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Terms used in these Directions are defined as follows:
- Price determination date: The date when the board of directors resolves on the price, conversion price, or subscription price of privately placed straight corporate bonds or securities with equity characteristics; the price of securities with equity characteristics may be determined by the board of directors only after, and on the basis of, a determination of the pricing by a resolution of a shareholders meeting.
- Reference price:
- For TWSE-listed or TPEx-listed stock, it shall be the higher of the following two calculations:
- The simple average closing price of the common shares of the TWSE listed or TPEx listed company for either the 1, 3, or 5 business days before the price determination date, after adjustment for any distribution of stock dividends, cash dividends or capital reduction.
- The simple average closing price of the common shares of the TWSE listed or TPEx listed company for the 30 business days before the price determination date, after adjustment for any distribution of stock dividends, cash dividends, or capital reduction.
- For emerging stock, it shall be the higher of the following two calculations:
- For the 30 business days preceding the price determination date, the simple arithmetic mean closing price of the common shares, or the sum of all transaction amounts of the common shares of such emerging stock traded on each of those business days in the Emerging Stock Computerized Price Negotiation and Click System divided by the sum of the number of shares traded on each of those business days, after adjustment for any distribution of stock dividends, cash dividends or capital reduction.
- The net worth per share shown on the financial report audited and certified or reviewed by a certified public accountant (CPA) for the period closest to the price determination date.
- For stock that has never been listed on the TWSE or TPEx or traded over-the-counter at securities firms, the reference price is the net worth per share shown on the financial report audited and certified or reviewed by a CPA for the period closest to the price determination date.
- Exchangeable corporate bond:
- If the exchangeable underlying stocks are TWSE listed (or TPEx listed), the reference price is the higher of either the simple average closing price of the common shares for any of either the 1, 3, or 5 business days before the price determination date, after adjustment for any distribution of stock dividends, cash dividends or capital reduction, or the simple average closing price of the common shares for the 30 business days before the price determination date, after adjustment for any distribution of stock dividends, cash dividends or capital reduction.
- If the exchangeable underlying stocks are emerging stocks, the reference price is the higher of the following: [i] for the 30 business days preceding the price determination date, the simple arithmetic mean closing price of the common shares, or the sum of all transaction amounts of the common shares of the exchangeable stock traded on each of those business days in the Emerging Stock Computerized Price Negotiation and Click System divided by the sum of the number of shares traded on each of those business days, after adjustment for any distribution of stock dividends, cash dividends or capital reduction, or [ii] the net worth per share shown on the financial report audited and certified or reviewed by a CPA for the period closest to the price determination date.
- If the exchangeable underlying stocks have never been TWSE listed (or TPEx listed) or traded over-the-counter at securities firms, [the company] shall, by the resolution date of the board of directors, request experts to provide opinions on the price per share for the common shares of the exchangeable underlying stocks.
- Theoretical price: A securities price calculated based on an appropriate pricing model that is selected in consideration of the various rights under the terms of issuance. The pricing model shall as a whole encompass, and include the concurrent consideration of, the various rights included in the terms of issuance. Any right not included for consideration within the model shall be excluded from the terms of issuance.
- Strategic investor: Any individual or juristic person that, for the purpose of increasing the profit of the investee company, provides assistance to the investee company in terms of enhanced skills, improved quality, reduced cost, increased efficiency, enlarged market, or other benefits, achieved through vertical or horizontal integration in the industry or joint effort in product or market development or otherwise, and using the individual's or juristic person's own experience, skills, knowledge, brand, or channels.
- Related party: As determined in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
- Insider: A director, supervisor, managerial officer, or a shareholder holding more than 10 percent of the total number of shares of the company, and any spouse, minor child, or nominee holder thereof.
- Independent expert: A CPA, lawyer, or securities underwriter, who may not be a related party of the public company or of any placee.
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For a private placement of securities by a public company under Article 43-6 of the Act, with the exception of straight corporate bonds (which may be resolved on by the board of directors under paragraph 3 of the same article), the below-listed particulars shall be stated in the notice to convene the shareholders' meeting in accordance with paragraph 6 of that article, and shall be thoroughly explained at the shareholders' meeting:
- The basis and reasonableness of the private placement pricing:
- For a private placement of common shares, specify the percentage by which the private placement price of common shares may not be lower than the reference price, and the basis for the method by which the price was set, and its reasonableness; if the placee intends to make a non-cash capital contribution, the meeting notice shall also specify the capital contribution method, amount offset by the non-cash contribution and its reasonableness, and an independent expert's opinions on the reasonableness of the offset amount, to serve as a reference for the shareholders to decide whether to agree.
- For a private placement of securities with equity characteristics such as preferred shares, convertible corporate bonds or corporate bonds with warrants, specify the terms of the private placement, the percentage by which the issuance price may not be lower than the theoretical price, and provide an overall explanation of the reasonableness of the terms set for the private placement. For a private placement of preferred shares, if the placee intends to make a non-cash capital contribution, the meeting notice shall also specify the capital contribution method, amount offset by the non-cash contribution and its reasonableness, and an independent expert's opinions on the reasonableness of the offset amount, to serve as a reference for the shareholders to decide whether to agree.
- If the price per share of the privately placed common shares or preferred shares, the conversion price of convertible corporate bonds, or the subscription price of preferred shares with warrants, corporate bonds with warrants, or employee stock warrants might possibly be lower than the par value of the shares, specify the cause, reasonableness, method of price setting, and any effect on the shareholders' equity (such as an increase in accumulated loss, or the possibility of future capital reduction as a result of an increase in accumulated loss).
- Where the company is a TWSE listed or TPEx listed company or an emerging stock company, if the price per share of the privately placed common shares is lower than 80 percent of the reference price, or if the issuance price of the preferred shares, convertible corporate bonds, preferred shares with warrants, corporate bonds with warrants, or employee stock warrants is lower than 80 percent of the theoretical price, state the independent expert's opinion on the basis and reasonableness of the pricing on the meeting notice, to serve as a reference for the shareholders to decide whether to agree.
- The shareholders' meeting may not grant discretionary authorization to the board of directors or the chairman of the board to set the percentage for the private placement pricing.
- The method for selecting the specific persons:
- If the placees are insiders or related parties of the company, the list of placees, method and objectives of selecting the placees, and the relationship between the placees and the company shall be fully discussed at a meeting of the board of directors and stated in the notice to convene the shareholders' meeting, failing which no such person may subscribe afterwards. The price per share fixed for privately placed common shares may not be lower than 80 percent of the reference price, and the issuance price fixed for privately placed preferred shares, convertible corporate bonds, preferred shares with warrants, corporate bonds with warrants, or employee stock warrants may not be lower than 80 percent of the theoretical price.
- If any placee is a strategic investor, the method and objectives of selecting the placee, the necessity for that selection, and the anticipated benefits shall be fully discussed at a meeting of the board of directors and stated in the notice to convene the shareholders' meeting.
- Where the placees have already been determined before the shareholders' meeting notice is mailed, the method and objectives of selecting the placees, and the relationship between the placees and the company, shall be specified. If any placee is a juristic person, the name of the juristic person and the name and the percentage of shareholdings shall be given of every shareholder of the juristic person whose equity interest ranks among the top 10, and also of the relationship to the company of every shareholder of the juristic person whose equity interest ranks among the top 10.
- Where the placees are determined after the shareholders' meeting notice is mailed, the above information on the placees shall be input into the Market Observation Post System ("MOPS") within 2 days starting from the date the placees are determined.
- In the reasons for the necessity for conducting the private placement, specify the reasons for not using a public offering, the limit on the private placement, the use of the funds raised by the private placement, and the anticipated benefits. If there are to be multiple closings, also specify the anticipated number of closings, the use of the funds for each closing of the private placement, and the anticipated benefits for each closing.
If an independent director expresses an objection or reservation, it shall be specified in the notice to convene the shareholders' meeting.
If there has been, is, or will be any significant change in managerial control during the period from 1 year preceding the day on which the board of directors resolves on the private placement of securities to 1 year from the delivery date of those privately placed securities, the company shall engage a securities underwriter to provide an assessment opinion on the necessity and reasonableness for conducting the private placement, and shall state the opinion in the notice to convene the shareholders' meeting to serve as a reference for the shareholders to decide whether to agree.
The required information under the preceding three paragraphs shall appear in the notice to convene the shareholders' meeting in a conspicuous typeface, accompanied by an indication of the websites where relevant information may be found, including the website of the MOPS and the company's website.
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