Chapter One: General Provisions
|
| Article 1 | These regulations are adopted as prescribed by Article 28 of the Regulations Governing Securities Firms. |
| Article 2 | These Regulations are applicable to the underwriting and resale of corporate stocks, corporate bonds, financial bonds, depository receipts and any other securities as determined by the Securities and Futures Commission, Ministry of Finance (hereinafter, "the SFC"). |
| Article 3 | In the underwriting of securities, a securities underwriter (hereinafter, "an underwriter") shall conduct such business in accordance with these Regulations. |
| Article 4 | In the underwriting of securities, an underwriter shall determine the offering price of the securities according to the following methods:
1. By competitive bidding;
2. By book building; or
3. As resolved by negotiations between the underwriter and the issuing company, issuing institution, or holder of the securities.
The said offering price shall refer to the unit price, coupon rate, conversion ratio, and put yield.
"Issuing institution" as used in these Regulations refers to a trustee institution or a special purpose company that accepts financial assets in trust or in transfer from the originator, and issues beneficiary certificates or asset-based securities based on those assets. |
| Article 4-1 | In the underwriting of securities on a firm commitment basis, except where prescribed by other laws and regulations (for example, ROC Over-the-Counter Securities Exchange Regulations (hereinafter, "the ROSE") Governing the Requirement to Engage a Recommending Securities Firm to Carry Out Underwriting and the Ratio of Subscriptions for its Own Account for Applications by Public Companies for OTC Stock Trading), an underwriter shall act as prescribed by the following provisions with respect to the proportion of securities retained for its own account. However, for any shares unsubscribed at the closure of the underwriting period, these restrictions shall not apply:
1. In the underwriting of initial public offerings (IPOs) for listed or Over-The-Counter (OTC) traded companies, the underwriter shall retain for its own account between 10 percent and 25 percent of the total number of shares underwritten. However, this provision shall not apply to IPOs for state-owned enterprises or certain technology firms as prescribed by the rules related to the examination of applications for listing on the Taiwan Stock Exchange (below, "the TSE");
2. In the underwriting of rights issues, convertible corporate bonds, ordinary corporate bonds not by negotiated sales, financial bonds not by negotiated sales, and Taiwan Depository Receipts for listed or OTC traded companies, the underwriter shall retain for its own account between 5 percent and 15 percent of the total number of shares underwritten. However, these restrictions shall not apply to issues of corporate bonds and Taiwan Depository Receipts undertaken by negotiated sales;
3. In the underwriting of rights issues for companies that are neither listed nor OTC traded, the underwriter shall retain for its own account a proportion not to exceed 15 percent of the total number of units underwritten; and
4. In the underwriting of preferred shares, preferred shares with warrants, and corporate bonds with warrants for public issued companies, the underwriter shall retain for its own account a proportion not to exceed 15 percent of the total number of shares underwritten.
5. Where a public offering of beneficiary certificates by a trustee institution or a public offering of assets-based securities by a special purpose company is not undertaken through negotiated underwriting, the ceiling on self-subscription shall be fifteen percent of the total amount underwritten.
For issues undertaken entirely by book building, each underwriter shall retain for its own account not more than 10 percent of the total number of units underwritten. |
| Article 5 | Underwriters shall allocate shares as prescribed by the following methods excepting that portion of underwritten units retained for its own account as prescribed by the preceding article:
1. By competitive bidding;
2. By book building;
3. By public subscription; or
4. By negotiated sales.
The allocation methods described in the above subparagraphs shall be undertaken in accordance with Articles 6, 7, 21, 22, 22-1, 31 and 52 of these Regulations. |
| Article 5-1 | In the underwriting of securities on a firm commitment basis, the underwriter shall make public announcement for underwriting securities for two consecutive days prior to the date of commencement of the underwriting, publish said announcement in daily newspapers, and act in accordance with the Criteria Governing the Particulars for Recording in Public Announcements of Securities Offerings of the Chinese Securities Association. |
Chapter Two: Determining Offering Price of Securities
|
Section One: Pricing by Competitive Bidding
|
| Article 6 | The following issues may be underwritten by competitive bidding: Offerings of already issued shares prior to listing or OTC trading as an IPO (excepting those for listing on the TIGER Board); issues of convertible corporate bonds and convertible corporate bonds with warrants; and public offerings undertaken as prescribed by Article 22-3 of the Securities Exchange Law (hereinafter, "the SEL"). |
| Article 7 | In the underwriting of securities as prescribed in the preceding Article, excepting government-owned enterprises and convertible corporate bonds, corporate bonds with warrants, and public offerings, lead and secondary underwriters (hereinafter, "the underwriting syndicate") shall provide 50 percent of the apportionment offered to the public for competitive bidding, with the remainder for allocation by public subscription by the members of the underwriting syndicate.
For the underwriting of convertible corporate bonds, the entirety of the apportionment offered to third parties shall be undertaken by competitive bidding. |
| Article 8 | In the underwriting of securities by competitive bidding, the lead underwriter shall first prepare documentation including that in the subparagraphs listed below. After being signed or sealed by the lead and secondary underwriters and the issuer of the securities, said documentation shall be submitted to the Chinese Securities Association:
1. The total number of underwritten units, number of units retained by the underwriter as prescribed by Article 4 paragraph 1, the number of shares offered by competitive bidding and minimum bidding unit;
2. The minimum offering price as resolved by negotiation with the issuer;
3. The firm commitment or best efforts underwriting fee, as resolved by negotiation with the issuer;
4. The unit size of lots offered for public subscription;
5. The names of the members of the underwriting syndicate, and the amount of securities apportioned to each, as specified by Article 7;
6. The method of allocating those units apportioned for competitive bidding that remain unsubscribed among the members of the underwriting syndicate; and
7. The time period of competitive bidding, and the date for submitting and opening bids as agreed in consultation with the Chinese Securities Association.
The upper limit for the minimum offering price in subparagraph 2 of the preceding paragraph shall be determined by the theoretical price as established by pricing formulae commonly employed in the market as prescribed by the Guidelines for the Use of Financial Information in the Pricing of Securities for Underwriting, excepting convertible corporate bonds and corporate bonds with warrants.
In the underwriting of convertible corporate bonds and corporate bonds with warrants by competitive bidding, the minimum offering price, as specified by paragraph 1 subparagraph 2 shall not exceed the par value of said securities.
In the event that unsubscribed shares as specified in paragraph 1 subparagraph 6 are allocated by the underwriting syndicate by negotiated sales, only specified parties listed in Article 35 shall participate in said placement, and those listed in Article 36 shall not participate. |
| Article 9 | A lead underwriter of securities shall make public announcement for two consecutive days no less than two days prior to the date of commencement of the acceptance of public bids, shall publish said announcement in daily newspapers, and shall submit said announcement to the Chinese Securities Association. Said announcement shall include the contents in following subparagraphs:
1. Name of Security;
2. Name, location, and telephone number of the lead underwriter;
3. Method, time period, and site of the public tender;
4. Date, time, and site of the opening of the public bidding;
5. Minimum offering price and minimum unit size;
6. Total number of securities being offered at the bidding by the underwriter; total number of units retained for its own account by the underwriter; the total number of units being offered for competitive bidding, and the amount of the tender guarantee (the sum of the said amounts shall not be less than 20 percent of the amount of the tender);
7. The maximum number of securities that shall be allocated to an individual bidder; and
8. Other supplemental subparagraphs that shall be disclosed in order to safeguard the public interest and investors.
The maximum number of securities that each participant shall receive relating to the preceding subparagraph 7 shall not exceed 3 percent of the apportionment made available for public offering. However, convertible corporate bonds or corporate bonds with warrants that are allocated by competitive bidding, banks, insurance companies, securities investment trust funds managed by securities investment trust companies, Qualified Foreign Institutional Investors (QFII) and those indicated by Article 35 subparagraph 5 are not thus limited but may be allocated a total of not more than ten percent of the apportionment made available for public offering. |
| Article 10 | In the underwriting of securities by competitive bidding, the underwriting syndicate may provide a company prospectus and relevant materials to investors, and convene a public hearing for the issue. |
| Article 11 | In an underwriting by competitive bidding, the underwriter shall act as prescribed by the following for the bidding:
1. Day One: Commencement of the tender;
2. Day Four: Closure of the tender (for a weekend, the tender shall be moved forward by one day); and
3. Tenders shall be opened on the fourth business day subsequent to the closure of the tender, and the Chinese Securities Association and the underwriter shall make public a list of awardees.
The participating bidders relating to paragraph 1 subparagraphs 1 and 2 must submit their bids directly to the premises of the underwriter.
The dates specified under paragraph 1 may be changed if necessary by applying for approval with the Chinese Securities Association. |
| Article 12 | Institutional and individual investors that participate in a public tender shall do so as prescribed by the prescribed format (see Attachment 1). The filling in of the tender form and submission of said form to a member of the underwriting syndicate shall be undertaken as prescribed by these Regulations. If there is any suspicion that the bid is in violation of these Regulations, or other relevant laws and regulations, the underwriter may refuse the bid.
Upon receipt of the bids, the above-mentioned underwriter is entitled to collect the underwriting fee from the participants. In addition, the participants shall provide at this time the tender guarantee as stated in the public announcement as prescribed by Article 9 of these Regulations.
Participants in the tender shall submit sealed bids that may not be withdrawn or altered. During the period of the tender, the underwriter shall not open the bids, and shall collect and log the bids received, assigning a log entry number to each. Before 9AM on the business day following the closure of the tender, received bids shall be delivered to the Chinese Securities Association, for opening at its premises. The Chinese Securities Association shall not accept any bids not delivered by this deadline. Any liability resulting from failure to submit bids by said deadline shall be borne by the underwriter. Upon receipt of the tender guarantee from the bidder, the underwriter shall, on the basis of trust, stipulate the criteria for contract violation and the method of compensation for said violation. |
| Article 13 | If submitted bids conform to any of the following circumstances, said bids will be disqualified from the tender, and the underwriting fee shall not be returned:
1. The bid price is lower than the minimum offering price as prescribed by Article 8 paragraph 1 subparagraph 2;
2. The amount of securities bid for is lower than the minimum lot size;
3. The bid lacks either a signature or seal;
4. Either the bid price or the bid amount has been changed, and the change has not been authenticated by application of the above-mentioned seal, or the data is not legible;
5. Either the tender guarantee or the underwriting fee has not been paid in total;
6. The tender does not indicate a bank account number for the repayment of tender guarantees resulting from unsuccessful bids;
7. In a previous tender, the bidder has failed to fulfill obligations related to the payment for securities; or
8. The identity of the bidder violates the requirements set forth under Articles 35 and 36.
The minimum unit for the bid price is cents; additional decimals shall be eliminated by rounding up or down.
Bid size shall be one thousand units, or integer multiples thereof.
In the underwriting of securities partly by competitive bidding and partly by public subscription, or in the underwriting of convertible corporate bonds or corporate bonds with warrants by competitive bidding, the underwriter shall indicate a space on the bid form for the bidder to fill in his central depository account number. For a bidder that fails to provide said account number, the bid shall be disqualified and the application fee shall not be returned. |
| Article 14 | The underwriters shall record the bid log on electronic data storage media in a form as prescribed by the Chinese Securities Association, and between 9AM and 10AM on the date of the opening of the bids shall bring it to the premises of the ROC SPA for entry. The results of the bidding will be based entirely on these electronic entries, and the underwriters shall refrain from divulging the contents of said media.. |
| Article 15 | At the closure of the tender period, the Chinese Securities Association shall open the bids on the prescribed opening date.
Upon the opening of bids by the Chinese Securities Association, tenders shall be awarded on the basis of bid price in descending order. Identical bids shall be awarded in random order, generated by an electronic computing device, until the entire tender has been awarded.
No individual bidder may be allocated a greater proportion of the tender than as prescribed by Article 9 paragraph 2. If the awarded amount of securities exceeds said proportion, and the lots awarded all bear the same price, the surplus lots are removed in random order generated by an electronic computing device. If the awarded amounts bear 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.
When tenders are awarded to a QFII, the total holdings of said investor as a proportion of the issuing company's outstanding shares shall comply with the restrictions as prescribed by the Regulations Governing Securities Investment by Overseas Chinese and Foreign Nationals. If the amount awarded will cause the total holdings to exceed the prescribed proportion, excess lots shall be awarded to other tender participants on the basis of bid price in descending order. Identical bids shall be awarded in random order, generated by an electronic computing device.
In addition to complying with paragraphs 3 and 4 in this Article, the underwriter shall also comply with all other relevant laws and regulations, and provide all relevant data as prescribed by the Chinese Securities Association. |
| Article 16 | Excepting a public offering, when the underwriting of securities is undertaken entirely by competitive bidding 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 shall be identical to the price paid by the underwriter for units retained for its own account. Said price shall be computed as the weighted average of the bid price of all successful bids. Decimals beyond cents shall be rounded up or down. |
| Article 17 | In the underwriting of securities undertaken partly by competitive bidding and partly by public subscription, when the total number of securities awarded by competitive bidding reaches the full amount available for allocation, the price of those units allocated by public subscription and those retained by the underwriter for its own account shall be determined by one of the following methods:
When not all tenders are awarded at a price greater than a specified multiple of the minimum offering price, as prescribed by Article 8 paragraph 1 subparagraph 2, it shall be computed as the weighted average price of all tenders awarded at a price below a specified multiple of the minimum offering price. Decimals beyond cents shall be rounded up or down; and
When all tenders are awarded at a price greater than a specified multiple of the minimum offering price, as prescribed by Article 8 paragraph 1 subparagraph 2, it shall be computed as a specified multiple of the minimum offering price. Decimals beyond cents shall be rounded up or down.
The specified multiple of the minimum offering price referred to in the preceding paragraph shall be resolved by negotiations between the underwriting syndicate and the issuing company, but shall not exceed a multiple of 1.3.
Excepting a public offering and except 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 offering as determined in the preceding paragraph. |
| Article 18 | In the underwriting of securities by competitive bidding, if the total number of securities bid for is insufficient to cover the number of securities apportioned for that purpose, then the minimum offering price, as prescribed by Article 8 paragraph 1 subparagraph 2, shall act as the price for both those securities that remain unallocated after competitive bidding and those securities retained by the underwriter for its own account. Said remainder shall be allocated as prescribed by Article 8 paragraph 1 subparagraph 6.
Excepting a public offering, the price at which the security opens on its first day of listing shall be the price underwritten according to the preceding paragraph. |
| Article 19 | Immediately following the awarding of bids, the Chinese Securities Association shall print a list of successful bids. Said list shall be made public after being examined and signed by representatives for the Chinese Securities Association, the securities issuer and from every member of the underwriting syndicate.
Said list shall for each bid include the following subparagraphs; awarded log entry number, price at which the tender was awarded, amount of securities allocated, total dollar amount, and personal ID number or juristic person uniform invoice number issued by the establishment withholding department of the tax collection authority at the place of establishment of the juristic person. |
| Article 20 | Immediately following the awarding of bids, members of the underwriting syndicate shall sign the underwriting contract and submit it to the Chinese Securities Association for recordance. |
Section Two: Pricing by Book Building
|
| Article 21 | In the underwriting of a rights issue by book building by an underwriting syndicate, in association with an IPO for the stock exchange or the OTC market (excepting those for listing on the TIGER Board), 50 percent of the total number of those shares offered to third parties shall be allocated by book building, with the remainder offered by the members of the underwriting syndicate by public subscription. |
| Article 22 | The following securities underwriting (excepting those securities for listing on the TIGER Board) may be undertaken entirely by book building or partly by book building and partly by public subscription:
1. Rights issues other than those prescribed by Article 21;
2. Issue and subscription of corporate bonds and financial bonds;
3. Issue and subscription of Taiwan Depository Receipts; and
4. Public offerings. |
| Article 22-1 | In the case of a public offering of beneficiary certificates by a trustee institution or a public offering of assets-based securities by a special-purpose company, when the book-building method is used, the entire portion sold publicly shall be sold through the book-building method. |
| Article 23 | A lead underwriter underwriting securities by book building shall first make provision for the following. All relevant agreements shall be signed or sealed by each lead and secondary underwriter and the issuer (issuing institution) of the securities, and submitted by the underwriter to the Chinese Securities Association for approval:
1. Formation of the underwriting syndicate by solicitation of secondary underwriters;
2. Determination of the total amount of securities for offering by book building;
3. Estimation of the probable range of the offering price, as determined by consultation with the issuer (issuing institution);
4. Determination of the firm commitment or best effort underwriting fee, as resolved by consultation with the issuer (issuing institution); and
5. Determination of the unit size, in the event that the securities will be offered by public subscription. |
| Article 24 | In the underwriting of securities by book building, the underwriter shall make public announcement to that effect for two consecutive days prior to the date of commencement of book building, and shall publish said announcement in daily newspapers. The content of said announcement shall be reported to the Chinese Securities Association, and shall include the items in the following subparagraphs;
1. Name of security;
2. Total number of underwritten securities, number of securities retained by the underwriter for its own account, the number of securities for public offering, and the number of securities for allocation by book building as a proportion of the total number of securities thus offered;
3. Deposit collection method, deposit payer, deposit amount, and conditions under which the deposit may be confiscated relating to the collection of the subscription security deposit by the underwriter as prescribed by Article 40 or Article 42;
4. Name, location, and telephone number of the underwriter;
5. Estimate of the probable range of the offering price;
6. Object, method, time period, and site of the book building; and
7. Other supplemental items that shall be disclosed in order to safeguard the public interest and investors. |
| Article 25 | After filing with and applying to the SFC with the relevant documentation, the underwriting syndicate may provide issuing company (issuing institution) prospectuses and other relevant materials to investors, and may convene a public hearing and begin the book building process. The book building shall be completed within eight business days of the filing taking effect (application being approved). |
| Article 26 | Investors seeking to participate in book building shall fill in a form produced as prescribed by the prescribed format (see Attachment 2) and submit said form to the underwriter.
The underwriting syndicate may entrust the undertaking of the book building process to a securities broker.
If there is any suspicion of a violation of these Regulations, or other relevant laws and regulations, the underwriter may disqualify the application.
In the underwriting of an offering to the public allocated entirely by book building as prescribed by Article 40, or partly by book building and partly by public subscription, the underwriter shall indicate a space on the book building form for the applicant to fill in his central depository account number. |
| Article 27 | With the exception of ordinary corporate bonds, financial bonds, public offerings of beneficiary certificates by trustee institutions or public offerings of assets-based securities by special-purpose companies, the maximum number of securities that each participant in the book building may be allocated shall not exceed 10 percent of the apportionment made available to the public. |
| Article 28 | By submitting the book building form to the underwriter, the investor is merely expressing the desire to subscribe; likewise, by accepting the book building form, the underwriter is merely seeking to establish the desire of the investor to subscribe; thus, neither party is bound by the content of the book building form. However, in the event that the underwriter collects a guarantee deposit for the book building as prescribed by Articles 40 or 42, failure by the investor to fulfill his payment obligation within a required time limit shall be resolved as prescribed by said Articles 40 or 42.
After collecting all the book building forms, the lead underwriter shall decide the offering price by negotiations with the issuing company (issuing institution) or holder of the securities in question. Only one offering price shall be applied to the entire issue. |
| Article 29 | After deciding the offering price for underwriting as prescribed by the preceding Article, the lead underwriter shall request that each secondary underwriter provide detailed information regarding the participating investors (except for the underwriting of ordinary corporate bonds, financial bonds, and public offerings of beneficiary certificates by trustee institutions or public offerings of assets-based securities by special-purpose companies). After adjusting the apportionment of securities among secondary underwriters, the lead underwriter shall draw up and sign an underwriting contract and submit said contract to the Chinese Securities Association. Allocation of securities by book building shall be undertaken as prescribed by the Chinese Securities Association's Regulations Governing Securities Underwriters' Allocation of Securities by Bookbuilding.
After the lead underwriter has informed each member of the underwriting syndicate of the quote based on the actual underwriting offering price, the investors shall make payment as prescribed by that price, and the agreed amount, before the deadline set by the lead underwriter. |
Section Three: Pricing by Negotiation
|
| Article 30 | If the determination of the offering price for underwritten securities is not undertaken as prescribed by Sections One or Two, a reference price shall be determined as prescribed by the Guidelines for the Use of Financial Information in the Pricing of Securities for Underwriting announced by the SFC, and other reasonable pricing methods in current use. Thereupon the underwriter shall resolve the offering price by negotiations with the issuing company (issuing institution) or the holder of said securities. |
| Article 31 | The underwriting of ordinary corporate bonds, financial bonds, public offerings of beneficiary certificates by trustee institutions, public offerings of assets-based securities by special-purpose companies, or corporate bonds with warrants may be undertaken entirely or partly by negotiated sales. The offering price shall be determined as prescribed by Article 30. The underwriting of warrants shall be undertaken entirely by negotiated sales. The public offering of securities in government-owned enterprises, if taking the form of a share released to the general public, may be undertaken entirely by negotiated sales. The method of allocation shall be determined by negotiations between the underwriter and the government agency that regulates the issuing company government-owned enterprises. |
| Article 32 | Except when permission is granted by the securities competent authority, the underwriter which offers ordinary corporate bonds or financial bonds by negotiated sales may allocate not more than 50 percent of the total number of securities to an individual subscriber. Not more than 20 percent of the total number of securities offered may be allocated to an individual subscriber in cases of public offerings of beneficiary certificates by trustee institutions or a public offerings of assets-based securities by special-purpose companies. The underwriter which offers warrants or corporate bonds with warrants by negotiated sales may allocate not more than 10 percent of the total number of securities to an individual subscriber.
If the securities referred to in the preceding paragraph are divided into different classes for issuance, the total volume of an underwritten offering shall be calculated as the total volume of a given single class of securities after the issue has been separated into different tranches. |
Chapter Three: Allocation of Securities
|
Section One: Allocation by Competitive Bidding
|
| Article 33 | When a public offering is undertaken not entirely by competitive bidding, after the underwriter has submitted the underwriting contract to the Chinese Securities Association and made public announcement of the names of the awardees, the underwriter shall mail to the awardees a notification of award and payment form, and complete the refund of guarantee deposits to unsuccessful and disqualified bidders within the following deadlines:
1. Day One: Following the public announcement of award, the underwriter shall mail notification of award and payment form (to be formatted per Attachment 3) to the awardees;
2. Day Four: Following the public announcement of award, the underwriter shall refund the guarantee deposits, (per Article 12 paragraph 2) to the unsuccessful and disqualified bidders;
3. Publication of the underwriting announcement, distribution of the company prospectus, and matters relevant to payment shall be undertaken simultaneously with the public subscription.
Matters relevant to payment in subparagraph 3 of the preceding paragraph above shall be undertaken by the method designated by the underwriter. The deadline for payment shall be identical to that by which awardees in public subscription, as specified by Article 53 paragraph 1 subparagraph 7, must make payment for subscribed securities to the designated bank.
If a date set for paragraph 1 subparagraphs 1 or 2 falls on a public or bank holiday, it shall be moved forward by one day next following the given 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 Chinese Securities Association.
The payment referred to in paragraph 1 subparagraph 3 shall be the purchase price for the securities, less the guarantee deposit as prescribed in Article 12 paragraph 2. In the event that the subscriber fails to fulfill his payment obligation, the underwriter need not refund the guarantee deposit, and shall retain for its own account the unawarded guarantee deposit. The price offered to said subscriber shall constitute the price paid by the underwriter. |
| Article 34 | For a public offering that is entirely undertaken by competitive bidding, the underwriter shall mail to the awardees notification of award, and a payment form, and complete the refund of guarantee deposits to unsuccessful and disqualified subscribers within the following deadlines after said underwriter has submitted the underwriting contract to the Chinese Securities Association and made public announcement;
1. Day One: Following the public announcement of award, the underwriter shall mail notification of award, a company prospectus and payment form to the awardees;
2. Day Four: Following the public announcement of award, the underwriter shall refund the guarantee deposits, (per Article 12 paragraph 2) to the unsuccessful and disqualified subscribers;
3. Day Six: Following the public announcement of award, the payment period for awardees shall commence; and
4. Day Ten: Following the public announcement of award, the payment period for awardees shall conclude.
If a date set for the preceding paragraph falls on a public or bank holiday, it shall be moved forward by one day next following the given 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 Chinese Securities Association.
The payment referred to in paragraph 1 subparagraph 3 shall be the purchase price for the securities, less the guarantee deposit as prescribed by Article 12 paragraph 2. In the event that the subscriber fails to fulfill his payment obligation by the required time limit, the underwriter need not refund the Guarantee deposit, and shall retain for its own account the unawarded securities. The price offered to said subscriber shall constitute the price paid by the underwriter. |
| Article 35 | In the underwriting of securities by competitive bidding, the underwriter is limited to accepting bids from the following persons:
1. ROC Nationals at least 20 years of age;
2. ROC institutional investors and securities investment trust funds managed by securities investment trust enterprises;
3. QFIIs;
4. Overseas Chinese and foreign Nationals, as permitted under the Regulations Governing Securities Investment by Overseas Chinese and Foreign Nationals;
5. Development Fund of the Executive Yuan, Postal Savings System, Public Employees Pension Fund, Labor Pension Fund and Labor Insurance Fund;
6. Others granted permission by the government. |
| Article 36 | Underwriters shall refuse bids from the following parties that respond to an offering by competitive bidding:
1. An invested company that has investments from the issuing company (issuing institution) carried under the equity method;
2. An investor that has investments in the issuing company (issuing institution) carried under the equity method;
3. Where the chairman or general manager of the company is the same person, the spouse, or a relative within the second degree of kinship of the chairman or general manager of the issuing company (issuing institution);
4. A foundation where the amount of donations it has received from the issuing company (issuing institution) is more than one third of the total amount of its paid-in funds;
5. The issuing company's (issuing institution's) chairman, supervisor, general manager, vice general manager, manager, or any officer serving directly under the President;
6. The spouse of any director, supervisor or general manager of the issuing company (issuing institution);
7. A relative within the second degree of kinship of any director, supervisor or general manager of the issuing company (issuing institution);
8. A director, supervisor or employee of the underwriting syndicate, or a relative of such person within the second degree of kinship; or
9. A person who meets the criteria of an interested party as defined in Article 2 of the SEL Enforcement Rules.
When an underwriter allocates convertible corporate bonds or corporate bonds with warrants by competitive bidding, the restrictions listed in above subparagraphs 1 through 7 do not apply. |
| Article 37 | An underwriter shall send notifications, company prospectuses and other relevant materials to awardees by priority registered mail. |
| Article 38 | Notification and payment forms received by awardees shall not be transferred to other parties. |
| Article 39 | The underwriter shall store, for a period of thirty days after the public announcement, all data relevant to the competitive bidding process. Information relating to disqualified bids and awardees shall be stored for a period of one year. However, if the SFC or the Chinese Securities Association deems it necessary, it may request an extension of the storage period. |
Section Two: Allocation by Book Building
|
| Article 40 | Where a listed or OTC traded company underwrites a rights issue as prescribed by Article 22 subparagraph 1 and where the portion of the shares for public allocation are allocated entirely by book building, the company shall, within two days of receiving a letter of approval for the contract for securities offering and issuance, make a public announcement of securities offering, and on the following day undertake the following:
1. Day One: Date of the sending of notifications, company prospectuses, and payment forms (formatting shall be per Attachment 4) by the underwriters;
2. Day Three: Date of commencement of the payment period for awardees, and date for refunding of book building guarantee deposits for unsuccessful bidders;
3. Day Seven: Date of closure of payment period for book building applicants;
4. Day Nine: Date of application by the issuer with the TSE for listing or with the ROSE for OTC trading of share payment certificates;
5. Day Ten: Completion of organization of the shareholders' roster;
6. Day Eleven: Announcement of listing or OTC trading of share payment certificates; and
7. Day Twelve: Disbursal of share payment certificates to shareholders, and listing or OTC trading of said certificates.
If a date set for the preceding paragraph or for Day Eight falls on a public or bank holiday, it shall be moved forward by one day next following the given 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 Chinese Securities Association.
In the underwriting of securities as prescribed by Article 22 subparagraph 1, excepting those securities subscribed to by the company's employees, the whole of the remainder shall be offered for underwriting, and the proportion made available for public subscription shall be allocated entirely by book building. If said employees can comply with the payment period specified in paragraph 1, paragraph 1 shall apply.
In the undertaking of the above paragraph 1, 50 percent of the underwritten securities shall be set aside for book building, for distribution among the existing shareholders in proportion to their current holdings of the company's securities. However, the restrictions listed in Article 27 shall still apply. In the event that existing shareholders subscribe to less than 50 percent of the underwritten securities, the remainder shall be consolidated for allocation to third parties by book building.
When the subscribers are delivering the book building form, the underwriter may collect a guarantee deposit from the subscriber of not more than 20 percent of the value of the subscribed securities.
The book building guarantee deposit as referred to in the above paragraph 1 subparagraph 2 shall be the full amount of the guarantee deposit for unsuccessful bidders, and shall be the amount of the guarantee deposit in excess of the payment for securities allocated to awardees.
The payment to be made by the subscriber as referred to in paragraph 1 subparagraph 2 above shall be the price of the securities subscribed less any guarantee deposit paid. In the event that said subscriber does not fulfill his obligation to make payment for subscribed securities, the underwriter may confiscate the guarantee deposit and shall retain for its own account said securities at the price offered to the subscriber.
The underwriter that collects guarantee deposits for subscription for book building as prescribed by paragraph 6 above shall do so as prescribed by Article 12 paragraph 4. |
| Article 41 | For an offering as prescribed by Article 22 subparagraph 4 undertaken entirely by book building, within two days of the obtaining of a letter of approval and recordation of the contract for offering and issue of underwritten securities, public announcement shall be made, and on the next day, the following shall be undertaken:
1. Day One: Sending of notifications, company prospectuses, and payment terms to the subscribers by underwriters;
2. Day Three: Date of commencement of the payment period for book building applicants;
3. Day Seven: Date of closure of the payment period for book building applicants; and
4. Day Fifteen: Disbursal of the securities.
If a date set for the preceding paragraph or for Day Eight falls on a public or bank holiday, it shall be moved forward by one day next following the given 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 Chinese Securities Association. |
| Article 42 | If the underwriting of securities is undertaken as prescribed by Article 21, Article 22 paragraphs 2, 3 or 4, or Article 22-1 (excepting underwriting as prescribed by the preceding Article), excluding rights issues undertaken as prescribed by Article 40, after submitting the underwriting contract to the Chinese Securities Association, the underwriter shall make public announcement two days prior to the commencement of book building (said announcement may also offer securities for public subscription), and shall undertake the following:
1. Day One: Underwriters shall send to subscribers notifications, company prospectuses and payment forms (formatted as Attachment 4), or subscription forms and payment forms (formatted as Attachments 5, 5-1, and 5-2 respectively), or Taiwan Depository Receipt payment forms (formatted as Attachment 6); and
2. Payment period: If securities are simultaneously offered by public subscription, the payment period shall be identical to that by which awardees in said public subscription, as specified by Article 53 paragraph 1 subparagraph 7, must make payment for subscribed securities to the designated bank. If no securities are offered by public subscription, then the payment period shall be specified by paragraph 1 subparagraphs 2 and 3 in the preceding Article.
If a date set for the preceding paragraph or for Day Eight falls on a public or bank holiday, it shall be moved forward by one day next following the given 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 Chinese Securities Association.
Between the time the subscriber commits to the purchase of securities and the commencement of the payment period, the underwriter may request that the subscriber pay a guarantee deposit of the full amount or part of the amount of the purchase price of said securities.
The payment to be made by the subscriber as referred to in paragraph 1, subparagraph 2 above shall be the price of the securities subscribed less any guarantee deposit paid. In the event that said subscriber does not fulfill his obligation to make payment for subscribed securities, the underwriter may opt not to refund the guarantee deposit.
The underwriter accepting guarantee deposits for book building by subscribers shall follow the requirements as prescribed by Article 12 paragraph 4. |
| Article 43 | When an underwriter accepts bids from subscribers for book building, the regulations provided in Articles 35 and 36 shall apply mutatis mutandis. However, for underwriting undertaken as prescribed by Article 22 paragraphs 2 through 4, Article 22-1, or Article 40, the identities of subscribers shall not be limited by Article 36 paragraphs 1 through 7. For securities allocated on a preferential basis to existing shareholders as prescribed by Article 40 paragraph 5, the restrictions of each paragraph in Article 36 shall not apply. For securities allocated by an underwriter but not paid for by the subscribers and reallocated to new subscribers by negotiated sales, the provisions in the preceding paragraph shall apply mutatis mutandis to the new subscribers. |
| Article 44 | Subscribers participating in the underwriting of securities by book building as prescribed by Article 40, or in the underwriting of warrants which is undertaken entirely by negotiated sales as prescribed by Article 31 paragraph 2, shall first apply to open an electronic transfer custodial account with the Taiwan Central Securities Depository Corporation (hereinafter, referred to as "the Central Depository") as prescribed by the business operations rules of said corporation. When making payment for securities, the subscriber shall provide the number of said account in order to facilitate the delivery of said securities. |
| Article 45 | The underwriter shall store for a period of thirty days after allocation all data relevant to the book building process. Information relating to disqualified bids and awardees shall be stored for a period of one year. However, if the SFC or the Chinese Securities Association deems it necessary, a request may be made for extension of the storage period. |
| Article 46 | An underwriter may enter into a securities book building and allotment contract with a securities broker as prescribed by Article 26 paragraph 2 to distribute securities and may entrust said broker to act on its behalf in other matters related to subscription and allotment of said securities. |
| Article 47 | For an underwriter entrusting a securities broker to allot securities on its behalf, the allotment price and the offering price shall be identical. |
| Article 48 | An underwriter entrusting a securities broker to allot securities on its behalf shall draw up a securities allotment contract. |
| Article 49 | A securities broker allotting securities on behalf of an underwriter, shall prepare a record of the names of subscribers and the amount of securities subscribed to by each, and submit said record to the underwriter. |
| Article 50 | In allotting securities on behalf of an underwriter, a securities broker and all agents employed by said broker shall abide by the following rules:
1. A prospectus and other relevant material detailing the terms under which securities are to be issued, the operating and financial conditions of the issuer, and other relevant matters shall be provided to subscribers;
2. No guarantees or commitments shall be made to subscribers regarding the investment return of the securities;
3. Contracts may not be entered into with underwriters on behalf of subscribers who are obviously incapable of effecting payment;
4. No improper solicitations may be made to subscribers; and
5. Related activities shall not be undertaken in any manner prohibited by the SFC. |
| Article 51 | The fee for allotment of securities to be received by the securities dealer shall be determined by negotiation with the underwriter. |
Section Three Allocation by Public Subscription
|
| Article 52 | The following offerings shall be undertaken by public subscription:
1. An offering not as prescribed in Articles 6, 7, 21, 22, 22-1, and 31, where the portion for public sale shall be undertaken entirely by public subscription;
2. An offering as prescribed in Article 7, where the portion for public sale undertaken by competitive bidding and the remainder shall be undertaken by public subscription;
3. An offering as prescribed in Articles 21 and 22, where the portion for public sale shall be undertaken by book building and the remainder shall be undertaken by public subscription;
4. An offering as prescribed in Article 31 paragraph 1 by negotiated sales where the remainder shall be undertaken by public subscription; and
5. An offering of Type II OTC shares.
For an offering by public subscription, the total number undertaken by any given underwriter may not be less than 500 lots for a best efforts offering and 300 lots for a firm commitment offering. However, this restriction shall not apply where the total number undertaken by public subscription is less than 1,000 lots for a best efforts offering and 600 lots for a firm commitment offering.
Where the total number of individual shares in an offering for public subscription is less than 3 million shares, each lot shall be restricted to 1,000 shares. |
| Article 53 | For an offering by public subscription, the underwriter shall make a public announcement of an offering for two consecutive days before commencement of the offering. The underwriter shall, together with the broker, undertake the following matters within the following times regarding public subscription, lottery, and lottery winner withholdings:
1. Day One: Date of commencement of subscription and commencement of offering periods for underwriting;
2. Day Four: Date of closure of subscription. Deadline for payment of subscription fee to correspondent bank;
3. Day Five: Date of withholding of subscription fee. Correspondent bank of the broker undertakes matters regarding withholding of subscription fee;
4. Day Six: Date of settlement of subscription fee;
5. Day Seven: Date of public lottery drawing. TSEC undertakes drawing. Lead underwriter announces list of winners. TSEC shall produce and send report of winner information to each broker. TSEC shall compile and report the information to the lead underwriter for provision to subscribers for their review;
6. Day Eight: Underwriter shall issue, within two days by registered post, lottery winner notification slip, prospectus (or subscription form), or subscription waiver declaration (Attachment 7) to each lottery winner;
7. Day Fourteen: Deadline for reception from the lottery winner of the subscription waiver declaration. Deadline for payment by lottery winner to correspondent bank of the subscription payment, and costs of posting the lottery winner notification slip and related materials (hereinafter, the "lottery winner notification fee") as prescribed by subparagraph 6;
8. Day Fifteen: Date of withholding of subscription payment and lottery winner notification fee; and
9. Day Sixteen: Date of settlement of the subscription payment and lottery winner notification fee.
The subscriber shall, on any given day during the subscription period between 09:00 and 14:00, fill-in a subscription letter (formatted as in Attachment 8) 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, fill-in and submit a subscription letter by fax or 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 a date set for paragraph 1 subparagraphs 2, 3, 4, 5, 6, 7, 8, or 9 falls on a public or bank holiday, it shall be moved forward by one day next following the given 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 Chinese Securities Association.
The document reception deadline for the subscription waiver declaration as used in paragraph 1 subparagraph 7 shall mean that the lottery winner may, by 14:00 of said deadline, fill-in and submit the said declaration to the original recipient broker in person, by post, fax, or Internet.
If the lottery winner has insufficient funds such that the correspondent bank is unable to withhold the subscription payment and lottery winner notification fee as prescribed in paragraph 1 subparagraph 8, it shall be deemed to have waived its subscription, and the handling fee withheld as prescribed by subparagraph 3 of the same paragraph may not be refunded.
The lottery winner notification fee shall be withheld with precedence from a lottery winner with insufficient funds and a lottery winner who has waived his subscription as referred to in the preceding paragraph.
The Chinese Securities Association shall prescribe the standard for the lottery winner notification fee.
The securities firm shall be responsible for compensation for any injury suffered by the lottery winner if resulting from the service of the lottery winner announcement. However, 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 prescribed by the Chinese Securities Association. If the number of shares subscribed does not exceed the number of shares to be sold, all qualified subscribers shall be deemed lottery winners, and a public lottery shall be unnecessary.
After the subscriber has commissioned subscription with a broker, the subscription letter may not be withdrawn or changed. |
| Article 54 | A subscriber in a public subscription by a securities firm shall be restricted to an ROC national. |
| Article 55 | The lead underwriter shall be responsible for undertaking a public announcement of an underwriting. The broker shall place said announcement, subscription letter and subscription waiver declaration in the business premises of the broker to be made available to investors upon request. The announcement shall be provided by the lead underwriter. The subscription letter and subscription waiver declaration may be photocopied or printed in equivalent dimensions by investors for undertaking subscription or subscription waiver. |
| Article 56 | A subscriber may use only one broker with respect to each kind of publicly subscribed security, and may not undertake duplicated subscription. Each subscriber is restricted to subscribing to one lot. The handling fee is NT$30 as prescribed by subscription. The receiving broker shall notify the correspondent bank to withhold the fee from the subscriber account on the date prescribed in Article 53. |
| Article 57 | Brokers undertaking subscription services shall open a special account at the correspondent bank for the subscriber fee, lottery winner notification fee, and subscription payment. The funds in said account shall not be used for other purposes. |
| Article 58 | A broker may 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:
1. Has not opened a trading account, electronic transfer custodial account, or central depository account with the broker undertaking consigned subscription;
2. Has not signed a consignment contract with the correspondent bank designated by the broker regarding matters related to the withholding of funds regarding the public subscription;
3. Has not undertaken subscription within the required time;
4. Has not filled in full or truthfully the required items in the subscription consignment contract;
5. Has not signed or sealed the subscription consignment contract. This provision shall not apply to those who undertake subscription by telephone or Internet;
6. The balance in the subscriber bank account for payment by wire transfer is less than the sum of the subscription fees and subscription payment; and
7. Has exploitatively or fraudulently used the name of another person.
The broker shall duly verify each of the preceding conditions. |
| Article 59 | After being consigned to undertake subscription, the broker shall, on a daily basis, input information regarding the subscription letter into the TSEC's computer system by batch file transmission or terminal key-in. Before the drawing, information regarding subscriptions where the handling fee cannot be withheld due to insufficient bank funds or information regarding duplicated subscription shall be excluded, and fees already withheld shall be returned.
On the date of the public lottery, the TSEC shall place a list of the qualified and unqualified subscribers as prescribed by the preceding paragraph (restricted to the consigned portions) at the Chinese Securities Association, the TSEC, and the business premises of the lead underwriter and broker to be available for review.
For duplicated subscription as prescribed by paragraph 1, the subscriber shall be notified by the underwriter by registered letter within one week of the closure of the offering period. |
| Article 60 | Where the number subscribed exceeds the number to be sold, the TSEC shall undertake a computerized public lottery with respect to those qualified. The TSEC shall invite representatives of the Chinese Securities Association, related groups, and the issuer to jointly monitor the lottery.
When undertaking the public lottery, the TSEC shall ask the monitor personnel to draw lots from among the observer identification badge numbers of the observers present to decide a lottery representative who will undertake the lottery. |
| Article 61 | For a firm commitment offering by public subscription, where the sum of the unsubscribed shares and the unpurchased shares by the bid winners does not exceed 10 percent of the total number of shares for allocation by public subscription, the underwriting syndicate shall purchase the entirety of the shortfall. Where the shortfall exceeds 10 percent, the underwriting syndicate shall purchase the portion of the shortfall up to 10 percent, and a designated person of the underwriting syndicate may allocate the remainder by negotiated sales or itself purchase the remainder.
With respect to own purchase of remainder of shares by the underwriting syndicate as referred to in the preceding paragraph, where the offering is prohibited by other laws or regulations, or is for a company that is not listed on the stock exchange or traded on the OTC market, it shall not be subject to the provisions in the preceding paragraph with respect to own purchase of the remainder of shares, and the remainder shall be allocated by negotiated sales to a designated person of the underwriting syndicate.
The designated person referred to in the preceding paragraphs 1 and 2 shall be confined to those persons listed under Article 35, and may not have the persons listed under Article 36 as their sales counterparts. |
| Article 62 | For an IPO or initial OTC offering by rights issue, an offering by rights issue undertaken by a company listed on the stock exchange or traded on the OTC market, or a corporate bonds or Taiwan Depository Receipts offering by public subscription, after payment for securities and lottery winner notification fee has been completed by the subscriber as prescribed by Article 53 paragraph 1 subparagraph 8, the securities firms and relevant departments shall undertake the following work within the following times regarding stock exchange or OTC exchange listing:
1. Day Seventeen: Deadline for negotiated sales or direct purchase;
2. Day Nineteen: Issuer applies for listing on the stock exchange or OTC exchange with the TSE or OSE using the certificate of payment;
3. Day Twenty: Compilation of shareholders (creditors) register is completed;
4. Day Twenty-one:
(1) Listing of securities on stock exchange or OTC exchange is publicly announced.
(2) Issuer transfers share payment certificates to Central Depository;
5. Day Twenty-two:
(1) Securities electronically transferred from a central depository company to the subscriber's central depository account; and
(2) Securities listed on stock exchange or OTC exchange.
If, on the dates specified in the above subparagraphs and on Day Eighteen, there occur one or more public or bank holidays, the deadline shall be moved forward by one day next following the given day; and the subsequent days shall be extended accordingly.
The dates specified under paragraph 1 may be changed if necessary by applying for approval with the Chinese Securities Association. |
| Article 63 | For an IPO or initial OTC offering by public subscription, after payment for securities and lottery winner notification fee has been completed by the subscriber as prescribed by Article 53 paragraph 1 subparagraph 8, the securities firms and relevant departments shall undertake the following work within the following times regarding stock market or OTC market listing:
1. Day Seventeen: Deadline for negotiated sales or own purchase;
2. Day Nineteen: Application by the company applying for listing or OTC trading with the TSEC or ROSE for listing or OTC trading of the share payment certificates;
3. Day Twenty: Completion of compilation of shareholders register;
4. Day Twenty-one:
(1) Public announcement of listing or OTC trading of stock shares; and
(2) Transfer by the issuer of share payment certificates to a central depository company.
5. Day Twenty-two;
(1) Electronic transfer of the securities from Central Depository to the subscriber's central depository account; and
(2) Listing or OTC trading of the shares.
If a date set for the preceding paragraph or for Day Eighteen falls on a public or bank holiday, it shall be moved forward by one day next following the given 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 Chinese Securities Association. |
| Article 64 | For a public offering by public subscription, after withholding of subscription payment and lottery winner notification fee has been completed as prescribed by Article 53 paragraph 1 subparagraph 8, the securities firms and relevant departments shall undertake the following work:
1. Day Seventeen: Deadline for negotiated sales or own purchase;
2. Day Nineteen: Bearer of securities transfers them to Central Depository; and
3. Day Twenty: Securities electronically transferred by Central Depository to purchaser's central depository account. Purchaser may engage in trading of the securities.
If a date set for the preceding paragraph or for Day Eighteen falls on a public or bank holiday, it shall be moved forward by one day next following the given 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 Chinese Securities Association. |
| Article 65 | For a rights issue offering for a company not listed on the stock exchange or trades on the OTC market by public subscription, after the subscription payment and lottery winner notification fee has been withheld as prescribed by Article 53 paragraph 1 subparagraph 8, the underwriter shall, on Day Seventeen, undertake negotiated sales or own purchase, and after the securities have been produced by the issuer, the lead underwriter shall, together with the issuer, send the securities to the central depository company for deposit into the purchaser's central depository account, or may distribute the securities as prescribed mutatis mutandis in Article 75. |
| Article 66 | Upon completion of the lottery, the TSE shall print the daily time schedule of the offering. Said schedule shall be signed by the representatives of the TSE, issuer, and underwriter, and then shall be publicly announced. The schedule shall list the names of the lottery winners and be filed with the competent authority.
The schedule as prescribed by the preceding paragraph shall include the sequential order and the national ID certificate of the lottery winner. |
| Article 67 | After the awarding of lottery winners, if it is discovered that such winner has not opened or has 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 allocate the shares of such winner by negotiated sales or shall purchase such shares itself as prescribed by Article 61. |
| Article 68 | The lottery monitors shall undertake the monitoring of personnel for the following work on the day of the drawing:
1. Determine whether the lottery delegate is undertaking the operating procedures as prescribed by regulation; and
2. Maintain order at the premises of the lottery drawing. |
| Article 69 | When undertaking the computerized public lottery, the TSE may chose to undertake the lottery using several computer terminals in simultaneous operation depending on the number of qualified participants or the quantity of sales. |
| Article 70 | Securities firms shall, after the public announcement of the lottery winners, keep general subscription information for 30 days and subscription information regarding unqualified subscribers or lottery winners for 90 days. However, the SFC and Chinese Securities Association may extend these times in consideration of the needs at the time. |
| Article 71 | Articles 37 and 38 shall apply mutatis mutandis to offerings by public subscription. |
Section Four Allocation by Negotiated Sales
|
| Article 72 | For an offering by negotiated sales, the underwriter shall complete the offering within the offering period, and shall make a public announcement of offering for two consecutive days before the date of commencement of the offering. |
| Article 73 | For an offering of ordinary corporate bonds, financial bonds, and corporate bonds with warrants, Articles 35 and 36 shall apply mutatis mutandis to the subject of negotiated sale by the underwriter.
The subject of negotiated sale for the offering of call (put) warrants shall be undertaken as prescribed by the Taiwan Stock Exchange Corporation Criteria Governing Review of Call (Put) Warrant Listings. In cases of public offerings of beneficiary certificates by trustee institutions or public offerings of assets-based securities by special-purpose companies, the counterparts in negotiated underwriting by a securities firm shall be governed by the mutatis mutandis application of Articles 35 and 36, provided they shall not be subject to the limitations under subparagraphs 1-7 of Article 36. |
| Article 74 | For an offering by negotiated sales, the underwriter shall deliver prospectuses before subscription by the subscribers. |
Chapter Four Issue of Securities
|
Section One Issue by Competitive Bidding
|
| Article 75 | When an underwriter undertakes an offering by competitive bidding, except for issues undertaken by both competitive bidding and public subscription, distribution shall be undertaken within 1 month of the offering commencement date. The underwriter shall affix the seals of the responsible personnel and managers to the securities collection notification slip. Uncollected shares shall be transferred to the issuer or its agent for handling. Distribution shall be undertaken as follows:
1. If it is found that contents recorded in the name (or name of juristic person), national ID uniform number (or tax address uniform number of juristic person), and original copy of national ID certificate (or photocopy of company registration certificate of juristic person) filled in the bid winner's bid, subscription letter, or payment letter are not in conformity, its winning bid shall be disqualified.
2. When collecting the shares in person or by post, the subscriber shall furnish a document of proof of share payment, seal, and original copy of own national ID certificate (company registration certificate shall be used for collection by juristic person). If another person is entrusted to collect the shares, an original copy of the authorization letter and the national ID certificate of the authorized collector shall be furnished.
3. If the subscriber dies after subscription but before issue, when collecting the shares, the subscriber's inheritor shall furnish the subscriber's death certificate, original copy of the inheritor's national ID certificate (household registration and original copy of national ID certificate of juristic person may be used for collection by minor under 14 years of age), inheritance arrangement, duplicate copy of household registration (sole household and relevant household), certificate of authentication of the inheritor's seal (certificate of juristic person shall be used for collection by minor), and certificate of proof of settlement of inheritance tax. If an inheritor waives inheritance, a securities inheritance waiver consent letter filed with the court and other relevant documents shall be furnished.
If the offering as prescribed by the preceding paragraph is undertaken by competitive bidding and public subscription, distribution shall be undertaken simultaneously and in the same manner as that for an offering by public subscription.
For an offering of convertible corporate bonds by competitive bid, distribution shall be undertaken by book-entry transfer as prescribed by the Rules of Business Operation of the Taiwan Securities Central Depository Company. |
Section Two Issue by Book Building
|
| Article 76 | For an offering by book building as prescribed by Article 40, distribution of such securities shall be undertaken by book-entry transfer using share payment certificates as prescribed by the Rules of Business Operation of the Taiwan Securities Central Depository Company. |
| Article 77 | For securities by book building as prescribed by Articles 41 and 42, distribution of such securities shall be undertaken and Articles 75 and 76 shall be applied mutatis mutandis to such distribution. |
Section Three Issue by Public Subscription
|
| Article 78 | For securities by public subscription, distribution shall be undertaken and Article 76 shall be applied mutatis mutandis to such distribution. |
| Article 79 | For an offering of ordinary corporate bonds, corporate bonds with warrants, and financial bonds by negotiated sales, the subscribers shall collect their shares from the underwriter in person or by an authorized person by furnishing share purchase certificate, seal, original copy of own national ID certificate, or photocopy of company registration certificate (authorization letter and national ID certificate of authorized person shall be furnished for collection by an authorized person).
For issue of call (put) warrants by negotiated sales, distribution shall be undertaken as prescribed by the Rules of Business Operation of the Taiwan Securities Central Depository Company.
In cases of public offerings of beneficiary certificates by trustee institutions or public offerings of assets-based securities by special-purpose companies, their distribution of securities shall be governed by the mutatis mutandis application of paragraph 1 or paragraph 2 above. |
Chapter Five Supplementary Articles |
| Article 80 | The transfer of securities underwritten by an underwriter shall be undertaken as prescribed by the Guidelines Governing the Processing of Securities Matters By An Issuer. |
| Article 81 | A securities firm shall process a subscription from a QFII as prescribed by the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals |
| Article 82 | Persons participating in the subscription to an underwritten offering as prescribed by these Regulations may not do so by exploitatively or fraudulently using another person's name or by falsifying a national ID certificate. If a subscription participant is found to have done so, its subscription qualification shall be cancelled and the handling fee may not be refunded. If a subscriber is found to have done so, its subscription qualification shall be cancelled and subscription payments and lottery winner notification fee may not be refunded. |
| Article 83 | If a person participating in the subscription to an offering as prescribed by these Regulations is found to meet conditions in Article 58 paragraph 1 or Article 75 paragraph 1 subparagraph 1, after its subscription qualification has been cancelled, subscription payments already withheld/paid shall be refunded, however, any handling fee and lottery winner notification fee already withheld/paid may not be refunded.
If a person whose subscription qualification has been cancelled as prescribed by the preceding paragraph and an inheritor whose subscription qualification has been cancelled wishes to request a refund of payments already made, they shall furnish an original copy of the subscriber's or inheritor's national ID certificate (if the juristic person is a profit-seeking enterprise, it shall be the company registration certificate, or if a minor less than 14 years of age, an original copy of the household registration and juristic person's national ID certificate may be furnished), payment form receipt (subscription form and payment form, however, those allocated shares in the public subscription have no payment form receipts.) payment form (subscription form and payment form) sealed (those allocated shares in the public subscription shall use the seal used to open their trading account), and address the original underwriter (in case of those shares in the public subscription, the original broker shall be addressed) to undertake a refund. |
| Article 84 | The Chinese Securities Association and relevant agencies may collect competitive bid and public subscription fees from securities firms. These fees shall be formulated by the Chinese Securities Association in consultation with the relevant agencies, and shall be reported to the competent authority for approval and subsequent enforcement. |
| Article 85 | For an offering by competitive bidding as prescribed by Article 6, if the tender winner fails to make payment, he shall be deemed in breach of contract, and the Chinese Securities Association shall not permit such person to participate in a tendering in the future. During the tendering period, underwriters shall report any occurrences of breach of contract to the Chinese Securities Association, and shall notify the person who is in breach of contract.
On the basis of the letter of report of an underwriter as prescribed by the preceding paragraph, the Chinese Securities Association shall notify all underwriters who shall then refuse to accept tenders from the person who is in breach of contract. Where a tender has already been accepted, the tendering qualification of said person shall be canceled.
On the basis of a breach of contract reported by an underwriter as prescribed by the preceding paragraph, after the Chinese Securities Association has notified all underwriters, if the rights and interests of a principal have been injured or for any other dispute, the underwriter reporting the breach of contract shall be held liable. |
| Article 85-1 | (Deleted) |
| Article 86 | The Chinese Securities Association shall report to a disciplinary committee any violations of laws and regulations or of these Regulations by securities firms. |
| Article 87 | These Regulations and any amendments hereto shall take force after passage by a meeting of the board of directors, and subsequent reporting to and approval by the SFC. |