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Taiwan Securities Association Rules Governing Underwriting and Resale of Securities by Securities Firms(2006.01.17) |
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Article 21
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In the underwriting of an IPO on a stock exchange or an OTC market involving issued shares or cash capital increase through a new share issue, where the shares are not offered through competitive auction, 10 to 20 percent of the shares that are required under TSEC or GTSM regulations to be publicly underwritten shall be allocated through public subscription, while the remainder thereof, and the preliminary overallotment, shall be offered through book building. However, the portion offered through public subscription shall not exceed 20 percent of the total number of shares underwritten; provided, that this provision does not apply to a public enterprise, nor does it apply to any other party that applies for an IPO of shares on a stock exchange or an OTC market in accordance with the provisions of Articles 6 and 6-1 of the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings, or in accordance with the provisions of the GreTai Securities Market Supplemental Provisions for Applications by Private Institutions Participating in Public Infrastructure Projects for Over-the-Counter Listing, or in accordance with other acts or regulations.
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Article 24
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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 in hardcopy and electronic media to the Taiwan Securities Association, and shall include the items in the following subparagraphs:
1. name of the security;
2. total number of underwritten units, number of units expected to be sold via overallotment, number of units retained by the underwriters for their own accounts, the number of units for public sale, and the number of units 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, Article 41, or Article 42: the collection method, who is required to pay it, the amount, and conditions under which the deposit may be confiscated;
4. matters relating to the collection of book building processing fees by securities underwriters in accordance with Article 26;
5. name, address, and telephone number of the underwriters;
6. the probable range of the offering price;
7. object of subscription, and the method, time period, and site for undertaking subscription;
8. parties to which securities will be allocated through book building; and
9. other supplemental items that must be disclosed in order to safeguard the public interest and investors.
In the section specifying the parties from whom bids are allowed to be accepted (as set forth under the preceding paragraph), the announcement shall print the provisions of Articles 35 and 36.
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Article 26
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Investors bidding in a book building process shall fill in a book building bid form produced in the prescribed format (see Attachment 2) and submit said form to the underwriter for handling.
The underwriting syndicate may hire a securities broker to accept book building bids for processing as referred to in the preceding paragraph.
A securities underwriter handling bids may refuse a bid if there has been a violation of the law or of these Regulations, or if there is any suspicion of such violations.
In the underwriting of an offering where the portion put up for public sale is allocated entirely by book building as prescribed by Article 40, or partly by book building and partly by public subscription, the underwriter shall indicate on the book building bid form that the applicant is required to fill in his central depository account number.
When a securities underwriter accepts a book building bid for processing, it may collect a book building processing fee from the bidder, acting in accordance with the Taiwan Securities Association Rules Governing Securities Underwriters' Allocation of Securities by Book Building.
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Article 41
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Where an underwriting case (other than one handled in accordance with the provisions of the preceding paragraph) is handled as prescribed by Article 21, Article 22, and Article 22-1, and all units are offered through a book building process, after the price has been set and the underwriting contract has been registered with the Taiwan Securities Association, the following matters shall be carried out:
1. Day One: Publish an underwriting notice and begin mailing subscription notices, prospectuses, related subscription notices, and notices of payment due;
2. Day Four: Payment period commences, and book building bid deposits not corresponding to allocated securities;
3. Day Seven: Payment deadline; issuer applies to the TSEC or the GTSM for a securities listing on the stock exchange or an OTC market;
4. Day Eight: Complete compilation of related registers;
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 TSEC or the GTSM 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 Taiwan Securities Association.
In an underwriting case handled in accordance with the provisions of Article 21, when a bidder submits a book building bid form, the securities underwriter may collect from the bidder a book building bid deposit equal to all or part of the value of the securities bid for.
The phrase "book building bid deposits not corresponding to allocated securities" in 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 shall be the price of the securities subscribed to less any book building bid deposit to be refunded (or not refunded) to the bidder 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 5 shall do so as prescribed by Article 12 paragraph 4.
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Article 42
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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 Taiwan Securities Association, the following matters shall be carried out:
1. Day One: Publicly release a book building allocation announcement (an underwriting notice shall be concurrently published 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, 5-2, and 5-3, respectively), or Taiwan Depositary Receipt notices of payment due (formatted per Attachment 6); and
2. Payment period: The deadline shall be identical to that for payment of the subscription processing fee, the bid deposit, and postage expense, as set forth under Article 53 paragraph 1 subparagraph 5.
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 Taiwan Securities Association.
When a bidder submits a book building bid form, the underwriter may collect from the bidder a book building bid deposit equal to all or part of the value of the securities bid for. 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.
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Article 52
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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 3, 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. an initial offering on a stock exchange or an OTC market (conducted by a public enterprise, or by any other party acting in accordance with other acts or regulations), in which: (1) a public sale to outside parties conducted in connection therewith as required under Article 6 is not undertaken by competitive auction; or (2) a book building process is employed as prescribed under Article 21.
6. in an underwriting case involving a public enterprise (or any other party acting in accordance with the provisions of Articles 6 and 6-1 of the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings, or in accordance with the provisions of the GreTai Securities Market Supplemental Provisions for Applications by Private Institutions Participating in Public Infrastructure Projects for Over-the-Counter Listing) that conducts an initial offering of shares on a stock exchange or an OTC market, where the entire amount of said shares are allocated through public subscription: those shares allocated via overallotment, if not allocated by means of negotiated sale, must be allocated through public subscription.
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Article 61
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For a firm commitment offering by public subscription, where subscriptions fall short of the number of units put up for sale, the underwriting syndicate may either place the remainder with a specific party or purchase the remainder on its own account.
Where purchase of units by the underwriting syndicate on its own account as referred to in the preceding paragraph is prohibited by other laws or regulations, or is in connection with an offering by a company that is not listed on the stock exchange or an OTC market, the syndicate may be exempted from the provisions in the preceding paragraph relating to purchase of units on its own account, and such units may be placed by the underwriting syndicate with a specific party.
Where the underwriting syndicate places securities with a specific party, as referred to in the preceding paragraphs 1 and 2, only the parties listed in Article 35 shall participate in said placement, and those listed in Article 36 shall not participate.
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