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Taiwan Securities Association Rules Governing Underwriting and Resale of Securities by Securities Firms(2008.05.16) |
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Article 4-1
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In the underwriting of securities on a firm commitment basis, except where prescribed by other laws and regulations, a securities underwriter shall act as prescribed by the following provisions with respect to the proportion of securities held for its own account; provided, however, that for any units purchased for its own account that remain unsubscribed at the closure of the underwriting period, these restrictions shall not apply:
1. In an underwriting case involving cash capital increase, convertible corporate bonds, ordinary corporate bonds not handled by negotiated sale, financial bonds not handled by negotiated sale, or Taiwan depositary receipts for exchange (or over-the-counter (OTC)) listed companies, the underwriter shall hold for its own account from 5 percent to 15 percent of the total number of units underwritten;
2. In the underwriting of a cash capital increase for a company that is an emerging stock company or that is not exchange (or OTC) listed, the underwriter may hold for its own account a proportion not to exceed 15 percent of the total number of units underwritten;
3. In an underwriting case involving preferred shares, preferred shares with warrants, or corporate bonds with warrants for public companies, the underwriter may hold for its own account a proportion not to exceed 15 percent of the total number of units underwritten;
4. In an underwriting case involving a secondary distribution of beneficial interest securities by a trustee institution or a secondary distribution of asset-backed securities by a special purpose company that is not undertaken through negotiated sale, purchases on own account shall not exceed fifteen percent of the total amount underwritten.
5. In an underwriting case where an offering of real estate asset trust beneficial interest securities by a trustee institution is not undertaken through negotiated sale, purchases on own account shall not exceed fifteen percent of the total amount underwritten.
In the underwriting cases contemplated under the preceding paragraph, for issues undertaken entirely by book building, each underwriter shall hold for its own account not more than 10 percent of the total number of units underwritten.
Where a public company carrying out a cash capital increase encounters waiver of subscription rights by an existing government-agency shareholder in accordance with the provisions of Article 267, paragraph 3 of the Company Act, the portion thus incorporated into the public underwriting may be excluded when calculating the "total number of units underwritten" set out in paragraph 1, subparagraph 1.
In underwriting case involving an initial listing on a stock exchange (or OTC) market, if the securities underwriter carries out the underwriting through public sale to outside parties, it shall first set aside 1,000 common shares from the offering for subscription by the Securities and Futures Investors Protection Center.
Except for underwriting cases involving an OTC company transferring its listing to a stock exchange, or for underwriting cases for which there are other acts and regulations that provide otherwise, if an underwriting case involving an initial listing of shares in common stock on a stock exchange (or OTC) market is carried out on a firm commitment basis, the lead underwriter shall stipulate with the issuing company that the issuing company is to coordinate with its shareholders to provide previously issued shares in common stock (the number thereof to be set at a certain percentage of the total volume of shares to be sold publicly to outside parties in the current underwriting case) to the lead underwriter for the purpose of exercising overallotment during the underwriting period. The related procedures shall be carried out in accordance with the Taiwan Securities Association Rules Governing the Underwriting Procedures to be Followed by Underwriters in Conducting an Initial Listing on a Stock Exchange or Over-the-Counter Market.
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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 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.
When an underwriting case handled by a foreign issuer involving a primary listing is a case of application for listing under the guidance of a securities firm, the offering price shall be set on the basis of information gathered during book building, and a research report furnished by the lead and co-underwriters, and a reasonable explanation of the offering price shall be provided
In an underwriting case involving cash capital increase by an emerging stock company, the offering price shall be set not lower than the net value per share as reported in the financial report for the most recent fiscal period, audited and attested or reviewed by a CPA, and shall take into consideration the average price calculated by dividing the sum of the trading value of the common shares of that emerging stock as shown in the Emerging Stock Computerized Price Negotiation and Click System on each day for a period of 30 business days immediately before the submission of the underwriting contract to the Association for recordation, by the sum of the numbers of shares traded on each business day, and a reasonable explanation of the offering price shall be provided.
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Article 62
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Where a company already listed on a stock exchange or an OTC market, or an emerging stock company, 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 related 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, or registration as an emerging stock.
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, or registration as an emerging stock, 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, or registered as an emerging stock.
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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