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Taiwan Stock Exchange Corporation Rules Governing Purchase of Listed Securities by Reverse Auction(2009.08.20) |
| 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, foreign national, or mainland area investor 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, foreign national, or mainland area investor, 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 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, foreign nationals, or mainland area investors applying for purchase by reverse auction with special-case approval.
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Article 6
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A principal initiating a reverse auction shall select from among the following methods for determining successful bids:
1. During the reverse auction, the highest sell quote that does not exceed the reverse auction floor price and that satisfies the reverse auction quantity requirements shall be the successful bid price. All sell quotes priced lower than the successful bid price shall be transacted at the successful bid price. If the quantity of securities for which sell quotes have been submitted at the successful bid price exceeds what can be transacted, each principal will be distributed an integral number of trading units, the quantity to be decided on a pro rata basis according to the quantity specified in each order. If there is still a remainder, distribution shall be conducted randomly by computer, with allocations to individual orders limited to one trading unit.
2. During the reverse auction, the lowest sell quote that does not exceed the reverse auction floor price shall have priority of execution, with subsequent transactions executed in a sequence determined on the basis of the prices at which the sell orders were quoted. Where quotes with an identical sell price are submitted, each principal will be distributed an integral number of trading units, the quantity to be decided on a pro rata basis according to the quantity specified in each order. If any quantity remains, further allocations shall be conducted randomly by computer, with allocations to individual orders limited to one trading unit.
When the quantity of successful bids under the preceding paragraph falls short of the publicly announced reverse auction quantity, the matter shall be handled as publicly announced by the TWSE.
Quotes which -- were submitted in violation of Article 3, paragraph 2 by the principal that initiated the reverse auction; or are higher than the reverse auction floor price; or cannot be transacted in compliance with the provisions of paragraph 1; shall be invalid.
If an overseas Chinese, foreign national, or mainland area investor engages a securities firm to apply to carry out a reverse auction, and on the day of the auction the quantity applied for exceeds the remaining quantity that the entity is allowed by law or regulation to invest in, the reverse auction shall be carried out for the latter amount. However, if the remaining quantity is insufficient to comply with the minimum reverse auction quantity provisions in the preceding Article, or cannot be confirmed, the reverse auction shall be cancelled.
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