| Title： |
Directions for Public Companies Conducting Private Placements of Securities(2009.05.08) |
| Date： |
|
|
1
|
1. A public company conducting a private placement of securities under Article 43-6 of the Securities and Exchange Act (“the Act”) shall do so in accordance with these Directions.
|
|
2
|
2. Terms used in these Directions are defined as follows:
(1) Price determination date: the date when the board of directors resolves on the price, conversion price, or subscription price of privately placed straight corporate bonds or securities with equity characteristics; the price of securities with equity characteristics may be determined by the board of directors only after, and on the basis of, a determination of the pricing by a resolution of a shareholders meeting.
(2) Reference price:
(i) The simple average closing price of the common shares of the exchange-listed or OTC-listed company for either the one, three, or five business days before the price determination date, after adjustment for any distribution of stock dividends, cash dividends or capital reduction.
(ii) For emerging stock, it shall be the higher of the following two calculations:
(a) The sum of all transaction amounts of the common shares of such emerging stock in the Emerging Stock Computerized Price Negotiation and Click System in each business day for 30 business days prior to the price determination date, divided by the sum of the number of shares traded in each business day, after adjustment for any distribution of stock dividends, cash dividends or capital reduction.
(b) The net worth per share shown on the financial report audited and certified or reviewed by a CPA for the period closest to the price determination date.
(iii) For stock that has never been listed on the stock exchange or OTC market or traded over-the-counter at securities firms, the reference price is the net worth per share shown on the financial report audited and certified or reviewed by a CPA for the period closest to the price determination date.
(iv) Exchangeable corporate bond
(a) If the exchangeable underlying stocks are exchange-listed (or OTC-listed), the reference price is the simple average closing price of the common shares for any of either the one, three, or five business days before the price determination date, after adjustment for any distribution of stock dividends, cash dividends or capital reduction.
(b) If the exchangeable underlying stocks are emerging stocks, the reference price is the higher of the following: [i] the sum of all transaction amounts of the common shares of the exchangeable stock in the Emerging Stock Computerized Price Negotiation and Click System in each business day for 30 business days prior to the price determination date, divided by the sum of the number of shares traded in each business day, after adjustment for any distribution of stock dividends, cash dividends or capital reduction, or [ii] the net worth per share shown on the financial report audited and certified or reviewed by a CPA for the period closest to the price determination date..
(c) If the exchangeable underlying stocks have never been exchange-listed (or OTC-listed) or traded over-the-counter at securities firms, [the company] shall, by the resolution date of the board of directors, request experts to provide opinions on the price per share for the common shares of the exchangeable underlying stocks.
(3) Independent expert: a CPA, lawyer, or securities underwriter; may not be a related party of the public company or of any placee.
|
|
3
|
3. For a private placement of securities by a public company under Article 43-6 of the Act, with the exception of straight corporate bonds (which may be resolved on by the board of directors under paragraph 3 of the same Article), the below-listed particulars shall be stated in the notice to convene the shareholders' meeting in accordance with paragraph 6 of that article, and shall be thoroughly explained at the shareholders' meeting:
(1) The basis and reasonableness of the private placement pricing:
(i) For a private placement of common shares or preferred shares, specify the percentage by which the private placement price of common shares or preferred shares may not be lower than the reference price, and the basis for the method by which the price was set, and its reasonableness; if the placee intends to make a non-cash capital contribution, the meeting notice shall also specify the capital contribution method, amount offset by the non-cash contribution and its reasonableness, and an independent expert’s opinions on the reasonableness of the offset amount, to serve as a reference for the shareholders to decide whether to agree.
(ii) For a private placement of securities with equity characteristics such as convertible corporate bonds or corporate bonds with warrants, specify the terms of the private placement, the percentage by which the conversion or subscription price may not be lower than the reference price, and provide an overall explanation of the reasonableness of the terms set for the private placement.
(iii) If the price per share of the privately placed common shares or preferred shares, the conversion price of convertible corporate bonds, or the subscription price of preferred shares with warrants, corporate bonds with warrants, or employee stock warrants might possibly be lower than the par value of the shares, specify the cause, reasonableness, method of price setting, and any effect on the shareholders’ equity (such as an increase in accumulated loss, or the possibility of future capital reduction as a result of an increase in accumulated loss).
(iv) Where the company is an exchange-listed or OTC-listed company or an emerging stock company, if the price per share of the privately placed common shares or preferred shares, the conversion price of convertible corporate bonds, or the subscription price of preferred shares with warrants, corporate bonds with warrants, or employee stock warrants is lower than 80% of the reference price, state the independent expert’s opinion on the basis and reasonableness of the pricing on the meeting notice, to serve as a reference for the shareholders to decide whether to agree.
(v) The shareholders’ meeting may not grant discretionary authorization to the board of directors or the chairman of the board to set the percentage for the private placement pricing.
(2) The method for selecting the specific persons:
(i) 1. Where the placees have already been determined before the shareholders' meeting notice is mailed, the method and objectives of selecting the placees, and the relationship between the placees and the company, shall be specified. If any placee is a juristic person, the name and the percentage of shareholdings shall be given of every shareholder of the juristic person whose shareholding exceeds 10 percent.
(ii) Where the placees are determined after the shareholders' meeting notice is mailed, the above information on the placees shall be input into the Market Observation Post System within two days from the date the placees are determined.
(3) In the reasons for the necessity for conducting the private placement, specify the reasons for not using a public offering, the limit on the private placement, the use of the funds raised by the private placement, and the anticipated benefits. If there are to be multiple closings, also specify the anticipated number of closings, the use of the funds for each closing of the private placement, and the anticipated benefits for each closing.
|
|
4
|
4. A public company report to the subsequent shareholders’ meeting or meetings and specify the dates of the approvals by the shareholders’ meeting and the board of directors for the conducting of a private placement of straight corporate bonds (including exchangeable corporate bonds) or securities with equity characteristics and the quantity approved, the basis and reasonableness of the private placement price, the method for selecting the specific persons, the reasons for the necessity of conducting the private placement, the placees of the private placement, qualification requirements, subscription quantities, relationship to the company, involvement in company operations, actual subscription (or conversion) price, the discrepancy between the actual subscription (or conversion) price and the reference price, any effect of the private placement on shareholder equity, and the status of utilization of the funds, plan implementation progress, and the realization of plan benefits from the time the price of
the shares or subscription has been paid up in full until the fund utilization plan has been completely carried out.
|
|
5
|
5. Information disclosure:
(1) Exchange-listed, OTC-listed companies and emerging stock companies shall input information on the private placement of securities into the Market Observation Post System in accordance with the rules of the Taiwan Stock Exchange Corporation (TWSE) and the GreTai Securities Market (GTSM):
(i) Within two days from the date the shareholders' meeting notice is sent out: the matters required to be specified in the shareholders' meeting notice as provided in Article 43-6, paragraph 6, of the Act; if the price per share of privately placed common shares or preferred shares, the conversion price of convertible corporate bonds, or the subscription price of preferred shares with warrants, corporate bonds with warrants, or employee stock warrants is lower than 80% of the reference price, also disclose the independent expert’s opinion on the basis and reasonableness of the private placement pricing; if the placee makes any non-cash capital contribution, also disclose the independent expert’s opinions on the reasonableness of the amount offset by the non-cash capital contribution.
(ii) Within two days from the actual date of determination of the private placement price:
(a) the monetary amount of the private placement, the use of the funds raised in the private placement, the schedule for use of the funds and anticipated benefits, the ratio of the current private placement amount and the anticipated cumulative amount of all private placements to the total paid-in capital, the method for selecting the placees, the basis for setting of the private placement price resolved by the shareholders' meeting, the private placement reference price and the actual private placement price, conversion price, or subscription price.
(b) For exchangeable corporate bonds, if the exchange price is lower than 80% of the reference price for the common shares of the exchangeable underlying stock, also request an expert to provide an opinion on the basis and reasonableness of the pricing, and disclose on the Market Observation Post System (MOPS) the reasonableness of the difference and the expert opinion.
(iii) Within 10 days from the end of each quarter: the status of use of the funds raised by the private placement of securities; from the time the price of the shares or subscription has been paid up in full until the fund utilization plan has been completely carried out, a quarterly statement shall be published detailing the status of utilization of the funds raised in the private placement.
(2) Within 15 days from the time the price of the shares or subscription has been paid up in full, the public company shall input into the Market Observation Post System the information on the private placement of securities as required under Article 43-6, paragraph 5 of the Act (see attached form):
(i) The type of securities privately placed, the date of the shareholders' meeting resolution, the monetary amount of the private placement, the unit price of the private placement, the basis on which the price was set, the total number of shares placed in the current private placement, the date the price of the shares or subscription has been paid up in full, the delivery date, the expiration date, the reason for conducting the private placement, the targets of the private placement, proportional shareholdings of the placees, relationship between the placees and the company, estimated number of director or supervisor seats to be obtained by the placees. For any placee that is a juristic person, the name shall be given of every shareholder of the juristic person whose direct or indirect overall equity interest exceeds 10 percent or whose equity interest ranks among the top 10.
(ii) In a case of private placement of employee stock warrants, also simultaneously disclose: the subscription volume of each individual subscription rights holder, the volume that may be subscribed to by each individual subscription rights holder per accounting year, the method for performance, and the duration of the rights.
(iii) In a case of private placement of overseas securities, also simultaneously disclose: the type of securities, denominated currency of the issue, and place of listing.
(3) The public company shall disclose the relevant matters regarding the conducting of the private placement in accordance with the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses.
|
|
6
|
6. For securities privately placed by an exchange-listed or OTC-listed company, and for any securities thereof that are distributed, converted, or subscribed subsequent to the private placement, the company shall, for three full years following the delivery date of the private placement securities, obtain a letter issued by the TWSE or GTSM acknowledging that the securities meet the standards for exchange listing or OTC listing before it may file with the Financial Supervisory Commission for retroactive handling of public issuance procedures.
|
|
7
|
7. For violations of these Directions, in addition to imposing administrative fines on the responsible persons of a company under Article 178, paragraph 1, and Article 179 of the Act, the Financial Supervisory Commission may also revoke registration cases pursuant to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers and the Regulations Governing the Offering and Issuance of Foreign Securities by Securities Issuers. In cases of serious violations, it may also impose the measures under Articles 20 and 171 of the Securities and Exchange Act.
|