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Taiwan Securities Association Rules Governing Underwriting and Resale of Securities by Securities Firms(2011.02.14) |
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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 may 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 22-3
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In an initial offering of Taiwan Depositary Receipts in which part are placed by book building and part by public subscription, the book building and public subscription procedures shall be carried out simultaneously, and 10 percent of the volume that is to be publicly sold shall first be put up for public subscription, and the volume allocated for public subscription shall be adjusted according to the subscription volume.
If the underwritten subscription volume (defined as the final confirmed total volume of subscriptions that brokers have transmitted to the TWSE by the public subscription deadline) falls short of the volume allocated for public subscription as referred to in the preceding paragraph, the shortfall may be added to the volume to be underwritten through book building, and allocated in that manner. If the subscription volume exceeds by a certain multiple the volume allocated for public subscription, the volume allocated for public subscription shall be adjusted upward in accordance with the following provisions:
(1) If the subscription multiple is at least 15 times but less than 20 times, the amount allocated for public subscription shall be adjusted to 15 percent.
(2) If the subscription multiple is at least 20 times but less than 25 times, the amount allocated for public subscription shall be adjusted to 20 percent.
(3) If the subscription multiple is at least 25 times but less than 30 times, the amount allocated for public subscription shall be adjusted to 25 percent.
(4) If the subscription multiple is at least 30 times but less than 35 times, the amount allocated for public subscription shall be adjusted to 30 percent.
(5) If the subscription ratio is at least 35 times but less than 40 times, the amount allocated for public subscription shall be adjusted to 35 percent.
(6) If the subscription multiple is at least 40 times but less than 45 times, the amount allocated for public subscription shall be adjusted to 40 percent.
(7) If the subscription multiple is at least 45 times but less than 50 times, the amount allocated for public subscription shall be adjusted to 45 percent.
(8) If the subscription multiple is 50 times or more, the amount allocated for public subscription shall be adjusted to 50 percent.
If the post-adjustment volume allocated for public subscription as calculated per any of the subparagraphs of paragraph 2 is not a whole number, the number shall be rounded up to the nearest whole number.
In an initial offering of Taiwan Depositary Receipts in which part are placed by book building and part by public subscription, the book building and public subscription procedures shall be carried out simultaneously. The relevant procedures shall be subject mutatis mutandis to the provisions of Article 42-1.
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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. (If a case of an offering prior to an initial listing on a stock exchange or an OTC market involves emerging stock trading, the lower limit of the anticipated offering price range may not be less than 70 percent of the simple arithmetic mean trade price for the 10 business days in which trades have been executed in Emerging Stock trading after the book building agreement has been registered with the Taiwan Securities Association, and relevant explanations shall be attached.)
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 with the Taiwan Securities Association 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 and a declaration by the issuing company that it has already held a roadshow in accordance with TWSE or GTSM rules.
If a declaration is not submitted in accordance with the preceding paragraph or the TWSE or GTSM notifies the Taiwan Securities Association that the issuing company has failed to hold a roadshow in accordance with regulations, the book building shall be postponed.
In an underwriting case involving an initial issue of Taiwan depositary receipts, when the lead underwriter registers the issue with the Taiwan Securities Association using hardcopy media as required in paragraph 1, it shall also submit an evaluation of whether during the 3 months before the date of registration there has been any unusual movement in the price of the stock represented by the Taiwan depositary receipts.
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Article 25
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After registering with the FSC for a public offering and issuance of securities, the underwriting syndicate may provide investors with prospectuses and other relevant materials of the issuing company (issuing institution), begin handling book building bids, and may convene public informational meetings to familiarize investors with the offering.
If a public informational meetings referred to in the preceding paragraph is held prior to a book build, the underwriters shall provide advisory services to the issuing company (or issuing institution) to publicly announce the estimated probable range of the offering price on the Market Observation Post System (MOPS) or by other means in accordance with applicable laws and regulations, and state that the subsequent final estimated probable range of the offering price shall be the range published in the book building announcement.
A public informational meeting held by underwriters for an underwriting case involving an initial listing on a stock exchange or OTC market may be held jointly with a roadshow held by the issuing company.
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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.
Prior to an initial listing on a stock exchange (or OTC) market, underwriting shall give adequate consideration to the company's most recent financial status, and in addition to setting the offering price 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, a reasonable explanation of the offering price shall also be provided, and the offering price may not be less than 70 percent of the simple arithmetic mean trade price for the 10 business days in which trades have been executed in Emerging Stock trading after the book building agreement has been registered with the Taiwan Securities Association. If there is a difference of 50 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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