| Title： |
Regulations Governing Share Repurchase by Listed and OTC Companies(2002.07.30) |
| Date： |
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Article 1
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These Regulations are adopted pursuant to Article 28-2 Paragraph 3 of the Securities and Exchange Law ("the Law").
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Article 2
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A company repurchasing its own shares at a centralized securities exchange market or at the place of business of a securities firm shall, within two days of the day on which the resolution was made at a meeting of the board of directors, announce the repurchase, and report the below listed items to the Securities and Futures Commission (SFC):
1. Purpose of the repurchase
2. Types of shares to be repurchased
3. Ceiling on total monetary amount of the repurchase
4. Planned period for the repurchase, and number of shares to be repurchased
5. Price range of the shares to be repurchased
6. Method for the repurchase
7. Number of shares held at the time of reporting
8. Status of repurchases within three years prior to the time of reporting
9. Status of repurchases that have been reported but not completed
10. Record of decision to repurchase shares resolved by the board of directors
11. Rules for Transfer of Shares provided in Article 10 of these Regulations
12. Rules for Conversion of Shares or Rules for Subscription of Shares provided in Article 11 of these Regulations
13. Declaration that the financial state of the company was considered at a meeting of the board of directors and that the maintenance of its capital would not be affected by the repurchase
14. Appraisal by a certified public accountant or securities firm of the reasonableness of the price of the shares to be repurchased
15. Other items specified by the SFC
Within two months of the day of expiration of the reporting period for the planned repurchase, the company may, through a majority vote at a meeting of the board of directors attended by at least a two-thirds quorum, amend the originally reported purpose of the repurchase by filing a report with the SFC.
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Article 2-1
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The company shall repurchase its own shares in accordance with the reported number and price of the shares to be repurchased specified in the preceding article.
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Article 3
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If a company fails to effect announcement and reporting in accordance with the provisions of Article 2, it may not repurchase its own shares on a centralized securities exchange market or at the place of business of a securities firm. Each time that the accumulative number of shares repurchased accounts for at least two percent of the shares issued by the company or the accumulative value of shares repurchased amounts to at least NT$300 million, the company shall, within two days, make an announcement of the date, number, type, and price of the shares, and report the same to the SFC.
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Article 4
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A company repurchasing its own shares according to the method specified in Article 43-1 Paragraph 2 of the Law shall report to the SFC and make public notice pursuant to the Regulations Governing Tender Offers for Purchase of the Securities of a Public Company.
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Article 5
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A company repurchasing its own shares shall complete the repurchase within two months of the reporting date specified in Article 2 of these Regulations, and, upon expiration of that period or within five days of completion of the repurchase, it shall submit a report to the SFC and announce the status of execution of the repurchase. If execution of the repurchase has not been completed upon expiration of said period and execution of another repurchase is required, a repurchase proposal shall again be submitted and resolved at a meeting of the board of directors.
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Article 6
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A company repurchasing its own shares shall enter the information specified in Articles 2 and 3, and in the preceding article into the Market Observation Post System (MOPS).
When a company that repurchases shares enters information regarding the share repurchase into the MOPS system, it need not post in a newspaper the public notices required under Article 2 Paragraph 1, Article 3, and the preceding article
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Article 7
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For a company repurchasing its own shares, except for a repurchase taking place under the circumstances described in Article 43-1 Paragraph 1 of the Law, the total number of shares repurchased per day may not exceed one third of the total number planned for the repurchase. The company may not provide price quotations during the first thirty minutes of trading, and shall appoint not more than two securities brokers to execute the repurchase.
A company repurchasing its own shares shall not be subject to the restriction regarding the number of shares repurchased specified in the preceding paragraph where the number of shares repurchased is not more than 200,000 shares per day.
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Article 8
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For a company repurchasing its own shares for reasons specified in Article 28-2 Paragraph 1 Subparagraphs 1 through 3 of the Law, the total monetary amount of shares repurchased shall not exceed the retained earnings plus the following realized capital gains:
1. gain on disposal of assets that has not yet been transferred to the retained earnings account; and
2. the gains listed under Article 241 of the Company Law ("gains realized from the issue of share certificates above par value" and "income realized through the receipt of gifts"); where the gift received consists of shares in a company; provided, however, that the income shall not be recorded until the shares have been sold.
The term "retained earnings" as used in the preceding paragraph includes legal reserve, special reserve, and unallocated earnings. However, the below listed items shall be excluded:
1. Earnings distributed through resolution of a meeting of the board of directors or a meeting of the shareholders
2. Special reserve set aside by the company pursuant to Article 41 Paragraph 1 of the Law. However, special reserve set aside pursuant to Article 14 Paragraph 1 of the Regulations Governing Securities Firms shall not be subject to this restriction
Calculation of the number and amount of shares that may be repurchased shall be based on financial reports for the latest accounting period prior to a resolution of a meeting of the board of directors. The financial reports must have been audited or reviewed in a lawful and transparent manner by a certified public accountant, and must have been issued an unreserved audit opinion or standard review opinion. However, if, due to considerations of long-term investment holdings and associated investment profit and loss on such holdings, the financial reports for the given period were calculated based on financial reports of the invested company that were not audited or reviewed by a certified public accountant, and were issued a reserved opinion by the accountant, this restriction shall not apply.
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Article 9
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A company repurchasing its own shares, except for where otherwise provided for in these Regulations, shall execute the repurchase on a centralized securities exchange market or at the place of business of a securities firm, and may not execute the repurchase in large monetary amounts by means of exchange, tender, or auction.
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Article 10
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A company which, under the circumstances described in Article 28-2 Paragraph 1 Subparagraph 1 of the Law, repurchasing its own shares for the purpose of transferring them to its employees, shall first adopt Rules for Transfer of Shares.
The below listed items shall be recorded in the Rules for Transfer of Shares:
1. Type, contents of rights, and restrictions on rights of shares to be transferred
2. Transfer period
3. Qualifications of transferee
4. Procedures for Transfer of Shares
5. Agreed price per share for the transfer (may not be less than the closing price of the shares on the day that the Rules for Conversion of Shares were adopted)
6. Rights and obligations subsequent to execution of the transfer
7. Other rights and obligations related to the company and its employees
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Article 11
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A company which, under the circumstances described in Article 28-2 Paragraph 1 Subparagraph 2 of the Law, repurchases its own shares for the purpose of converting them, shall make a record to that effect in the Rules for Conversion of Shares or the Rules for Subscription of Shares.
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Article 12
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With respect to a resolution at a meeting of the company's board of directors to execute a repurchase of the company's own shares, the company's directors, supervisors, officers, shareholders holding more than ten percent of its shares, and other associated persons found in violation of Article 157 Paragraph 1 of the Law shall also be subject to punishment pursuant to the Law.
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Article 13
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These Regulations shall take force on the day of their promulgation.
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