| Article 4-1 |
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:
- In an underwriting case involving cash capital increase, convertible (or exchangeable) 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;
- In an underwriting case for a cash capital increase by an emerging stock company other than an underwriting case for initial listing on the exchange or OTC market, the underwriter shall hold for its own account from 10 percent to 20 percent of the total number of units underwritten.
- In the underwriting of a cash capital increase for a company 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;
- 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;
- If a company already listed on a stock exchange or an OTC market, or an emerging stock company, either issues preferred shares and preferred shares with warrants for which the warrant is detachable (“preferred shares with detachable warrants”), corporate bonds and corporate bonds with warrants for which the warrant is detachable (“corporate bonds with detachable warrants”), the underwriter may set respectively the percentage to hold for its own account, provided that the percentage may not exceed 15 percent of the total number of units underwritten;
- 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;
- 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 a case involving an initial listing on a stock exchange (or OTC) market of securities not registered for emerging market trading or a case involving underwriting of an initial issuance of Taiwan Depositary Receipts, if the securities underwriter carries out the underwriting through public sale to outside parties, it shall first set aside 1,000 common shares (or 1,000 units of depositary receipts) 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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