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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 three business days before the commencement date of the tender:
- 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, minimum bidding unit, and maximum bid quantity per bid form;
- the minimum offering price as resolved by negotiation with the issuer;
- the firm-commitment fee or best-efforts underwriting fee, as resolved by negotiation with the issuer;
- the unit size of lots offered through public subscription;
- the names of the members of the underwriting syndicate, and the amount of securities apportioned to each, as specified by Article 7;
- 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;
- 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 issuer shall provide the securities underwriter with a list of the persons who are disqualified from participating in the tender and negotiated sale pursuant to Article 36 and Article 73, paragraph 5.
The minimum offering price in subparagraph 2 of the preceding paragraph shall comply with the following requirements:
- In an underwriting case involving an initial listing on a stock exchange or an OTC market, its upper limit shall be 70 percent of the simple arithmetic mean of the average trade prices, after factoring out ex-rights trading in connection with issuance of stock dividends (or ex-rights trading in connection with capital reduction) and ex-dividend trading, of the 30 business days on which trades have been executed before the filing of the competitive auction agreement with the Taiwan Securities Association. If the stock has not been registered and traded as an emerging stock, the underwriter and the issuer shall negotiate and set a reasonable minimum price for the auction.
- 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 the simple arithmetic mean of the closing common share price, after factoring out ex-rights trading in connection with issuance of stock dividends (or ex-rights trading in connection with capital reduction) and ex-dividend trading, calculated for either the one, three, or five business days before the filing of the competitive auction agreement with the Taiwan Securities Association.
- In the underwriting of a cash capital increase through an issue of preferred shares, or of warrants that have been detached from preferred shares with detachable warrants or warrants that have been detached from corporate bonds with detachable warrants, by a company already listed on a stock exchange or an OTC market, its 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, it 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 9
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A lead underwriter of securities shall publish a competitive auction announcement in daily newspapers on the first day on which public bids are accepted. The content of said announcement shall be reported in hardcopy and electronic media to the Taiwan Securities Association three business days before the commencement date of the tender, and shall include the items in the following subparagraphs:
- name of the security;
- names, addresses, and telephone numbers of the underwriters;
- method, time period, and site of the bidding;
- date, time, and site of the opening of the bids;
- minimum offering price, minimum bidding unit, and maximum bid quantity per bid form;
- total quantity of securities to be put up for underwritten distribution; number of units expected to be sold via overallotment; total number of units retained for their own accounts by the securities underwriters; the total number of units being offered for competitive auction, and the amount of the bid deposit and the circumstances under which it may be confiscated;
- the maximum quantity of securities that may be allocated to each successful bidder;
- parties from whom competitive auction bids will be accepted, and the provisions of Articles 35 and 36 shall be specified;
- matters relating to the collection of bid processing fees and award processing fees by securities underwriters;
- any statutory restrictions upon holding percentages as may be set forth in other laws or regulations with respect to the industry to which the issuer belongs (please list these on the bid form);
- if a bidder fills out and submits multiple bid forms for the same competitive auction, or has multiple competitive auction cases for which bidding closes on the same day, when the bidder submits a bid to participate in any one or more of those cases, funds shall be deducted from the bidder's bank deposit for the sum total of the bid deposits and bid processing fees for all of the bid forms submitted by the bidder;
- the method of disclosure of the prospectus, also specifying that the prospectus discloses the tentatively set offering price, and specifying the method for querying the subsequently set offering price;
- in the event the total number of securities bid for in valid bids is insufficient to cover all the securities offered through competitive auction in an underwriting case involving the initial listing of shares on a stock exchange or an OTC market, so that price setting cannot be completed, the TWSE will not open the bids, and the brokers shall, on the third business day following the bid closure date, make no-interest refunds to the bidders of the bid deposits and of the bid processing fees less the relevant handling fees;
- other supplemental items that must be disclosed in order to safeguard the public interest and investors.
In an underwriting case involving an initial listing on a stock exchange or an OTC market, the lead underwriter shall submit the timetable for the procedures and a declaration by the issuer that it has already held a roadshow in accordance with TWSE or TPEx rules. If a declaration is not submitted or the TWSE or TPEx notifies the Taiwan Securities Association that the issuing company has failed to hold a roadshow in accordance with regulations, the competitive auction shall be postponed.
The maximum quantity of securities that may be allocated to each successful bidder referred to in paragraph 1 subparagraph 7 shall be taken as the the maximum bid quantity per bid form referred to in paragraph 1, subparagraph 5. In an underwriting case involving an initial listing on a stock exchange or an OTC market, the minimum bidding unit under paragraph 1, subparagraph 5 shall be capped at 5,000 shares.
The amount of the bid deposit under paragraph 1, subparagraph 6 shall be limited to an amount from 30 percent to 60 percent of the bid amount.
The maximum quantity allocated to each successful bidder, as referred to in subparagraph 7 of paragraph 1, shall not exceed 10 percent of the portion of the offering put up for public sale to outside parties. If it is an underwriting case involving an initial listing on a stock exchange or an OTC market, the lead underwriter may lower the 10 percent cap on the maximum quantity allocated to each successful bidder according to the circumstances in the given case.
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