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Article 5
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With the exception of that portion of underwritten units held for its own account in accordance with the preceding article, a securities underwriter carrying out the underwriting of securities (hereinafter, "public sale to outside parties") shall use the following methods to allocate units:
1. competitive auction;
2. book building;
3. public subscription; or
4. negotiated sale.
The allocation methods described in the above subparagraphs shall be undertaken in accordance with Articles 6, 7, 21, 21-1, 22, 22-1, 31 and 52 of these Regulations.
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Article 21
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In the underwriting of an initial listing on a stock exchange or an OTC market involving previously issued shares or cash capital increase through a new share issue, if the shares are not underwritten through competitive auction, then they shall be underwritten through simultaneous book building and public subscription procedures in compliance with the provisions of Article 21-1. 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 initial listing 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 21-1
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In the underwriting of an initial listing on a stock exchange or an OTC market involving previously issued shares or cash capital increase through a new share issue, if the shares are underwritten through simultaneous book building and public subscription procedures, 10 percent of the shares that are required under TSEC or GTSM regulations to be publicly underwritten (less the portion of the shares that are required under applicable laws or regulations to be set aside for subscription by employees of the issuer, and not including any overallotment) shall first be allocated through public subscription, with the number of units earmarked for allocation through public subscription adjusted to match subscription volume.
Where the underwritten subscription volume (defined as the final confirmed total volume of subscriptions that brokers have transmitted to the TSEC by the public subscription deadline) falls short of the number of units earmarked, as referred to in the preceding paragraph, for allocation through public subscription, the shortfall may be added to the shares to be underwritten through book building, and allocated in that manner. If the subscription volume exceeds by a specified multiple the number of shares earmarked for public subscription, public subscription volume shall be adjusted upward in accordance with the following provisions:
1. Where the over-subscription ratio is at least 25 times but less than 50 times, the public subscription ratio shall be adjusted to 15 percent.
2. Where the over-subscription ratio is at least 50 times but less than 75 times, the public subscription ratio shall be adjusted to 20 percent.
3. Where the over-subscription ratio is at least 75 times but less than 100 times, the public subscription ratio shall be adjusted to 25 percent.
4. Where the over-subscription ratio is 100 times or greater, the public subscription ratio shall be adjusted to 30 percent.
Any remainder, or any preliminary overallotment, shall be underwritten through book building.
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Article 22
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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. secondary distributions.
In underwriting cases contemplated under the preceding paragraph where part of the securities are allocated by book building and part by public subscription, if the book building and public subscription procedures are carried out simultaneously, the timetable for the procedures shall be subject to mutatis mutandis application of Article 42-1. However, if subscription volume exceeds by a specified multiple the number of units earmarked for public subscription, there is no need to upwardly adjust the public subscription volume or to observe the requirements of Article 42-1, paragraph 1, subparagraph 4, item 2.
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Article 22-2
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The lead underwriter for an initial listing on a stock exchange or over-the-counter market shall establish a pre-marketing mechanism as part of its book building process, whereby prior to the official start of book building it shall first seek to determine the demand of key organizations and qualified institutional investors in terms of prices and volumes. A record of information gathered during the pre-marketing period shall be retained in written form for one year, and on electronic media for three years, for reference purposes.
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Article 23
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A lead underwriter underwriting securities by book building shall first carry out the matters listed in the following subparagraphs. All relevant agreements shall be signed or sealed by the lead underwriter, each co-underwriter, and the issuer (issuing institution), and then reported to the Taiwan Securities Association by the first business day prior to the start of the book building period (or by the second business day in the case of an initial listing on a stock exchange or an OTC market):
1. formation of the underwriting syndicate by solicitation of co-underwriters;
2. determination of the total quantity of securities to be offered by book building, and the number of units expected to be sold via overallotment;
3. estimation of the anticipated offering price range, as determined in consultation with the issuer (issuing institution);
4. determination of the firm-commitment fee or best-efforts underwriting fee, as determined in consultation with the issuer (issuing institution); and
5. determination of the lot size, in the event that the securities will be offered by public subscription.
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Article 24
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In the underwriting of securities by book building, the lead underwriter shall publish a book building announcement in daily newspapers on the first day 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 by the first business day prior to the start of the book building period (or by the second business day in the case of an initial listing on a stock exchange or an OTC market), and shall include the items in the following subparagraphs:
1. The 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 securities 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; in the case of an initial listing on a stock exchange or an OTC market involving simultaneous book building and public subscription procedures, the lead underwriter shall also note that it will adjust book building volume on the basis of the number of subscriptions received during the public subscription procedure.
3. Where securities underwriters collect a book building bid deposit in accordance with the provisions of Article 40, Article 41, Article 42, or Article 42-1, the lead underwriter shall indicate 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 securities underwriters' collection from allotees of the entire amount of advance book building payments in accordance with Article 42-1.
5. Matters relating to the collection of book building processing fees by securities underwriters in accordance with Article 26.
6. The names, addresses, and telephone numbers of the underwriters.
7. The anticipated offering price range (within the anticipated offering price range for an initial listing on a stock exchange or an OTC market, the minimum price may not be less than 75% of the maximum).
8. The manner of disclosure of the prospectus, including: (1) a statement clarifying that the anticipated offering price range as disclosed in the prospectus is an estimate based on information gathered during book building; and (2) an explanation of how to inquire about subsequent offering price revisions.
9. The securities on offer, and the method, time period, and site for submission of bids.
10. Parties from whom book building bids will be accepted.
11. The pricing date (in the case of an initial listing on a stock exchange or an OTC market involving simultaneous book building and public subscription procedures).
12. Other supplemental items that must be disclosed in order to safeguard the public interest and investors.
In the section specifying the parties from whom book building bids will be accepted (as set forth under the preceding paragraph), the announcement shall print the provisions of Articles 35 and 36, or (depending on the type of securities on offer) Articles 43 and 43-1.
In an underwriting case involving an initial listing on a stock exchange or an OTC market, when the lead underwriter registers the offering using hardcopy media as required in paragraph 1, it shall also submit a timetable adopted in compliance with the provisions of Article 42-1.
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Article 27
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The maximum quantity of securities (with the exception of an initial listing of common shares on a stock exchange or an OTC market [which must be allocated in accordance with the provisions of Article 27-1], ordinary corporate bonds, financial bonds, real estate asset trust beneficial interest securities, beneficial interest securities publicly offered by a trustee institution, or asset-backed securities publicly offered by a special-purpose company) actually allocated to any single bidder in the book building process shall not exceed 10 percent of the portion of the offering that is put up for public sale.
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Article 27-1
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In a case involving an initial listing of common shares on a stock exchange or an OTC market, regulations governing the volume of securities that may be allocated to any single bidder are as follows:
1. The maximum quantity of securities actually allocated to any qualified institutional investor shall not exceed 10 percent of the quantity underwritten by the allocating underwriter, or 100,000 shares, whichever is higher, provided that the combined quantity of securities actually allocated by all underwriters to any single bidder shall not exceed 10 percent of the portion of the securities put up for public sale to outside parties in the present offering.
2. The maximum quantity of securities actually allocated to any other bidder shall not exceed 5 percent of the quantity underwritten by the allocating underwriter, or 50,000 shares, whichever is higher, provided that the combined quantity of securities actually allocated by all underwriters to any single bidder shall not exceed 5 percent of the portion of the securities put up for public sale to outside parties in the present offering.
The term "qualified institutional investors" in subparagraph 2 of the preceding paragraph means domestic and foreign institutional investors and foreign institutional investors, including domestic and foreign banks, insurance companies, bills finance companies, fund management companies, government investment institutions, government funds, mutual funds, unit trusts, investment trust enterprises, and trust enterprises.
The maximum combined quantity of securities allocated by an underwriter in accordance with paragraph 1, subparagraph 2 to any company that has underwriting business dealings with that underwriter shall not exceed 20 percent of the quantity of securities underwritten by that underwriter.
The phrase "any company that has underwriting business dealings with that underwriter" in the preceding paragraph means a company for which that underwriter has lead managed an offering within 12 months before the present offering is to be listed on a stock exchange or OTC market, or a company which that underwriter anticipates doing so within the coming three months.
When an underwriter arranges for specified parties to subscribe to undersubscribed shares or shares that subscribers fail to pay for after allotment, it is exempt from the restrictions of paragraph 1, subparagraph 2, but such subscriptions are still not allowed to exceed 10 percent of the quantity of securities underwritten by that underwriter, or 100,000 shares, whichever is higher, and the combined total of all shares allotted by the underwriter to the aforementioned specified parties shall not exceed 10 percent of the portion of the offering that is put up for public sale to outside parties.
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Article 28
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By submitting a book building bid form to a securities underwriter, an investor is merely expressing the desire to subscribe; likewise, by processing the book building bid 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 bid form. However, in the event that the securities underwriter collects a book building bid deposit as prescribed by Article 40, 41, 42, or 42-1, failure by the bidder or subscriber to fulfill his payment obligation within a required time limit shall be handled as prescribed by Article 40, 41, 42, or 42-1.
After gauging market demand through the bidding process, the lead underwriter shall negotiate the actual offering price with the issuing company (issuing institution) or holder of the securities in question, and a uniform offering price shall be applied to the entire issue.
The actual offering price as negotiated pursuant to the preceding paragraph shall not fall outside the estimated probable range of the offering price as set forth under paragraph 23, subparagraph 3.
In an underwriting case involving an initial listing of shares on a stock exchange or an OTC market in which all shares are allocated through book building, if the total number of securities bid for in valid book building bids is insufficient to cover all the securities offered through the book building process in question, then the book building process shall be repeated. However, a single book building process may only be repeated once. If a book building process is being repeated, this fact must be noted when the book building process is reported to the FSC in accordance with Articles 23 and 24.
In the underwriting of an initial listing of shares on a stock exchange or an OTC market that involves simultaneous book building and public subscription procedures, if the total number of securities bid for in valid book building bids is insufficient to cover all the securities offered through the book building process in question, the book building process shall be repeated, and the TSEC and the Taiwan Securities Association shall be notified by the next business day after day on which acceptance of book building bids comes to a close; a public announcement shall also be published in daily newspapers and on the Taiwan Securities Association's website no later than the second business day after the day on which acceptance of book building bids comes to a close, and brokers shall on that same day make no-interest refunds to subscribers of subscription deposits and prepaid postage for lottery winner notifications (but subscription processing fees will not be refunded).
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Article 30
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Unless the determination of the offering price for underwritten securities is undertaken as prescribed in Section One or Two, a reference price shall be determined in accordance with another reasonable pricing method. Thereupon the underwriter shall resolve the offering price by negotiations with the issuing company (issuing institution) or the holder of said securities.
In an underwriting case involving an initial listing on a stock exchange or an OTC market, the offering price shall be set on the basis of information gathered during book building, prices on the Emerging Stock Market over the preceding month, and a research report furnished by the lead and co-underwriters, and a reasonable explanation of the offering price shall be provided. If there is a difference of 15 percent between the offering price and the closing price on the Emerging Stock Market for the business day preceding the pricing date, a concrete explanation of the reasons for the pricing shall be provided.
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Article 32
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Except when permission is granted by the competent authority for the securities industry, in an underwriting case involving the negotiated sale of ordinary corporate bonds or financial bonds, not more than 50 percent of the total number of securities shall be allocated 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 involving real estate asset trust beneficial interest securities, a secondary distribution of beneficial interest securities by a trustee institution, or a secondary distribution of asset-backed securities by a special-purpose company. In a case involving call (put) warrants or corporate bonds with warrants, not more than 10 percent of the total number of securities shall be allocated 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.
In an underwriting case conducted in accordance with the provisions of Article 31, paragraph 4, the number of units actually allocated to any individual subscriber shall not exceed 10 percent of the combined total of the portion of the offering put up for public sale to outside parties plus units allocated via overallotment; for a case conducted in accordance with the provisions of Article 31, paragraph 5, the number of units actually allocated to any individual subscriber shall not exceed 10 percent of the total number of units put up for negotiated sale, and the provisions of Article 27-1 shall be observed.
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Article 33
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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 Taiwan Securities Association, the underwriter shall carry out the following:
1. Day One: Publish an underwriting announcement, and begin mailing notifications of award and payment notices;
2. Day Two: Refund bid deposits (per Article 12 paragraph 2) to unsuccessful and disqualified bidders;
3. Delivery of 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 governing when public subscribers are required to forward payment to their bank to cover subscription processing fees, subscription payments, and prepaid postage for lottery winner notification, as set forth under Article 53 paragraph 1 subparagraph 2.
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 lottery winners 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 postponed by one day, and the dates that follow shall be postponed accordingly.
The dates specified under paragraph 1 may be changed if necessary by applying to the Taiwan Securities Association for approval.
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 lottery winner fails to fulfill his payment obligation within the specified time period, the securities underwriter may confiscate the bid deposit, and shall subscribe on its own account, at the price offered to said lottery winner, to the units that were to have been allocated to said lottery winner.
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Article 34
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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 Taiwan Securities Association, the underwriter shall carry out the following:
1. Day One: Publish an underwriting announcement and begin mailing notifications of award, prospectuses, and payment due notices.
2. Day Two: Begin refunding bid deposits (per Article 12 paragraph 2) to unsuccessful and disqualified subscribers; payment date.
3. Day Three: Specified parties make payment; issuer applies to the TSEC or the GTSM for a securities listing on a stock exchange or an OTC market.
4. Day Four: Underwriter carries out underwriting on standby commitment basis; compilation of related registers is completed.
5. Day Five: Announcement of securities listing on a stock exchange or an OTC market.
6. Day Six: Securities are issued and listed on a stock exchange or an OTC market.
In a secondary distribution, the procedures set forth in subparagraphs 4, 5, and 6 under the preceding paragraph, which are connected with application for listing of securities on a 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 postponed by one day, and the dates that follow shall be postponed accordingly.
The dates specified under paragraph 1 may be changed if necessary by applying to the Taiwan Securities Association for approval.
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 lottery winner fails to fulfill his payment obligation within the specified time period, the securities underwriter may confiscate the bid deposit, and shall subscribe on its own account, at the price offered to said lottery winner, to the units that were to have been allocated to said lottery winner.
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Article 38
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Award notifications are nontransferable.
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Article 40
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Where a company listed on a 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 Taiwan Securities Association, the following matters shall be carried out:
1. Day One: Publish an underwriting announcement and mail prospectuses and notices of payment due.
2. Day Two: Payment period commences, and book building bid deposits not corresponding to allocated shares are returned to unsuccessful bidders.
3. Day Three: Specified parties make payment; issuer applies to the TSEC or the GTSM to list certificates of payment for shares on a stock exchange or an OTC market.
4. Day Four: Underwriter carries out underwriting on standby commitment basis; shareholders' register is completed.
5. Day Five: Certificates of payment for shares are listed on a stock exchange or an OTC market.
6. Day Six: Certificates of payment for shares are issued and listed on a stock exchange or an OTC market.
If any of the dates set forth in the preceding paragraph falls on a weekend, regular holiday, or bank holiday, it shall be postponed by one day, and the dates that follow shall be postponed accordingly.
The dates set forth under paragraph 1 may be changed if necessary by applying for approval with the Taiwan Securities Association.
Where a company listed on a 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, 36, and 43-1 paragraph 2 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 lottery winners 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.
A securities underwriter that collects book building bid deposits as prescribed by paragraph 6 above shall do so as prescribed by Article 12 paragraph 4.
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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 announcement and begin mailing subscription notices, prospectuses, related subscription notices, and notices of payment due.
2. Day Two: Payment date, and date for refund of book building bid deposits not corresponding to allocated securities.
3. Day Three: Payment deadline; issuer applies to the TSEC or the GTSM for a securities listing on a stock exchange or an OTC market.
4. Day Four: Complete compilation of related registers.
5. Day Five: Announcement of securities listing on a stock exchange or an OTC market.
6. Day Six: Securities are issued and listed on a 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 a 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 postponed by one day, and the dates that follow shall be postponed 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 lottery winners 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.
A securities 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 in 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 announcement shall be concurrently published at this time) and begin mailing subscription notifies, prospectuses, and notices of payment due.
2. Payment period: The deadline shall be identical to that for payment of the subscription processing fee, the bid deposit, and prepaid postage, 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 postponed by one day, and the dates that follow shall be postponed accordingly.
The dates specified under paragraph 1 may be changed if necessary by applying to the Taiwan Securities Association for approval.
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 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 securities 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 42-1
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In an underwriting case where an initial listing on a stock exchange or an OTC market involves simultaneous book building and public subscription procedures conducted in accordance with Articles 21 and 21-1, the following matters shall be carried out beginning from the second business day after the book building agreement has been registered with the Taiwan Securities Association:
1. Day One: Publish a book building announcement (together with a public subscription announcement) and begin accepting book building bids.
2. Day Two: Public subscription commencement date.
3. Day Four: Deadline for submission of book building bids and public subscriptions, and deadline for bidders to forward payment to their bank to cover subscription processing fees, subscription payments (calculated on the basis of the ceiling for the anticipated book building price range), and prepaid postage for lottery winner notification.
4. Day Five:
(1) Set the offering price; the lead underwriter shall is required at this time to notify the TSEC and the Taiwan Securities Association of the actual offering price.
(2) Calculate the over-subscription ratio on the basis of the figure for public subscription volume as provided by the TSEC, and adjust the book building volume and public subscription volume accordingly.
(3) Conduct book building allocation.
(4) Execute underwriting contract.
(5) Date for withholding of subscription processing fees, subscription payments, and prepaid postage for lottery winner notifications; broker's bank undertakes matters regarding withholding of subscribers' subscription processing fees, subscription payments, and prepaid postage for lottery winner notifications.
5. Day Six:
(1) Date for public drawing of lots. The TSEC undertakes the drawing, then produces and sends report of winner information to each broker, and compiles and reports the information to the lead underwriter for provision to subscribers for their review.
(2) File underwriting contract with the Taiwan Securities Association.
(3) Mail out allocation notices, prospectuses, and payment notices.
6. Day Seven:
(1) Issue allocation announcement.
(2) Parties allotted shares through book building make payment.
(3) Brokers make no-interest refunds to non-lottery winners of bid deposits and prepaid postage; the subscription processing fees of non-lottery winners are not returned.
(4) If the offering price as set by the lead underwriter is lower than the bid deposit, brokers will make no-interest refunds to lottery winners of the difference between the bid deposit and the actual offering price.
(5) Underwriters shall send lottery winner notifications, prospectuses (or subscription forms), and other relevant materials to lottery winners by express registered mail.
(6) Issuer applies to the TSEC or the GTSM for a securities listing on a stock exchange or an OTC market.7. Day Eight: Specified parties make payment (the lead underwriter shall ascertain prior to 12 o'clock noon on that day whether the specified parties have made payment) or underwriters take up shares on their own accounts.
8. Day Nine:
(1) Shareholders' register is completed.
(2) An issuer delivers certificates of payment to the Taiwan Depository & Clearing Corporation; a company applying for listing on a stock exchange or an OTC market delivers shares to the Taiwan Depository & Clearing Corporation.
(3) Listing of securities on a stock exchange or an OTC market is publicly announced.
9. Day Ten:
Securities are listed on a stock exchange or an OTC market.
If a date set forth in any of the subparagraphs under the preceding paragraph falls on a weekend, regular holiday, or bank holiday, it shall be postponed by one day, and the dates that follow shall be postponed accordingly.
The dates specified under paragraph 1 may be changed if necessary by applying to the Taiwan Securities Association for approval.
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 payment to be made by the bidder, as referred to in paragraph 1 subparagraph 6, item 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 securities 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.
When the lead underwriter finalizes the book building allocation list, it may request that allotees pay the subscription price in full, and may cancel the eligibility for allocation of any bidder that fails to act as required.
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Article 43
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For common corporate bonds, financial bonds not involving equity rights, and the types of underwriting cases set out in Article 22 subparagraphs 3 and 4 and Article 22-1 subparagraphs 2 and 3, the types of bidders from whom a securities underwriter is allowed to accept bids shall be restricted by the mutatis mutandis application of Article 35 and Article 36 subparagraphs 8 and 9, and the securities underwriter shall also obtain declarations from bidders affirming that they meet the eligibility requirements for purchasers.
For securities allocated by an underwriter but not paid for by the subscribers and placed with a specified party, the provisions in the preceding paragraph shall apply mutatis mutandis to the specified party.
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Article 43-1
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When a securities firm conducts an underwriting case involving an initial listing on a stock exchange or an OTC market, the parties from whom it is allowed to accept book building bids shall be restricted by the mutatis mutandis application of Articles 35 and 36; in addition, the firm shall refuse bids involving the participation of any of the parties listed in the following subparagraphs, and shall also obtain declarations from bidders affirming that they meet the eligibility requirements for purchasers:
1. An employee of the issuer.
2. A director, supervisor, or managerial officer (or a spouse, son, or daughter thereof) of a company that has underwriting business dealings with an underwriter.
3. A financial holding company to which an underwriter itself belongs, or another subsidiary of such a financial holding company; however, this restriction does not apply to a securities investment trust fund offered by a securities investment trust company belonging to such a financial holding company.
4. A director, supervisor, or managerial officer (or a spouse, son, or daughter thereof) of a financial holding company to which an underwriter itself belongs, or of another subsidiary of such a financial holding company.
5. A de facto related party of the issuer or an underwriter.
6. A party listed in any of the preceding subparagraphs that uses the name of another party to participate in subscription (i.e. a de facto related party that engages in any of the acts set out under Article 2 of the Securities and Exchange Act Enforcement Rules).
When a securities firm, acting on behalf of a company already listed on a stock exchange or an OTC market, conducts an underwriting case involving a cash capital increase or an offering of corporate or financial bonds with equity characteristics, the parties from whom it is allowed to accept book building bids shall be restricted by the mutatis mutandis application of the preceding paragraph, provided that it need not be restricted by subparagraphs 1 and 2 of the preceding paragraph.
For securities allocated by an underwriter but not paid for by the subscribers and subsequently placed with a specified party, the provisions of paragraphs 1 and 2 shall apply mutatis mutandis to the specified party.
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Article 52-1
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In an underwriting case where an initial listing on a stock exchange or an OTC market involves simultaneous book building and public subscription procedures, the lead underwriter shall publish a public subscription announcement in daily newspapers on the business day immediately preceding the day on which it begins accepting subscriptions, and shall concurrently publish a book building announcement (prepared in accordance with the provisions of Article 24) in daily newspapers on the three business days before it begins accepting subscriptions. The content of the announcements shall be reported in hardcopy and electronic media to the Taiwan Securities Association, and shall include the items in the following subparagraphs:
1. Public subscription period.
2. Matters requiring attention regarding the rights and obligations of subscribers, as follows:
(1) Subscribers need to have a trading account, a central depository account, and a bank account.
(2) Subscribers need to enter into a contract with a transfer bank.
(3) When submitting a bid, a subscriber must have a sufficient bank balance to cover the subscription processing fee, postage for lottery winner notification, and the subscription payment (calculated on the basis of the ceiling for the anticipated book building price range).
(4) The manner of disclosure of the prospectus, including: (1) a statement clarifying that the anticipated offering price range as disclosed in the prospectus is an estimate based on information gathered during book building; and (2) an explanation of how to inquire about subsequent offering price revisions.
(5) If the subscription deadlines for multiple securities underwriting cases fall on the same day and a subscriber has submitted bids for more than one of them, funds shall be withdrawn from the subscriber's bank account in an amount equal to the sum of the subscription processing fees, postage for lottery winner notifications, and subscription payments for all securities that have been subscribed for.
3. A subscriber may not submit duplicated subscriptions.
4. Subscribers shall be advised to make a careful evaluation prior to subscribing, for once they are selected as lottery winners they may not abandon a subscription and request a refund.
5. The procedure for payment of refunds to non-lottery winners, and to lottery winners when the actual offering price is lower than the maximum anticipated book building price.
6. How to direct inquiries regarding subscriptions and lottery winner lists.
7. The deadline for payment of subscription processing fees, postage for lottery winner notifications, and subscription payments.
8. How public subscription volume will be adjusted when subscriptions (defined as the final confirmed total volume of subscriptions that brokers have transmitted to the TSEC by the public subscription deadline) exceed the number of units earmarked for allocation through public subscription by a specified multiple.
9. The date on which the offering price will be set.
10. The date on which the securities are scheduled for listing on a stock exchange or an OTC market.
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Article 53
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Except for the underwriting of an initial listing on a stock exchange or an OTC market that involves simultaneous book building and public subscription procedures, an underwriter handling an offering by public subscription shall, after registering the underwriting contract with the Taiwan Securities Association, observe the following schedule in handling matters relating to subscriptions, bid deposits, and postage for lottery winner notifications:
1. Day One: Publish an underwriting announcement and commence subscription.
2. Day Three: Subscription period closes. Deadline for subscriber's payment of subscription processing fee, subscription payment, and postage expense for lottery winner notification to the designated bank.
3. Day Four: Date of withholding of subscription processing fees, subscription payments, and postage for lottery winner notifications. Broker's bank undertakes matters regarding withholding of subscribers' subscription processing fees, subscription payments, and postage for lottery winner notifications.
4. Day Five: Date of public drawing of lots. The TSEC undertakes drawing. 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.
5. Day Six:
Date of settlement of subscription processing fees, subscription payments, and postage expense for lottery winner notifications.
Brokers make no-interest refunds to non-lottery winners of bid deposits and prepaid postage for lottery winner notifications; the subscription processing fees of non-lottery winners are not returned.
Underwriter shall send lottery winner notifications and prospectuses (or subscription forms) to lottery winners via express registered mail.
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 7) 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 via the 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, and 5 falls on a weekend, regular holiday, or bank holiday, it shall be postponed by one 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.
The Taiwan Securities Association shall prescribe the standard for the postage expense for lottery winner notification. 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 Taiwan Securities Association. If the number of units subscribed does not exceed the number of units to be sold, all qualified subscribers shall be deemed lottery winners, and a public drawing of lots shall be unnecessary.
After the subscriber has commissioned subscription with a broker, the subscription form shall not be withdrawn or changed.
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Article 56
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A subscriber may use only one broker to subscribe to any given security offered through public subscription, and shall not undertake duplicated subscription [via multiple brokers]. Each subscriber is restricted to subscribing to one lot. The processing fee is NT$20 per subscription. The receiving broker shall notify the subscriber's bank to deduct the fee from the subscriber account on the dates prescribed in Articles 42-1 and 53.
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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 a 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 or 43-1 shall not participate.
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Article 62
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Where a company already listed on a stock exchange or an OTC market either carries out a cash capital increase or issues corporate bonds or Taiwan Depositary Receipts that are allocated through public subscription, after subscription, payment of bid deposits, and lottery winner notification have been completed as prescribed by Article 53 paragraph 1, the securities firms and relevant departments shall undertake listing on a stock exchange or an OTC market, carrying out the following work within the following deadlines:
1. Day Seven: Deadline for placement with specific party;
2. Day Eight:
(1) Underwriter carries out underwriting on standby commitment basis.
(2) Issuer uses share payment certificates to apply with the TSEC or the GTSM for listing on a stock exchange or an OTC market.
3. Day Nine:
(1) Complete compilation of shareholders' (creditors') register.
(2) Issuer transfers share payment certificates to the Taiwan Depository & Clearing Corporation.
4. Day Ten: Listing of securities on a stock exchange or an OTC market is publicly announced.
5. Day Eleven:
(1) Securities electronically transferred from the Taiwan Depository & Clearing Corporation to the subscriber's central depository account.
(2) Securities listed on a stock exchange or an OTC market.
If a date set forth in the above subparagraphs falls on a weekend, regular holiday, or bank holiday, the deadline shall be postponed by one 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.
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Article 66
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Upon completion of the lottery, the TSE shall print the daily underwriting report. Said report shall be signed by the representatives of the TSE, issuer, and underwriter, and then shall be publicly announced.
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Article 87
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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 FSC. The adoption, elimination, or amendment of any attachments to these Regulations shall take force after passage by a meeting of the board of directors.
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