive auction agreement with the Taiwan Securities Association. If the stock has not been registered and traded as an emerging stock, the underwriter and the issuer shall negotiate and set a reasonable minimum price for the auction.
- In the underwriting of a cash capital increase through an issue of common shares by a company already listed on a stock exchange or an OTC market in which all shares are put up for underwritten distribution, it shall not be lower than 90 percent of the simple arithmetic mean of the closing common share price, after factoring out ex-rights trading in connection with issuance of stock dividends (or ex-rights trading in connection with capital reduction) and ex-dividend trading, calculated for either the one, three, or five business days before the filing of the competitive auction agreement with the Taiwan Securities Association.
- In the underwriting of a cash capital increase through an issue of preferred shares, or of warrants that have been detached from preferred shares with detachable warrants or warrants that have been detached from corporate bonds with detachable warrants, by a company already listed on a stock exchange or an OTC market, its upper limit shall be the reference price calculated based on the appropriate pricing model selected at the time the fund-raising plan was reported to the competent authority.
- In the underwriting of convertible corporate bonds and corporate bonds with warrants, it shall not exceed the par value of said securities.
In the event that unsubscribed units as specified in paragraph 1 subparagraph 6 are placed by the underwriting syndicate with a specific party, only the parties listed in Article 35 shall participate in said placement, and those listed in Article 36 shall not participate.
|
Info |
| Article 9 | A lead underwriter of securities shall publish a competitive auction announcement in daily newspapers on the first day on which public bids are accepted. The content of said announcement shall be reported in hardcopy and electronic media to the Taiwan Securities Association three business days before the commencement date of the tender, and shall include the items in the following subparagraphs:
- name of the security;
- names, addresses, and telephone numbers of the underwriters;
- method, time period, and site of the bidding;
- date, time, and site of the opening of the bids;
- minimum offering price, minimum bidding unit, and maximum bid quantity per bid form;
- total quantity of securities to be put up for underwritten distribution; number of units expected to be sold via overallotment; total number of units retained for their own accounts by the securities underwriters; the total number of units being offered for competitive auction, and the amount of the bid deposit and the circumstances under which it may be confiscated;
- the maximum quantity of securities that may be allocated to each successful bidder;
- parties from whom competitive auction bids will be accepted, and the provisions of Articles 35 and 36 shall be specified;
- matters relating to the collection of bid processing fees and award processing fees by securities underwriters;
- any statutory restrictions upon holding percentages as may be set forth in other laws or regulations with respect to the industry to which the issuer belongs (please list these on the bid form);
- if a bidder fills out and submits multiple bid forms for the same competitive auction, or has multiple competitive auction cases for which bidding closes on the same day, when the bidder submits a bid to participate in any one or more of those cases, funds shall be deducted from the bidder's bank deposit for the sum total of the bid deposits and bid processing fees for all of the bid forms submitted by the bidder;
- the method of disclosure of the prospectus, also specifying that the prospectus discloses the tentatively set offering price, and specifying the method for querying the subsequently set offering price;
- in the event the total number of securities bid for in valid bids is insufficient to cover all the securities offered through competitive auction in an underwriting case involving the initial listing of shares on a stock exchange or an OTC market, so that price setting cannot be completed, the TWSE will not open the bids, and the brokers shall, on the third business day following the bid closure date, make no-interest refunds to the bidders of the bid deposits and of the bid processing fees less the relevant handling fees;
- other supplemental items that must be disclosed in order to safeguard the public interest and investors.
In an underwriting case involving an initial listing on a stock exchange or an OTC market, the lead underwriter shall submit the timetable for the procedures and a declaration by the issuer that it has already held a roadshow in accordance with TWSE or TPEx rules. If a declaration is not submitted 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 competitive auction shall be postponed.
The maximum quantity of securities that may be allocated to each successful bidder referred to in paragraph 1 subparagraph 7 shall be taken as the the maximum bid quantity per bid form referred to in paragraph 1, subparagraph 5. In an underwriting case involving an initial listing on a stock exchange or an OTC market, the minimum bidding unit under paragraph 1, subparagraph 5 shall be capped at 5,000 shares.
The amount of the bid deposit under paragraph 1, subparagraph 6 shall be limited to an amount from 30 percent to 60 percent of the bid amount.
The maximum quantity allocated to each successful bidder, as referred to in subparagraph 7 of paragraph 1, shall not exceed 10 percent of the portion of the offering put up for public sale to outside parties. If it is an underwriting case involving an initial listing on a stock exchange or an OTC market, the lead underwriter may lower the 10 percent cap on the maximum quantity allocated to each successful bidder according to the circumstances in the given case.
|
Info |
| Article 10 | In the underwriting of securities through competitive auction, the underwriting syndicate may provide a company prospectus and relevant materials to investors, and may also convene public informational meetings to familiarize investors with the offering.
|
|
| Article 11 | In an underwriting by competitive auction, the securities underwriter shall administer bidding and auctioning in accordance with the following schedule:
- Day One: Commencement of the tender.
- Day Three: Tender closure date (where day four falls on a weekend, the tender closure date shall be postponed by one day). Deadline for bidders to deposit their bid deposit and bid processing fee in the handling bank.
- Day Four: Date of deduction of the bid deposits and bid processing fees. Broker's bank undertakes matters regarding the deduction of the bidders' bid deposits and bid processing fees.
- Day Five: Bid opening date. Brokers notify successful bidders to carry out the deposit of the award price and the award processing fee.
When a securities broker notifies the successful bidders to carry out the deposit procedures under paragraph 1, subparagraph 4, it shall keep a record of the notice.
In a case involving an initial listing of shares on a stock exchange or an OTC market, if, pursuant to Article 18, paragraph 3, the bids are not opened, the lead underwriter shall, on the first business day after the tender closure date, notify the Taiwan Securities Association. The securities brokers shall, on the third business day after the tender closure date, make no-interest refunds to the bidders of the bid deposits and of the bid processing fees less the relevant handling fees; on the same day, the brokers also shall perform the procedures for delivery of the bid processing fees.
The dates specified under paragraph 1 may be changed if necessary by applying to the Taiwan Securities Association for approval.
|
Info |
| Article 12 | Bidders that participate in a public tender shall, following the prescribed format (see Attachment 1), fill in the bid form and transmit it by means of the Internet to the Underwritten Securities Competitive Auction System, or they may do so through the terminals installed at the place of business of the headquarters or a branch of the securities firm where they opened their account.
For the bid processing fee and bid deposit that a bidder is required to pay under the public announcement provisions of Article 9, the securities broker shall notify the bank to deduct the funds from the bidder's bank account on the date set under Article 33 or 34.
After the bidder has submitted a bid, the bid form may not be withdrawn or changed.
The securities underwriter may collect an award processing fee from a successful bidder, and the provisions of paragraph 2 shall apply mutatis mutandis.
|
Info |
| Article 13 | A bid form to which any of the following circumstances applies is invalid and will be disqualified from the tender without refund of the bid processing fee:
- The bid price is lower than the minimum offering price as prescribed by Article 8 paragraph 1 subparagraph 2;
- The quantity of securities bid for is lower than the minimum bidding unit or exceeds maximum bid quantity per bid form;
- The bid deposit or the bid processing fee has not been paid in full;
- The trading account number (11 digits) has not been properly filled in, or the information is not true.
- The ID number or uniform invoice number has not been properly filled in, or the information is not true.
- If a natural person, the date of birth has not been properly filled in, or the information is not true.
- The stock code has not been properly filled in.
- The identity of the bidder violates the requirements set forth under Articles 35 and 36.
- Failure to open a trading account, a book-entry bank account for remittance of funds, or a book-entry account for securities custody.
- Failure to sign a contract with the bank designated by the securities broker for deductions of funds in connection with the competitive auction.
- The balance in the bidder's book-entry bank account for remittance of funds is lower than the sum total of the deposit and bid processing fee required for the bid for the securities.
- The bidder has submitted the bid in the name of another, or falsely using the name of another.
The per-share (or per-lot) bid price shall be expressed in units no smaller than one cent; decimal figures smaller than one cent shall be rounded up or down.
Bid quantity shall be expressed in units of one thousand shares (or in lots).
|
Info |
| Article 14 | After the closure of the tender period, the TWSE shall open the bids on the prescribed opening date, and the provisions of Articles 60, 68, and 69 shall apply mutatis mutandis.
If a bid form has any of the circumstances in paragraph 1 of Article 13, the TWSE shall disqualify the bid before the opening of bids.
|
|
| Article 15 | With the exception of underwriting cases conducted by means of competitive auction for warrants that have been detached from preferred shares with detachable warrants or warrants that have been detached from corporate bonds with detachable warrants, which must be handled in accordance with the provisions of Article 17-1, securities shall be awarded on the basis of bid price in descending order. Identical bids shall be awarded in random order, generated by the Taiwan Securities Association using computer, until the entire offering has been awarded.
The quantity awarded to each successful bidder shall not exceed the proportion provided under Article 9, paragraph 5. If the awarded quantity of securities exceeds said proportion, and the lots are cleared at a uniform price, the surplus lots are removed in random order generated by computer. If the lots are cleared at two or more different prices, lots of equal size are removed from either end of the price spectrum, until the prescribed proportion is reached. In the event that one lot remains after the above process, said lot shall be removed from the upper end of the price spectrum.
In addition to complying with paragraph 2 of this Article, the securities underwriter shall also handle the results of the opening of bids in compliance with all other relevant laws and regulations, and shall provide all relevant data as prescribed by the TWSE and the Taiwan Securities Association.
Each successful bidder shall subscribe the securities at the bidder's own award price.
|
Info |
| Article 16 | With the exceptions of secondary distribution cases and underwriting cases conducted by means of competitive auction for warrants that have been detached from preferred shares with detachable warrants or warrants that have been detached from corporate bonds with detachable warrants by a listed or OTC company, when the underwriting of securities is undertaken entirely by competitive auction and the total number of securities awarded by tender reaches the full amount available for allocation, the price at which the security opens on its first day of listing and the price paid by the underwriter for units retained for its own account shall be computed as the weighted average of the bid price of all successful bids (decimals beyond cents shall be rounded up or down), and shall be capped at a certain multiple of the minimum offering price set under Article 8, paragraph 1, subparagraph 2.
The certain multiple referred to in the preceding paragraph shall be determined by negotiation between the underwriting syndicate and the issuing company, but may not exceed a multiple of 1.3.
|
|
| Article 17 | In the underwriting of securities undertaken partly by competitive auction and partly by public subscription, when the total number of securities awarded by competitive auction reaches the full amount available for allocation, the offering price of those units allocated by public subscription and those retained by the underwriter for its own account shall be computed as the weighted average of the bid price of all successful bids (decimals beyond cents shall be rounded up or down), and shall be capped at a certain multiple of the minimum offering price set under Article 8, paragraph 1, subparagraph 2.
The certain multiple referred to in the preceding paragraph shall be determined by negotiation between the underwriting syndicate and the issuing company, but may not exceed a multiple of 1.3.
With the exception of secondary distribution cases or where otherwise provided under law, the price at which the security opens on its first day of listing shall be the price underwritten for public subscription as determined in the preceding paragraph.
|
Info |
| Article 17-1 | An underwriting case conducted by means of competitive auctionfor warrants that have been detached from preferred shares with detachable warrants or warrants that have been detached from corporate bonds with detachable warrants shall be handled through uniform price clearing, whereby the TWSE, in opening the bids, adds up the cumulative total of the bid quantities, starting with the highest-priced bid and working its way down until the entire offering has been cleared, with the lowest price necessary to sell all securities offered through competitive auction taken as the uniform clearing price. If the total number of the securities bid for in valid bids is insufficient to cover the all the securities offered through competitive auction, then the minimum offering price, as prescribed by Article 8 paragraph 1 subparagraph 2, shall serve as the uniform clearing price.
Those bidding at or above the uniform clearing price are successful bidders, and in all cases their bids will be cleared at the uniform clearing price.
If the total number of securities bid for in valid bids exceeds the number of securities offered through competitive auction, then those submitting bids at the uniform clearing price shall be awarded securities in random order, generated by computer, until all securities offered through competitive auction have been awarded.
The quantity of securities awarded to each successful bidder shall not exceed the proportion set forth under Article 9, paragraph 5. Where an award does exceed this proportion, the quantity in excess shall be select at random by computer and subtracted from the award.
The uniform clearing price shall serve as: the offering price for those units of a security retained by the underwriter for its own account in connection with an underwriting case of warrants that have been detached from preferred shares with detachable warrants or warrants that have been detached from corporate bonds with detachable warrants, and for units that remain unsubscribed after conclusion of competitive auction. The uniform clearing price shall serve as the basis for calculating the price at which a security opens on its first day of listing in accordance with the directions of the TWSE or TPEx.
In addition to complying with paragraph 4 of this Article, the securities underwriter shall also handle the results of the opening of bids in compliance with all other relevant laws and regulations, and shall provide all relevant data as prescribed by the TWSE and the Taiwan Securities Association.
|
Info |
| Article 18 | In the underwriting of securities by competitive auction, if the total number of securities bid for is insufficient to cover the number of securities offered through competitive auction, then the minimum offering price, as prescribed by Article 8 paragraph 1 subparagraph 2, shall serve as the offering price for those securities that remain unallocated after competitive auction, those securities retained by the underwriter for its own account, and those securities allocated through public subscription. Units that remain unsubscribed after conclusion of competitive auction shall be allocated as prescribed by Article 8 paragraph 1 subparagraph 6.
Except for the underwriting of a secondary distribution or of a capital increase by listed or OTC companies involving a cash capital increase, the price at which the security opens on its first day of listing shall be the offering price set forth under the preceding paragraph.
In an underwriting case involving an initial listing of shares on a stock exchange or an OTC market conducted by competitive auction, if the total number of securities bid for in valid bids is insufficient to cover the all the securities put up through the competitive auction in question, the TWSE will not conduct the opening of bids.
In an underwriting case under the preceding paragraph, if there is to be newly conducted any competitive auction or book building or public subscription, this fact must be stated when making the respective filing with the Taiwan Securities Association in accordance with Articles 8 and 9, 23, 24, or 53.
|
Info |
| Article 19 | Immediately following the opening of bids, the TWSE shall provide a report on the results of the bid opening, which shall for each bid include award numbers, the award price, the number of units awarded, the total dollar amount of securities allocated, and either personal ID numbers (in the case of individual successful bidders) or juristic person uniform invoice numbers issued by the tax authorities for the localities where institutional successful bidders are located (in the case of institutional successful bidders).
|
|
| Article 20 | Immediately following the opening of bids, members of the underwriting syndicate shall sign the underwriting contract and submit it to the Taiwan Securities Association for recordation.
|
|