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Taiwan Securities Association Rules Governing Underwriting and Resale of Securities by Securities Firms(2009.03.31) |
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Article 8
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In the underwriting of securities offered through competitive auction, the lead underwriter shall first prepare documentation determining the particulars listed in the subparagraphs below. After being signed or sealed by the lead underwriter and co-underwriters and the issuer of the securities, said documentation shall be reported to the Taiwan Securities Association:
1. the total number of underwritten units, number of units expected to be sold via overallotment, number of units held by the securities underwriter for its own account as prescribed by Article 4-1, the number of units offered by competitive auction, and minimum bidding unit;
2. the minimum offering price as resolved by negotiation with the issuer;
3. the firm-commitment fee or best-efforts underwriting fee, as resolved by negotiation with the issuer;
4. the unit size of lots offered through public subscription;
5. the names of the members of the underwriting syndicate, and the amount of securities apportioned to each, as specified by Article 7;
6. except for the initial listing of shares on a stock exchange or an OTC market, the method of allocating among the members of the underwriting syndicate any units that remain unsubscribed after conclusion of competitive auction; and
7. the date(s) of competitive auction and the time(s) for submitting and opening bids, as agreed in consultation with the Taiwan Securities Association.
The upper limit for the minimum offering price in subparagraph 2 of the preceding paragraph shall, in an underwriting case involving an initial listing on a stock exchange or an OTC market, be the figure obtained by using the method of calculation reported to the Taiwan Stock Exchange Corporation (TSEC) or the GreTai Securities Market (GTSM); in the underwriting of a cash capital increase through an issue of common shares by a company already listed on a stock exchange or an OTC market in which all shares are put up for underwritten distribution, [it] shall not be lower than 90 percent of (1) the closing common share price on the business day prior to the offer through competitive auction, or (2) the simple average of closing common share prices over either the three or five business days prior to the offer through competitive auction, factoring out bonus shares issued as stock dividend (or treasury shares canceled in connection with a capital reduction); in the underwriting of a cash capital increase through an issue of preferred shares by a company already listed on a stock exchange or an OTC market, the upper limit shall be the reference price calculated based on the appropriate pricing model selected at the time the fund-raising plan was reported to the competent authority.
In the underwriting of convertible corporate bonds and corporate bonds with warrants by competitive auction, the minimum offering price, as negotiated pursuant to paragraph 1 subparagraph 2, shall not exceed the par value of said securities.
In the event that unsubscribed units as specified in paragraph 1 subparagraph 6 are placed by the underwriting syndicate with a specific party, 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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Article 17-1
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An underwriting case involving cash capital increase through a competitive auction of new shares issued for the purpose of carrying out an initial listing on a stock exchange or OTC market, or an underwriting case in which a company already listed on a stock exchange or an OTC market conducts a cash capital increase through a competitive auction, shall be handled through uniform price clearing, whereby the TSEC, in opening the bids, adds up the cumulative total of the bid quantities, starting with the highest-priced bid and working its way down until the entire offering has been cleared, with the lowest price necessary to sell all securities offered through competitive auction taken as the uniform clearing price. In an underwriting case in which a company already listed on a stock exchange or an OTC market conducts a cash capital increase through a competitive auction, if the total number of securities bid for in valid bids is insufficient to cover the all the securities offered through competitive auction, then the minimum offering price, as prescribed by Article 8 paragraph 1 subparagraph 2, shall serve as the uniform clearing price.
Those bidding at or above the uniform clearing price are lottery winners, and in all cases their bids will be cleared at the uniform clearing price.
If the total number of securities bid for in valid bids exceeds the number of securities offered through competitive auction, then those submitting bids at the uniform clearing price shall be awarded securities in random order, generated by computer, until all securities offered through competitive auction have been awarded.
The quantity of securities awarded to any single bidder shall not exceed the proportion set forth under Article 9 paragraph 2. Where an award does exceed this proportion, the quantity in excess shall be select at random by computer and subtracted from the award.
The uniform clearing price shall serve as: the offering price for those units of a security retained by the underwriter for its own account in connection with a cash capital increase carried out by a company already listed on a stock exchange or an OTC market, and for units that remain unsubscribed after conclusion of competitive auction; the subscription price for those units allocated through public subscription; the price at which a security opens on its first day of listing in the case of underwriting through competitive auction of an initial listing on a stock exchange or an OTC market involving cash capital increase through a new share issue; the price of securities sold upon the exercise of an overallotment; and the price at which a security opens on its first day of listing in the case of cash capital increase through an issue of preferred shares by a company already listed on a stock exchange or an OTC market.
In addition to complying with paragraph 4 of this Article, the securities underwriter shall also handle the results of the opening of bids in compliance with all other relevant laws and regulations, and shall provide all relevant data as prescribed by the TSEC and the Taiwan Securities Association.
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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. cash capital increase through an issue of preferred shares by a company already listed on a stock exchange or an OTC market;
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 22-1
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Where either of the following types of underwriting cases are undertaken through the use of book building, the part put up for public sale shall be underwritten entirely by book building:
1. underwriting of a public offering by a company already listed on a stock exchange or an OTC market in which the offering involves a cash capital increase through the issue of common shares and the entire offering is put up for underwritten distribution;
2. underwriting of an offering of beneficial interest securities by a trustee institution, or underwriting of an offering of asset-backed securities by a special-purpose company; or
3. real estate asset trust beneficial interest securities.
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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 through an issue of ordinary shares 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 through an issue of ordinary shares 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.
If a company listed on a stock exchange or an OTC market carrying out a cash capital increase through an issue of preferred shares 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.
In an underwriting case handled in accordance with the provisions of Article 21 or Article 22, paragraph 1, subparagraph 1, 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.
Where a company listed on a stock exchange or an OTC market carrying out a cash capital increase through an issue of preferred shares uses the book building method for a portion of the shares and public subscription method for another portion of the shares to allocate the 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.
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 44
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A bidder participating in the underwriting of securities by book building as prescribed by Article 40 and Article 22, paragraph 1, subparagraph 1, or in the underwriting of call (put) warrants undertaken entirely by negotiated sales as prescribed by Article 31 paragraph 2, shall first apply to open an electronic transfer custodial account with the Taiwan Securities Central Depository Co., Ltd. (hereinafter, referred to as "the Central Depository") as prescribed by the Operating Rules for the Taiwan Securities Central Depository Company. When making payment for securities, the subscriber shall provide the number of said account in order to facilitate the delivery of said securities.
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