| Title： |
Taiwan Stock Exchange Corporation Rules Governing Purchase of Listed Securities by Reverse Auction(2009.06.09) |
| Date： |
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Article 2
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When a securities broker, acting pursuant to these Rules, accepts an engagement by a principal to conduct a purchase of securities by reverse auction, it shall fill out an application form and submit it to the TWSE. If the principal is an overseas Chinese or foreign national with special-case approval from the Ministry of Economic Affairs Investment Commission, any of the Science Park Administrations, or the Export Processing Zone Administration, the application shall include evidentiary documentation of government approval of the investment and inward remittance of funds. If the principal is a domestic company, the total amount of any equity investment shall be handled in compliance with the provisions of Article 13 of the Company Act, and supporting documentation shall be annexed.
Once the TWSE has granted permission in response to an application filed in connection with an engagement by a principal, as referred to in the preceding paragraph, it will make a public announcement of the matters listed below three trading days prior to the implementation of the reverse auction. After the TWSE has made the public announcement, neither the principal nor the engaged securities broker may apply to amend or cancel the application. However, this restriction does not apply to cancellation of reverse auctions or amendment of reverse auction quantities pursuant to the provisions of Article 6, paragraph 4.
1. The name and quantity of the securities to be purchased by reverse auction.
2. The date and time of the reverse auction.
3. The following information for the party initiating the reverse auction:
(1) Background.
(2) Purpose of the reverse auction.
(3) If an overseas Chinese or foreign national, the source of the investment capital.
(4) If a juristic person, its financial condition for the most recent year.
4. Floor price for a reverse auction: Limited to within a range of 15 percent above or below the closing price on the trading day preceding the reverse auction, provided that if there is no price fluctuation limit for a given security, at the time of application a floor price limited to within 15 percent above or below the closing price on the reverse auction date may be selected. At the commencement of the reverse auction, the securities firm that applies for the reverse auction shall deliver a sealed letter containing the reverse auction floor price to the TWSE for on-the-spot announcement, and such floor price shall also be published in the Market Information System.
5. Auction method: To be selected pursuant to Article 6, paragraph 1.
6. Means of handling a shortfall between the quantity of successful bids and the publicly announced quantity to be purchased through the reverse auction.
7. Period and method for quotes by securities firms participating in the bidding.
8. Other relevant matters.
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Article 4
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For securities firms participating in the bidding to sell in a reverse auction, their quotes shall be entered by means of a computer link to the TWSE's computer network from 3 p.m. to 4 p.m., and trade execution shall be confirmed on the same trading day as the quote is entered.
Except as otherwise provided by public announcement, the quantity of quotes as referred to in the preceding paragraph shall be expressed in the trading unit or multiple for the particular type of stock and shall not be subject to the limit of 500 trading units or less imposed upon ordinary trade orders. Quotes that do not comply with this provision shall be invalid.
The reverse auction floor price and quoted prices of bids to sell shall be calculated on a per-share (call (put) warrant unit, beneficial unit, or depositary receipt unit, all of which are abbreviated below as "unit") basis.
During the quoting period, a securities firm may use a computer with an online link to the TWSE's computer network to cancel or amend the quantity or price of any previously quoted bid to sell.
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Article 5
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If the total number of issued shares (units) of the security for which the reverse auction application is made under these Rules is 20 million or less, the quantity of shares to be purchased in the reverse auction may not be less than 20 percent of the total issued shares (units). If the issued shares exceed 20 million, the quantity of the excess shares to be purchased may not be less than 10 percent. However, this restriction shall not apply to overseas Chinese or foreign nationals applying for purchase by reverse auction with special-case approval.
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Article 9
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A securities broker applying to carry out a reverse auction shall collect in advance the full price of the intended purchase from the principal at the time it accepts the order to carry out the reverse auction.
A securities broker accepting an order to participate in the bidding to sell in a reverse auction shall collect in advance all securities from the principal at the time it accepts the order from the principal.
Where a securities broker is engaged to conduct a reverse auction or to participate in the bidding to sell under Article 2, paragraph 1, the brokerage contract shall contain express provisions for handling default and damages therefor.
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Article 15
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The unit price of any securities to be purchased by reverse auction shall be within 7 to 15 percent of the closing price of those securities on the date of application for the reverse auction; the sell bid quoted at the unit price farthest below the price of the securities on the date of application for reverse auction will have priority of execution, with quotes at the same price executed in order of the chronological sequence of their entry into the system.
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