| Title： |
Regulations Governing Tender Offers for Purchase of the Securities of a Public Company(2002.10.22) |
| Date： |
|
Chapter I General Provisions
|
| Article 1 | These Regulations are promulgated according to Paragraph 4 of Article 43-1 of the Securities and Exchange Law (hereinafter "the Law"). |
| Article 2 | "Public Tender Offer" as referred to in these Regulations means purchase of securities from unspecified persons bypassing the centralized securities exchange market or the over-the-counter (OTC) markets, and instead using public announcement, advertisement, radio broadcast, telecommunication, letters, telephone, presentation show, explanation delivering or other methods to make a public offer.
The applicable securities under these Regulations include those shares, new shares entitlement certificates, warrants, preferred shares attached with warrants, convertible corporate bonds, corporate bonds attached with warrants, and any other securities approved by the Securities and Futures Commission (hereinafter "SFC") of a company, which has already completed the public issuance or supplemental public issuance of the above-mentioned securities in accordance with the Law. |
| Article 3 | The term "affiliates" as used in Paragraph 2 of Article 43-1 and Paragraph 1 of Article 43-3 of the Law and in these Regulations refers to any of the following:
1. For an Offeror that is a natural person, it refers to his or her spouse and minor children.
2. For an Offeror that is a juristic person, it refers to an affiliated enterprise as defined in Chapter 6-1of the Company Law.
Securities held by affiliates mentioned in the preceding paragraph include those held using the names of other persons. |
| Article 5 | "Securities Related Entities" as referred to in these Regulations means the following:
1. Securities dealer associations.
2. Securities and Futures Institute.
3. Stock Exchange or OTC Exchange.
4. Centralized securities depository enterprises.
5. Other entities designated by the SFC. |
| Article 6 | If the reporting and public announcement by the Offeror do not fall on the same date, the calculation of the period mentioned in Paragraph 1 of Article 43-3 of the Law shall commence from the earlier of the two dates. |
Chapter II Reporting and Public Announcement of Public Tender Offer
|
| Article 7 | Any public tender offer to purchase the securities of a public company shall not be made until after a report has been filed with the SFC and a public announcement made, except under the circumstances set forth in Subparagraphs 1 to 3 of Paragraph 2 of Article 43-1 of the Law. For any competitive public tender offer for securities issued by the same public company, a report of public tender offer shall be filed with the SFC and a public announcement made at least five trading days prior to the expiry date of the original public tender offer period. |
| Article 8 | Use of securities as consideration for public tender offer shall be confined to within the following scope:
1. For domestic securities, confined to securities that are either listed on a stock exchange or traded on an OTC market pursuant to the provisions of the Law.
2. For foreign securities, confined to those conforming to SFC regulations. |
| Article 9 | Before the commencement date of the public tender offer, the Offeror, unless buying back its own shares under Article 28-2 of the Law, shall file a report with the SFC, including the Public Tender Offer Report Form and the following documents, in accordance with Article 7:
1. Public tender offer prospectus.
2. The consignment contract entered into between the Offeror and his entrusted institution pursuant to Article 15 of these Regulations.
3. The power of attorney to his designated representative if the Offeror does not maintain any domicile or business place in the Republic of China (ROC).
4. If the consideration for the public tender offer is cash, an explanation of the source of funds and supporting documents; if the funds are acquired through financing, an explanation of the financing, supporting documents, and the repayment plan. If the consideration for the public tender offer is securities in accordance with the provisions of these Regulations, the name, type, and average price over the most recent three months, of the securities shall be specified, as well as the closing price on the date prior to filing of the report, the time of acquisition, acquisition price, the price used in calculating the consideration, and the factors that determined the consideration price.
5. The certified public accountant certified financial report for the most recent two years if the Offeror is a juristic person; or for all the operative years if duration of operation is less than two years. If a financial report for the most recent year has not yet been certified by the certified public accountant, then it can be replaced by a self-prepared financial report. 6. If the Offeror is a juristic person, the explanation of the impact to that juristic person's financial and business status within three years after acquiring the securities.
7. Other documentation required by the SFC.
If the public tender offer requires approval by or effective registration with any other competent government authority, the filing documents shall be reviewed by an attorney, and a lawfully prepared attorney's opinion shall be furnished; the report shall also specify the Offeror's liability for compensation for any injury to the Offeree in the event any other competent government authority denies approval to the public tender offer case, suspends its effectiveness, or voids the approval.
Before the date of the public tender offer, the Offeror shall serve a copy of the Public Tender Offer Report Form and relevant documents referred to in Paragraph 1 to the public company whose securities are being acquired.
Before the date of the public tender offer, the Offeror shall publicly announce the Public Tender Report Form and the particulars in Subparagraph 4 of Paragraph 1 and in Paragraph 2. |
| Article 10 | An Offeror buying back its own shares in accordance with Article 28-2 of the Law shall publicly announce, and report to the SFC, attaching the Public Tender Offer Report Form and the following supporting documents, before the date of the public tender offer:
1. Subparagraphs 2 and 4 of the Paragraph.
2. The meeting minutes recording the resolution by the board of directors to buy back the shares.
3. A declaration from a board of directors meeting, stating that, taking into consideration the company's financial condition, there will be no effect on the company's maintenance of capital.
4. The most recent duly disclosed financial report audited or reviewed by a certified public accountant before the board resolution.
5. The opinion of a certified public accountant or securities underwriter on the reasonableness of the buyback price.
6. The documentation required under Article 10 of the Regulations Governing Share Repurchase by Listed and OTC Companies regarding methods for transferring shares to employees or under Article 11 regarding methods for converting shareholding or subscribing shares.
7. Affect on unappropriated retained earnings of the company.
8. Other documentation required by the SFC. |
| Article 11 | Any person who individually or jointly with another person(s) intends to acquire within 50 days securities accounting for 20 percent or more of the total issued shares of a public company shall do so by means of a public tender offer.
Where the following conditions are met, the requirement set forth in the preceding paragraph of public tender offer for the securities shall not apply:
1. Transfer of shares between affiliates mentioned in Article 3.
2. Other conditions in conformity with SFC regulations. |
| Article 12 | A joint intending acquirer as referred to in the phrase "jointly with another person(s), intends to acquire [...] securities" in the preceding article shall be determined as follows:
1. One with whom the intending acquirer acquires the shares for a common purpose by means such as contract, agreement, or meeting of minds.
2. A company in which the intending acquirer or his/her spouse serves as chairman or president (general manager).
3. A company in which the intending acquirer and his/her spouse and relative(s) within the second degree of kinship hold a combined total of more than one-half of the voting shares or comprise the majority of directors.
4. An affiliated enterprise as defined in Chapter 6-1 of the Company Law.
5. If the intending acquirer is a juristic person, any shareholder holding 20 percent or more therein.
6. A foundation in which the intending acquirer or his/her spouse has donated at least NT$1 million, which furthermore accounts for one-third or more of the paid-in funds thereof.
Where the intending acquirer is a juristic person, Subparagraph 2 and Subparagraph 3 of the preceding paragraph shall apply to the responsible person or representative(s) thereof. |
| Article 13 | During the period from the determination date of a public tender offer until the reporting and public announcement date(s), any person who becomes aware of any information relating to that public tender offer due to his job duties or any other reasons shall keep such information in confidence. |
Chapter III The Proceeding of the Public Tender Offer Process
|
| Article 14 | The public company whose the securities are being acquired shall, within seven days after its receipt of the Public Tender Offer Report Form and relevant documents delivered to it by the Offeror pursuant to Paragraph 3 of Article 9, have the following items publicly announced, reported in writing to the SFC for recordation, and copied to the Securities Related Entities: 1. The types, number and amount of shares currently held by the current directors and supervisors and any shareholders with more than 10% of the company's stocks.
2. The recommendation made to the company's shareholders on such tender offer purchase, wherein the names and reasons of every objecting directors shall be recorded.
3. Whether there were major changes on the company's financial conditions after the delivery of its most recent financial statements, and the contents of such changes.
4. The types, number and amount of shares of the Offeror or its affiliated enterprises as defined under Chapter 6-1 of the Company Law held by the current directors, supervisors or the major shareholders having over 10% of the shareholding of the target company.
5. Other relevant important information.
Shares held by persons in Subparagraph 1 and Subparagraph 4 of the preceding paragraph include those held by his/her spouse and minor children and held under the names of other persons. |
| Article 15 | Public tender offeror shall appoint the following institutions to be responsible for the taking Offeree's deposit of securities, the delivery of public tender offer prospectus, and the receipt and payment of the public tender offer funds or securities, etc.:
1. Securities firms.
2. Banks.
3. Other institutions approval by the SFC.
When an appointed institution takes deposit of securities from the Offeree, it shall issue to the Offeree a receipt describing the types and number of the securities. When an appointed institution takes deposit of securities from the Offeree by means of book-entry via a securities firm, it shall comply with regulations applying to centralized securities depository enterprises. |
| Article 16 | The Offeror, unless buying back shares according to Article 28-2 of the Law, shall serve the public tender offer prospectus to its appointed institution and Securities Related Entities before the commencement date of the public tender offer period; and shall furthermore deliver the public tender offer prospectus to the Offeree at the Offeree's request or upon the Offeree depositing the securities with the appointed institution referred to in the preceding Article. The appointed institution mentioned in the preceding paragraph shall deliver the public tender offer prospectus on behalf of the Offeror. |
| Article 17 | Before making any modifications to conditions other than those set forth in Paragraph 1 of Article 43-2, the Offeror shall file a report with the SFC and make a public announcement, and each Offeree, appointed institution and the public company whose securities are being acquired shall be notified. |
| Article 18 | The length of public tender offer period shall not be less than ten (10) days and more than fifty (50) days.
If what is provided under Paragraph 2 of Article 7 occurs or for another legitimate reason, the original Offeror may report to the SFC and make a public announcement of an extension of the public tender offer period. However, the extension period(s) shall not exceed a total of thirty (30) days. |
| Article 19 | During the public tender offer period, the Offeree may at any time revoke its offered sale. |
| Article 20 | When an Offeror buys back its own shares in accordance with Article 28-2 of the Law, shares held by its affiliated enterprises as defined under Article 369-1 of the Company Law, or directors, supervisors, or managers themselves or spouses or minor children thereof, or held under the name of another person, shall not be sold in response to the offer during the period of share buyback by the Offeror.
When a government operated enterprise in which the government holds more than 50 percent of the total issued shares is approved by the Executive Yuan, at the request of the competent authority of the enterprise, to buy back its own shares in accordance with Subparagraph 3 of Paragraph 1 of Article 28-2 of the Law, the restriction set forth in the preceding paragraph may be exempted.
The price in a public tender offer referred to in the preceding paragraph shall not be higher than the closing securities price on the date of public announcement of the public tender offer or the net worth per share on the financial report for the most recent period, whichever of the two is higher; the public tender offer price and the volume of securities to be acquired through the public tender offer shall furthermore not be changed during the public tender offer period. |
| Article 21 | When termination of a public tender offer proceeding is approved by the SFC pursuant to Paragraph 1 of Article 43-5 of the Law, public announcement and notice of such to each Offeree, appointed institution, and the public company whose securities are being acquired shall be made within two (2) days of receiving SFC approval for termination of the public tender offer. |
| Article 22 | The Offeror shall, within two (2) days from the public tender offer period's expiration date as provided under Article 18 of these Regulations, report to the SFC and publicly announce the following matters:
1. The name or trade name, and domicile or location of the Offeror.
2. The name of the public company whose securities are being acquired.
3. The types of the securities acquired.
4. The public tender offer period.
5. If the tender offer purchase is conditioned upon that the shares number to be sold has reached the projected shares number to be acquired, the description of whether such condition has been satisfied.
6. The number of the securities to be sold and the actual number sold.
7. The time, manner and place for payment of the purchase consideration.
8. The delivery time, manner, and place for the transacted securities.
On the date of public announcement pursuant to the preceding paragraph, the Offeror shall notify the Offerees respectively of the sale-related matters. |
| Article 23 | If the shares number to be sold has exceeded the projected shares number to be acquired, the Offeror shall purchase the shares pro rata from all the Offerees, and shall return those shares which have been deposited but the transaction of which not yet consummated to the original Offerees.
For listed or OTC company securities, the Offeror shall distribute the stocks according to the proportion of the amounts reported by the individual sellers up to a limit of one thousand stocks. If there are stocks left over, the Offeror shall buy the stocks in the random order prescribed by the circumstances. |
| Article 24 | "Legitimate reason" in Paragraph 3 of Article 43-5 of the Law refers to any of the following: 1. Circumstances set forth in Paragraph 2 of Article 7.
2. Where consent has been given by a resolution of the board of directors of the public company whose securities are being acquired, as evidenced by supporting documents. However, this shall not apply where the entirety of the body of directors of the public company whose securities are being acquired does not conform to the provisions of Article 26 of the Law.
3. Other legitimate reasons. |
Chapter IV Supplementary Provisions |
| Article 25 | Report or application documentation submitted under these Regulations shall be prepared and bound pursuant to the statutorily required format. Same rules shall apply when filing corrections. |
| Article 26 | When a non-public company makes a public announcement pursuant to these Regulations, it shall publish the announcement in a newspaper and submit a copy of the newspaper containing the announcement to the SFC for recordation, and copy the same to the Securities Related Entities.
When a public company makes a public announcement pursuant to these Regulations, it shall publish the announcement on the Market Observation Post system and the provisions of the preceding paragraph shall not apply. |
| Article 27 | An Offeror who acquires, individually or jointly with another person(s), over 10% of the outstanding shares of a public company shall be exempted from the requirement to file an acquisition report under Paragraph 1 of Article 43 of the Law for the shares acquired through that public tender offer. |
| Article 28 | These Regulations shall become effective on the date of promulgation. |