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To facilitate the concurrent domestic and over-seas offers of Chunghwa Telecom shares, on 26 June 2003 the Taiwan Stock Exchange (TSE) announced amendments to its Rules Governing Auction of Securities Listed on TSE, so as to accommodate necessary trading operations due to the time differences between Taiwan and other locations. The amendments are outlined below:
Time of transaction: Under the amended rules, when a shareholder applies with TSE for an auction, if the listed company whose shares are to be auctioned is at the same time spon-soring an issuance of overseas depositary re-ceipts (DRs) and the shareholder who applies for TSE auction is the selling shareholder of DRs (i.e. it is conducting a concurrent offer-ing), the sales of securities resulting from the auction may be transacted on the business day following the bidding day, rather than on the bidding day itself as is usually required for TSE auctions.
Time for floor price announcement: For a concurrent offering, the timing of the an-nouncement of the auction floor price may be otherwise provided by the selling shareholder after consulting with TSE, and the floor price does not need to be announced on the TSE Market Information System at the start of the auction or at the close of bidding.
Determination of final auction price: The amended rules provide for a third method for determining the final auction price, in addition to the two already contained in the old rules. The additional method is as follows: All bids submitted by bidders at prices above the an-nounced floor price will be transacted at the floor price, up to the auction size announced by the TSE. If the total volume of bids above the base price exceeds the quantity of shares announced for auction, shares will be allo-cated pro rata to the volumes of the individual bids, until no complete lot remains. Any shares that remain unallocated will then be allocated in an order chosen randomly by computer, up to a limit of one lot per bid.
Disclosure of bid volume: In order to adjust the numbers of shares offered domestically and overseas, and to provide full information to the market, a new provision permits that when an auction request relates to a concurrent offer, the selling shareholder may notify the TSE that after the close of bidding on the day of the auction, it will at an appropriate time disclose the total bid volume received at or above a specific price.
