| Title： |
Taiwan Securities Association Rules Governing Underwriting and Resale of Securities by Securities Firms(2006.09.26) |
| Date： |
|
|
Article 21-1
|
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.
Where post-adjustment public subscription volume as calculated per any of the subparagraphs under paragraph 2 is not a whole number, the number shall be rounded up to the nearest whole number.
|
|
Article 36
|
When a securities underwriter accepts competitive auction bids, it shall obtain from each subscriber a declaration that it does not meet any of the descriptions set out in the following subparagraphs, and the underwriter shall refuse a bid if its discovers that the subscriber does meet one of the following descriptions:
1. an equity-method investee of the issuing company (issuing institution);
2. an investor that has equity-method investments in the issuing company (issuing institution);
3. a company whose chairman or general manager is the same person as the chairman or general manager of the issuing company (issuing institution), or is the spouse thereof, or is a relative thereof within the second degree of kinship;
4. a foundation that has received one-third or more of its paid-in endowment from the issuing company (issuing institution);
5. the issuing company's (issuing institution's) directors, supervisors, general manager, vice general manager(s), assistant general managers, or any officer serving directly under the general manager;
6. the spouse of a director, a supervisor, or the general manager of the issuing company (issuing institution);
7. a relative within the second degree of kinship of a director, a supervisor, or the general manager of the issuing company (issuing institution);
8. a director, supervisor, or employee of the underwriting syndicate, a spouse thereof, or a relative thereof within the second degree of kinship; or
9. any person as set out in the preceding subparagraphs who participates in the offering under the name of another person (i.e. a person who meets the criteria of a de facto related party as defined in Article 2 of the Securities and Exchange Act Enforcement Rules).
|
|
Article 42-1
|
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 notify the TSEC and the Taiwan Securities Association of the actual offering price by 12:30 p.m. on that same day, and after 1:30 p.m. on that same day the TSEC shall disclose the information on its website and transmit it to brokers.
(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) Payment date for subscription processing fees, subscription payments (calculated on the basis of the actual offering price), and postage.
(4) 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.
(5) 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.
(6) Underwriters shall send lottery winner notifications, prospectuses (or subscription forms), and other relevant materials to lottery winners by express registered mail.
(7) 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 an underwriter finalizes its 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.
An underwriter may not reveal the actual offering price to any outside party before the TSEC discloses it on its website in accordance with paragraph 1, subparagraph 4, item 1.
If the bids submitted during the book building are too few for the setting of a price, the lead underwriter shall notify the TSEC and the Taiwan Securities Association by the point in time set out in paragraph 1, subparagraph 4. The TSEC will not carry out a public drawing of lots, and brokers shall make no-interest refunds to bidders of bid deposits and prepaid postage for lottery winner notifications on the following business day, but subscription processing fees will not be refunded. Brokers shall also process the payment of subscription processing fees on that same day.
|
|
Article 52-1
|
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.
11. If the bids submitted during the book building are too few for the setting of a price, the book building process shall be repeated. The TSEC will not carry out a public drawing of lots, and brokers shall make no-interest refunds to bidders of prepaid postage for lottery winner notifications and securities subscription payments on the second business day following the subscription deadline, but subscription processing fees will not be refunded.
|
|
Article 66
|
Upon completion of the lottery, the TSEC shall print out the daily underwriting report, publicly announce it, and transmit it in the form of an electronic file to securities underwriters.
|
|
Article 70
|
Securities firms shall, after the public announcement of the lottery winners, keep records relating to ordinary subscriptions for 30 days and records regarding unqualified subscribers or lottery winners for 90 days. However, the FSC and Taiwan Securities Association may extend these times in consideration of the needs at the time.
The TSEC shall keep subscription records on file for five years after the bid opening.
|