Chapter I General Provisions
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| 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, the GreTai Securities Market Regulations 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 held for its own account; provided, however, that for any shares purchased for its own account that remain unsubscribed at the closure of the underwriting period, these restrictions shall not apply:
1. In the underwriting of an initial public offering (IPO) carried out by a public company on the stock exchange or an over-the-counter (OTC) market, the underwriter shall hold for its own account between 10 percent and 25 percent of the total number of shares underwritten; provided, however, that this provision shall not apply to the underwriting of an IPO carried out by a state-owned enterprise or a technology-based enterprise as set forth under the provisions of the Taiwan Stock Exchange Corporation Criteria for Review of Securities Listings;
2. In the underwriting of cash capital increase, convertible corporate bonds, ordinary corporate bonds not by negotiated sale, financial bonds not by negotiated sales, and Taiwan Depositary Receipts for listed or OTC-traded companies, the underwriter shall hold for its own account from 5 percent to 15 percent of the total number of units underwritten;
3. In the underwriting of cash capital increase for companies that are neither listed nor OTC-traded, the underwriter may hold 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 companies, the underwriter may hold for its own account a proportion not to exceed 15 percent of the total number of units underwritten.
5. Where a public placement of beneficiary certificates by a trustee institution or a public offering of asset-backed securities by a special purpose company is not undertaken through negotiated sale, purchases on own account shall not exceed fifteen percent of the total amount underwritten.
For issues undertaken entirely by book building, each underwriter shall hold for its own account not more than 10 percent of the total number of units underwritten.
Where a public company carrying out a cash capital increase encounters waiver of subscription rights by an existing shareholder in accordance with the provisions of Article 267, paragraph 3 of the Company Act, and the authority with jurisdiction over such existing shareholder consents to incorporation of [the corresponding units] into the public underwriting, the portion thus incorporated into the public underwriting shall be excluded when calculating the "total number of units underwritten" set out in paragraph 1, subparagraph 2. |
| 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 | An underwriter [intending to] underwrite securities shall publish an underwriting notice for two consecutive days in daily newspapers, and [in so doing] shall act in accordance with the Chinese Securities Association Guidelines Governing the Particulars to be Recorded by Securities Underwriters in Securities Underwriting Announcements. |
Chapter II Offering Price
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Section 1 Pricing by Competitive Auction
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| Article 6 | In the underwriting of an IPO on the stock exchange or an OTC market (other than the GreTai Securities Market's second board [Tiger Board]) involving issued shares or cash capital increase through a new share issue, and in the underwriting of a cash capital increase by a company already listed on the stock exchange or an OTC market in which all shares are put up for underwritten distribution, where underwriting is not carried out using the book building method, the shares shall be offered through competitive auction; provided, however, that in the underwriting of an IPO on the stock exchange or an OTC market where the total number of shares is less than 3 million, shares put up for public sale may be allocated entirely through public subscription.
In the underwriting of convertible corporate bonds or corporate bonds with warrants, and in public placement offerings carried out in accordance with the provisions of Article 22 paragraph 3 of the Securities and Exchange Act (hereinafter, "public placement offerings"), the securities may be offered through competitive auction. |
| Article 7 | In the underwriting of securities issued through competitive auction as prescribed in the preceding article, except where the issuer is a government-owned enterprise, underwriting of that portion of the offering put up for public sale shall be handled in accordance with the following provisions:
1. In the underwriting of an IPO on the stock exchange or an OTC market (other than the GreTai Securities Market's second board [Tiger Board]), 50 percent shall be offered through competitive auction, and the remainder shall be offered through public subscription.
2. In the underwriting of an offering of convertible bonds, and in the underwriting of a cash capital increase by a company already listed on the stock exchange or an OTC market in which all shares are put up for underwritten distribution, all units shall be offered through competitive auction.
3. In the underwriting of offering of corporate bonds with warrants and public placements, the units may be offered either entirely through competitive auction, or through a combination of competitive auction and public subscription. |
| Article 8 | In the underwriting of securities offered through competitive auction, the lead underwriter shall first prepare documentation determining the particulars listed in the subparagraphs below. After being signed or sealed by the lead underwriter and co-underwriters and the issuer of the securities, said documentation shall be reported to the Chinese Securities Association:
1. the total number of underwritten units, number of units held by the underwriter for its own account as prescribed by Article 4-1, the number of units offered by competitive auction, and minimum bidding unit;
2. the minimum offering price as resolved by negotiation with the issuer;
3. the firm-commitment fee or best-efforts underwriting fee, as resolved by negotiation with the issuer;
4. the unit size of lots offered through 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 among the members of the underwriting syndicate any units that remain unsubscribed after conclusion of competitive auction; and
7. the date(s) of competitive auction and the time(s) 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, in the case of an IPO on the stock exchange or an OTC market, be the theoretical price established using "pricing formulae commonly employed in the market" as set forth in 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 a cash capital increase by a company already listed on the stock exchange or an OTC market in which all shares are put up for underwritten distribution, [it] shall not be lower than 90 percent of (1) the closing common share price on the business day prior to the offer through competitive auction, or (2) the simple average of closing common share prices over either the three or five business days prior to the offer through competitive auction, factoring out bonus shares issued as stock dividend (or treasury shares canceled in connection with a
capital reduction).
In the underwriting of convertible corporate bonds and corporate bonds with warrants by competitive auction, the minimum offering price, as negotiated pursuant to paragraph 1 subparagraph 2, shall not exceed the par value of said securities.
In the event that unsubscribed units as specified in paragraph 1 subparagraph 6 are allocated by the underwriting syndicate to a specified party through negotiated sale, only the 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 in daily newspapers on the first and second days on which public bids are accepted. 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 the security;
2. name, address, and telephone number of the underwriters;
3. method, time period, and site of the bidding;
4. date, time, and site of the opening of the bids;
5. minimum offering price and minimum bidding unit;
6. total quantity of securities to be put up for underwritten distribution; total number of units retained for their own accounts by the underwriters; the total number of units being offered for competitive auction, and the amount of the tender guarantee (the amount of the tender guarantee shall not be less than 20 percent of the amount of the tender);
7. the maximum quantity of securities that shall be allocated to an individual bidder;
8. any statutory restrictions upon holding percentages as may be set forth in other laws or regulations with respect to the industry to which the issuer belongs (please list these on the bid form); and
9. other supplemental items that must be disclosed in order to safeguard the public interest and investors.
The maximum quantity that each participant shall receive, as referred to in subparagraph 7 of the preceding paragraph, shall not exceed 3 percent of the portion of the offering put up for public sale; provided, however, that where convertible corporate bonds or corporate bonds with warrants are underwritten through competitive auction, this restriction shall not apply to banks, insurance companies, securities investment trust funds managed by securities investment trust enterprises, Qualified Foreign Institutional Investors (QFIIs), or any party listed under Article 35 subparagraph 5, in which cases the allocation shall not exceed ten percent of the portion of the offering put up for public sale. |
| 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 | After closure of the tender period, the Taiwan Stock Exchange shall open the bids on the prescribed opening date.
Except for underwriting through competitive auction of an IPO on the stock exchange or an OTC market involving cash capital increase through a new share issue, or of additional offerings on the stock exchange or an OTC market involving a cash capital increase (such offerings must be handled in accordance with the provisions of Article 17-1), securities shall be awarded on the basis of bid price in descending order. Identical bids shall be awarded in random order, generated by computer, until the entire offering 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 quantity of securities exceeds said proportion, and the lots are cleared at a uniform price, the surplus lots are removed in random order generated by computer. If the lots are cleared at two or more different prices, lots of equal size are removed from either end of the price spectrum, until the prescribed proportion is reached. In the event that one lot remains after the above process, said lot shall be removed from the upper end of the price spectrum.
In addition to complying with paragraph 3 of this Article, the underwriter shall also handle the results of the opening of bids in compliance with all other relevant laws and regulations, and shall provide all relevant data as prescribed by the Taiwan Stock Exchange and the Chinese Securities Association. |
| Article 16 | With the exception of public offerings and cash capital increase by a listed or OTC company, when the underwriting of securities is undertaken entirely by competitive auction and the total number of securities awarded by tender reaches the full amount available for allocation, the price at which the security opens on its first day of listing and the price paid by the underwriter for units retained for its own account shall be computed as the weighted average of the bid price of all successful bids. Decimals beyond cents shall be rounded up or down. |
| Article 17 | With the exception of an IPO on the stock exchange or an OTC market involving cash capital increase through a new share issue, in the underwriting of securities undertaken partly by competitive auction and partly by public subscription, when the total number of securities awarded by competitive auction reaches the full amount available for allocation, the 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:
1. 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 within a specified multiple of the minimum offering price. Decimals beyond cents shall be rounded up or down; and
2. 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.
Except for a public placement, an IPO on the stock exchange, or an OTC market involving cash capital increase through a new share issue, or where otherwise provided under law, the price at which the security opens on its first day of listing shall be the price underwritten for public subscription as determined in the preceding paragraph. |
| Article 17-1 | Underwriting through competitive auction of an IPO on the stock exchange or an OTC market involving cash capital increase through a new share issue, or of additional offerings by listed or OTC companies involving a cash capital increase, shall be handled through uniform price clearing, whereby the Taiwan Stock Exchange, in opening the bids, adds up the cumulative total of the bid quantities, starting with the highest-priced bid and working its way down until the entire offering has been cleared, with the lowest price necessary to sell all securities offered through competitive auction taken as the uniform clearing price. If the total number of securities bid for in valid bids is insufficient to cover the all the securities offered through competitive auction, then the minimum offering price, as prescribed by Article 8 paragraph 1 subparagraph 2, shall serve as the uniform clearing price.
Those bidding at or above the uniform clearing price are awardees, and in all cases their bids will be cleared at the uniform clearing price.
If the total number of securities bid for in valid bids exceeds the number of securities offered through competitive auction, then those submitting bids at the uniform clearing price shall be awarded securities in random order, generated by computer, until all securities offered through competitive auction have been awarded.
The quantity of securities awarded to any single bidder shall not exceed the proportion set forth under Article 9 paragraph 2. Where an award does exceed this proportion, the quantity in excess shall be select at random by computer and subtracted from the award.
The uniform clearing price shall serve as: the offering price for those units of said security retained by the underwriter for its own account, for units that remain unsubscribed after conclusion of competitive auction; the subscription price for those units allocated through public subscription; and the price at which a security opens on its first day of listing in the case of underwriting through competitive auction of an IPO on the stock exchange or an OTC market involving cash capital increase through a new share issue.
In addition to complying with paragraph 4 of this Article, the underwriter shall also handle the results of the opening of bids in compliance with all other relevant laws and regulations, and shall provide all relevant data as prescribed by the Taiwan Stock Exchange and the Chinese Securities Association. |
| Article 18 | In the underwriting of securities by competitive auction, if the total number of securities bid for is insufficient to cover the number of securities offered through competitive auction, then the minimum offering price, as prescribed by Article 8 paragraph 1 subparagraph 2, shall serve as the offering price for those securities that remain unallocated after competitive auction and those securities retained by the underwriter for its own account, and as the subscription price for those securities allocated through public subscription. Units that remain unsubscribed after conclusion of competitive auction shall be allocated as prescribed by Article 8 paragraph 1 subparagraph 6.
Except for the underwriting of a public placement or of additional offerings by listed or OTC companies involving a cash capital increase, the price at which the security opens on its first day of listing shall be the offering price set forth under the preceding paragraph. |
| 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 2: Pricing by Book Building
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| Article 21 | In the underwriting of an IPO on the stock exchange or an OTC market (other than the GreTai Securities Market's second board [Tiger Board]) involving issued shares or cash capital increase through a new share issue, where the shares are not offered through competitive auction, the shares shall be underwritten using the book building method. The underwriting syndicate shall use the book building method to underwrite 50% of the shares put up for public sale, and the members of the underwriting syndicate shall offer the remainder through public subscription; provided, however, that where the total number of shares is less than 3 million, shares put up for public sale may be allocated entirely through public subscription. |
| Article 22 | In the following types of securities underwriting cases, the part put up for public sale may be undertaken entirely by book building or partly by book building and partly by public subscription:
1. (deleted);
2. offerings of corporate bonds and financial bonds;
3. offerings of Taiwan Depositary Receipts; and
4. public placements. |
| Article 22-1 | Where either of the following types of underwriting cases are undertaken through the use of book building, the part put up for public sale shall be underwritten entirely by book building:
1. underwriting of a public offering by a company already listed on the stock exchange or an OTC market in which the offering involves a cash capital increase through the issue of new shares and the entire offering is put up for underwritten distribution; or
2. underwriting of a public placement of beneficial securities by a trustee institution, or underwriting of a public placement of asset-backed securities by a special-purpose company. |
| 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 a public book building announcement in daily newspapers for two consecutive days on the first and second days on which book-building bids are accepted. 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 the security;
2. total number of underwritten securities, number of securities retained by the underwriters for their own accounts, the number of securities for public sale, and the number of securities for allocation by book building as a proportion of the total number of securities put up for public sale;
3. where underwriters collect a book-building bid deposit in accordance with the provisions of Article 40 or Article 42: the collection method, who is required to pay it, the amount, and conditions under which the deposit may be confiscated;
4. name, address, and telephone number of the underwriters;
5. the probable range of the offering price;
6. object of subscription, and the method, time period, and site for undertaking subscription; and
7. other supplemental items that must 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 3: Pricing by Negotiation
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| 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 III Allocation of Securities
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Section 1: Allocation by Competitive Auction
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| Article 33 | When the portion [of an offering] that is put up for public sale is not entirely underwritten by competitive bidding, after registering the underwriting contract with the Chinese Securities Association, the underwriter shall carry out the following:
1. Day One: Make public announcement of award (announcement of public subscription underwriting shall be concurrently made at this time), and begin mailing notifications of award and payment notices (to be formatted per Attachment 3);
2. Day Four: Refund bid deposits (per Article 12 paragraph 2) to unsuccessful and disqualified bidders;
3. Delivery of company prospectuses 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 either of the dates set forth in paragraph 1 subparagraphs 1 and 2 falls on a weekend, regular holiday, 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 bid deposit as prescribed in Article 12 paragraph 2. In the event that the awardee fails to fulfill his payment obligation within the specified time period, the underwriter may confiscate the bid deposit, and shall subscribe on its own account, at the price offered to said awardee, to the units that were to have been allocated to said awardee. |
| Article 34 | When the portion [of an offering] that is put up for public sale to outside parties is entirely underwritten by competitive bidding, after registering the underwriting contract with the Chinese Securities Association, the underwriter shall carry out the following:
1. Day One: Make public announcement of award, make public underwriting announcement, and begin mailing notifications of award, prospectuses, and payment due notices;
2. Day Four: Begin refunding bid deposits (per Article 12 paragraph 2) to unsuccessful and disqualified subscribers; payment period commences;
3. Day Seven: Payment deadline;
4. Day Eight: Complete compilation of related registers; issuer applies to Taiwan Stock Exchange or GreTai Securities Market for a securities listing on the stock exchange or an OTC market;
5. Day Nine: Announcement of securities listing on the stock exchange or an OTC market.
6. Day Ten: Securities are issued and listed on the stock exchange or an OTC market.
In the underwriting of securities offered through public placement, the procedures set forth in subparagraphs 4, 5, and 6 under the preceding paragraph, which are connected with application for listing of securities on the stock exchange or an OTC market, need not be carried out.
Where any of the dates set forth in the preceding paragraph falls on a weekend, regular holiday, 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 bid deposit as prescribed by Article 12 paragraph 2. In the event that the awardee fails to fulfill his payment obligation within the specified time period, the underwriter may confiscate the bid deposit, and shall subscribe on its own account, at the price offered to said awardee, to the units that were to have been allocated to said awardee. |
| 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 keep information relating to ordinary bids for a period of thirty days after the public announcement of award. Bidding materials for 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 2: Allocation by Book Building
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| Article 40 | Where a company listed on the stock exchange or an OTC market carries out a cash capital increase in which all shares are put up for underwritten distribution, and all shares put up for public sale are allocated through the book building method, after the price has been set and the underwriting contract has been registered with the Chinese Securities Association, the following matters shall be carried out:
1. Day One: Publicly release an underwriting announcement and begin mailing subscription notices, prospectuses, and notices of payment due (to be formatted per Attachment 4);
2. Day Four: Payment period commences, and book-building bid deposits not corresponding to allocated shares are returned to unsuccessful bidders;
3. Day Seven: Payment deadline;
4. Day Eight: Shareholders' register is completed; issuer applies to the Taiwan Stock Exchange or the GreTai Securities Market to list certificates of payment for shares on the stock exchange or an OTC market;
5. Day Nine: Issue public announcement concerning listing of certificates of payment for shares on the stock exchange or an OTC market;
6. Day Ten: Certificates of payment for shares are issued and listed on the stock exchange or an OTC market; and
7. (deleted)
If any of the dates set forth in the preceding paragraph falls on a weekend, regular holiday, 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 set forth under paragraph 1 may be changed if necessary by applying for approval with the Chinese Securities Association.
Where a company listed on the stock exchange or an OTC market carrying out a cash capital increase uses the book building method to allocate all shares (other than those securities set aside for subscription by the company's employees) that are put up for underwritten distribution and public sale, those shares allocated to the company's employees may be handled in accordance with the provisions of paragraph 1, provided that said employees can comply with the payment period specified in paragraph 1.
Where matters are undertaken in the manner set forth under paragraph 1, shares may be allocated on a priority basis to existing shareholders; provided, however, that the restrictions listed in Articles 27 and 36 shall still apply.
When a bidder submits a book-building bid form, the securities underwriter may collect a bid deposit from the bidder of not more than 20 percent of the value of the securities bid for.
The book-building bid deposits not corresponding to allocated shares as referred to in the above paragraph 1 subparagraph 2 means the book-building bid deposits paid by unsuccessful bidders, and bid deposits paid by awardees in excess of the amount required for securities actually allocated to them.
The payment to be made by the bidder as referred to in paragraph 1 subparagraph 2 above shall be the price of the securities subscribed less any book-building bid deposit remaining after the bidder has received (or not received) a refund in accordance with the provisions of the preceding paragraph. In the event a bidder does not fulfill his payment obligation within the allotted time, the securities underwriter may confiscate the book-building bid deposit and shall retain for its own account said securities at the price offered to the bidder.
An underwriter that collects book-building bid deposits as prescribed by paragraph 6 above shall do so as prescribed by Article 12 paragraph 4. |
| Article 41 | Where an underwriting case is handled as prescribed by Article 22 and Article 22-1 subparagraph 2, and all shares are offered using book building, after the price has been set and the underwriting contract has been registered with the Chinese Securities Association, the following matters shall be carried out:
1. Day One: Publicly release an underwriting announcement and begin mailing subscription notices, prospectuses, related subscription notices, and notices of payment due;
2. Day Four: Payment period commences;
3. Day Seven: Payment deadline;
4. Day Eight: Complete compilation of related registers; issuer applies to Taiwan Stock Exchange or GreTai Securities Market for a securities listing on the stock exchange or an OTC market;
5. Day Nine: Announcement of securities listing on the stock exchange or an OTC market.
6. Day Fifteen: Securities are issued and listed on the stock exchange or an OTC market.
In an underwriting carried out as set forth under Article 22 subparagraph 4, the requirements set forth in subparagraphs 4, 5, and 6 above (concerning application to the Taiwan Stock Exchange or the GreTai Securities Exchange for a listing on the stock exchange or an OTC market) shall not apply.
If a date set forth in any of the subparagraphs under paragraph 1 falls on a weekend, regular holiday, 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 set forth under paragraph 1 may be changed if necessary by applying for approval with the Chinese Securities Association. |
| Article 42 | If the portion of an offering put up for public sale is underwritten partly by book building and partly by public subscription as prescribed by Articles 21 and Article 22 (excepting underwriting as prescribed by the preceding Article), after the underwriting contract has been registered with the Chinese Securities Association, the following matters shall be carried out:
1. Day One: Publicly release a book-building allocation announcement (announcement of public subscription underwriting shall be concurrently made at this time) and begin mailing subscription notifies, prospectuses, and notices of payment due (formatted per Attachment 4), or subscription forms and notices of payment due (formatted per Attachments 5, 5-1, and 5-2 respectively), or Taiwan Depositary Receipt notices of payment due (formatted per Attachment 6); and
2. Payment period: The payment deadline shall be identical to that applying to public subscription lottery winners with respect to the forwarding of subscription payment to their bank, as set forth under Article 53 paragraph 1 subparagraph 7.
If any of the dates set forth under the preceding paragraph falls on a weekend, regular holiday, 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 a bidder commits to the purchase of securities and the commencement of the payment period as set forth in paragraph 1 subparagraph 2, the underwriter may request that the subscriber pay a book-building bid deposit of the full amount or part of the amount of the purchase price of said securities. The payment to be made by the bidder as referred to in paragraph 1 subparagraph 2 above shall be the price of the securities subscribed less the book-building bid deposit. In the event a bidder does not fulfill his payment obligation within the allotted time, the securities underwriter may confiscate the book-building bid deposit.
When the underwriter referred to in the preceding paragraph accepts a book-building bid deposit from a subscriber, it shall follow the requirements as prescribed by Article 12 paragraph 4. |
| Article 43 | The provisions of Articles 35 and 36 shall apply mutatis mutandis with respect to the types of bidders from whom an underwriter is allowed to accept bids in a book building process; provided, however, that for underwriting undertaken as prescribed by Article 22 or Article 22-1 subparagraph 2, the types of bidders from whom an underwriter is allowed to accept bids shall not be subject to the limitations prescribed under Article 36 subparagraphs 1 through 7.
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 3: Allocation by Public Subscription
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| Article 52 | The following offerings shall be undertaken by public subscription:
1. in the underwriting of an offering carried out other than as prescribed in Article 6 paragraph 2, Article 22, Article 22-1 subparagraph 2, or Article 31, or in the underwriting of a cash capital increase by a company listed on the stock exchange or an OTC market in which not all shares are put up for underwritten distribution: the portion put up for public sale that must be offered entirely by public subscription;
2. in the underwriting of an offering as prescribed in Article 7, where the portion put up for public sale is offered partly by competitive auction: any remaining portion that must be offered by public subscription;
3. in the underwriting of an offering as prescribed in Articles 21 and 22, where the portion put up for public sale is offered partly by book building: any remaining portion that must be offered by public subscription;
4. in the underwriting of an offering as prescribed in Article 31 paragraph 1, where a part is offered by negotiated sale: any remaining portion that must be undertaken by public subscription; and
5. in the underwriting of an IPO on the stock exchange or an OTC market: any offering in which fewer than 3 million shares are underwritten, and (1) any offering that is not undertaken by competitive auction or (2) any offering where a book building process is employed as prescribed under Article 21.
In an underwriting where the shares are offered by public subscription, the total number of shares underwritten by any given underwriter for allocation by public subscription may not be less than 500 lots for a best efforts offering and 300 lots for a firm commitment offering; provided, however, that 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 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, after registering the underwriting contract with the Chinese Securities Association, observe the following schedule in working together with the broker to handle matters relating to subscription, lottery, and the withholding of lottery winner payments:
1. Day One: Publicly release an underwriting announcement and commence subscription;
2. Day Four: Subscription period closes. Deadline for payment of subscription fee to correspondent bank;
3. Day Five: Date of withholding of subscription processing fee. Broker's bank undertakes matters regarding withholding of subscribers' subscription processing fees;
4. Day Six: Date of settlement of subscription processing fee;
5. Day Seven: Date of public lottery drawing. The Taiwan Stock Exchange Corporation (TSEC) undertakes drawing. Lead underwriter announces list of winners. TSEC produces and sends report of winner information to each broker. TSEC compiles and reports 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, a lottery winner notification slip, prospectus (or subscription form), and subscription waiver declaration (formatted as in Attachment 7) to each lottery winner;
7. Day Fourteen: Deadline for reception of any subscription waivers from lottery winners. Deadline for payment by lottery winner to its bank of the subscription payment and the cost of mailing the lottery winner notification slip and related materials (hereinafter, the "lottery winner notification fee") as set forth under subparagraph 6;
8. Day Fifteen: Subscription payment and lottery winner notification fee deducted [from lottery winners' bank accounts]; 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 form (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 on the day of the deadline, fill in and submit a subscription form 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 any of the dates set forth in paragraph 1 subparagraphs 2, 3, 4, 5, 6, 7, 8, and 9 falls on a weekend, regular holiday, 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 meaning of the document reception deadline for the subscription waiver declaration in paragraph 1 subparagraph 7 is that the lottery winner may, by 14:00 on the day of the deadline, fill in and submit the said declaration to the original recipient broker in person, by mail, fax, or Internet.
A lottery winner who does not have sufficient funds to allow his bank is to deduct the subscription payment and lottery winner notification fee as prescribed in paragraph 1 subparagraph 8 shall be deemed to have waived his subscription, and the processing fee deducted as prescribed by subparagraph 3 of the same paragraph shall not be refunded.
Where a lottery winner does not have sufficient funds in his bank account or waives his subscription, as set forth in the preceding paragraph, deduction of the lottery winner notification fee shall be deducted with precedence.
The Chinese Securities Association shall prescribe the standard for the lottery winner notification fee. A securities firm shall be responsible for compensation for any loss to the lottery winner resulting from problems in service of the lottery winner announcement; provided, however, that 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 separately 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 form shall 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 subscription volume exceeds the number of securities to be sold, the TSEC shall undertake a computerized public lottery among qualified subscriptions. 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 monitors to draw the lots. |
| 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 4: Allocation by Negotiated Sales
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| Article 72 | For an offering by negotiated sale, the underwriter shall complete the offering within the offering period. |
| 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 IV: Issue of Securities
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Section 1: Allocation by Competitive Auction
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| 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 2: Allocation by Book Building
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| 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 3: Allocation by Public Subscription
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| Article 78 | For securities by public subscription, distribution shall be undertaken and Article 76 shall be applied mutatis mutandis to such distribution. |
Section 4: Allocation by Negotiated Sales
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| 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 V: Supplementary Provisions |
| 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. |