FSC to Impose More Stringent Restrictions on Private Share Placement

Taipei, Aug. 16, 2010 (CENS)--Listed companies in the black, on both the centralized and over-the-counter markets, can raise fresh capital via private share placement only for the introduction of strategic investors, according to revised measures governing private-share placement, which is expected to be approved by the Financial Supervisory Commission (FSC) at a meeting of its commissioners on Thursday (Aug. 19).

The revised measures will also impose more restrictions on prices for subscription by internal parties to the private share placement. The new regulations, however, will not be applied to cases of private share placement already approved by the shareholders' meetings of listed companies.

Some 180 listed companies have planned to raise fresh capital via private share placement this year, and most of the plans have been approved by shareholders' meetings held in June.

The revisions are meant to avoid dampening of share prices by major shareholders before the finalization of private-placement plans, for the purpose of lowering their subscription costs. A recent scandal at Xepex Electronics, a power-supply transformer manufacturer, related to private share placement underscores the need for such revisions.

The revised measures stipulate that subscription prices for private share placement by listed companies in the black cannot be lower than 90% of the reference prices. Subscription prices for private placement by companies in the red cannot be lower than 80% of the reference prices, similar to the existing regulation.

Companies in the black can raise fresh capital via private share placement only for the introduction of strategic investors for such purposes as horizontal or vertical integration with upstream or downstream business partners and improvement of industrial chain.