The Regulations are established in accordance with Article 12 of the Government-Owned Enterprise Privatization Act (hereinafter referred to as "the Act").
Measures that may not have been explicitly stated herein shall refer to that cited under the Government-Owned Enterprise Privatization Enforcement Rules (hereinafter referred to as "the Rules").

The Regulations are applicable to employees as defined under Article 12 of the Rules.

When a Government-owned enterprise under the Ministry of Finance undergoes privatization in observation of the Act, eligible employees may subscribe to purchase government-owned shares in the enterprise in accordance with the Regulations.

Employee subscription to government shares in accordance with the Regulations may be processed directly without hosting a public offering of the shares.

The total amount of government shares eligible for employee subscription in accordance with the Regulations, including the available subscription quota, over-subscription quota, and preferential shares reserved for long-term shareholding, shall not exceed thirty-five percent (35%) of the total outstanding shares issued by the enterprise.Total outstanding shares stated in the foregoing Paragraph refers to the total number of actual paid shares on the initial offering day of government shares.

The term “available subscription quota” as stated in the Regulations is defined as the total number of shares open for employee subscription, as derived by applying the the initial offering price to dividethe amount of twenty-four (24) times the sum of the enterprise’s standard median payrolls.
The term “ over-subscription quota” as stated in the Regulations is defined as the total number of shares open for additional employee subscription during the share offering related to privatization. Over-subscription quota does not include available subscription quota, but is still subject to the limitation of overall shares available for subscriptions.
The term “median standard payrolls” as stated in the Paragraph 1 refers the monthly median on the sum of total standard payrolls that an enterprise has dispensed per month to its entire employees according to the payroll standards stipulated in
Article 14 of the Rules, based on a twelve (12) month period prior to the initial government share offering (not includingthemonth during which government shares were being offered) after the Act was amended and promulgated on November 29, 2000. The term “initial offering price” refers to the selling price of government shares during the initial share offering of respective enterprises, the lowest execution price shall be adopted in the situation where shares have been transacted at multiple execution price levels.
As mentioned in the foregoing paragraph, “the month of initial government share offering” refers to the month of the day on which the respective enterprise files or reports public share offerings or negotiated share transfers to the securities and futures authorities.

The subscription price on employee-eligible subscription shares shall be consistent with the lowest execution price of respective government share offerings. When government shares were sold only through overseas offerings as either original stocks or global depository receipts, the subscription price shall be the underwriting price of the overseas sale converted into New Taiwan Dollar, or the closing price of the stock at the local stock exchange on the day which the underwriting price was fixed, whichever is lower. Employees who voluntarily agree to centrally deposit the entire or partial position of shares purchased according to the preceding paragraph at custodians designated by the enterprise, and who promise not to transfer or pledge the said shares within two (2) years may purchase the shares in centralized safekeeping at ninety percent (90%) of the aforementioned subscription price; employees who promise not to transfer or pledge the said shares within three (3) years may purchase the shares in centralized safekeeping at eighty percent (80%) of the aforementioned subscription price.
The subscription price of the shares purchased by employees through over-subscription shall be consistent with the lowest execution price of respective government share offerings.

For privatized enterprises that sells all government shares in one single trench, , the full amount of available subscription quota and over-subscription quota shall be offered to its employees also on a one-time basis during the same trench. For privatized enterprises that sells its government shares in multiple trenches, employee subscription shall be processed as follows:
1. Available subscription quota for each government share offering prior to full privatization shall be calculated in proportion to the total shares due for sale in the respective trench (51% of actual paid shares on the initial government share subscription and offering date, minus private shareholdings on the initial offering date); the calculation formula is as follows:
Available employee subscription quota in each trench =
Number of government shares offered in the trench total shares within the
available subscription quota
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Number of government shares offered in the trench
ｘTotal share amount due for sale to complete full privatization
In trenches where the number government shares being offered exceeds the total share amount due for sale to complete full privatization, the following subparagraph shall apply.
2. At the trench where full privatization will be completed, the available subscription quota shall be balance of the total available subscription quota less the sum of all previous subscriptions, and shall be offered to employees in full together with the available over-subscription quota.

Total share amount within the available subscription quota and the over-subscription quota eligible for individual employees shall be determined by enterprise according to the employee’s years in service, job ranking, performance, and other factors. the unit for calculation shall be one share, and fractions of a share shall be omitted.

For shares purchased through employee subscription and held for one, two, and three full years after payment date, the employee may be eligible to purchase additional shares up to specific proportions of the share holding upon maturity. Where the original subscription price was lower than Fourteen New Taiwan Dollars (NT$14), additional shares may be purchased at 70% of the subscription price. The incentive schedules for additional purchases are displayed in the following table:
Subscription price (NTD) Eligible additional purchase ratio for shares held over one full year Eligible additional purchase ratio for shares held over two full years Eligible additional purchase ratio for shares held over three full years
UnderNT$20 18% 25% 39%
NT$20 and above, but under NT$30 10% 12% 16%
NT$30 and above, but underNT$60 8% 9% 12%
NT$60 and above 6% 7% 9%
Number of shares in the foregoing paragraph shall be calculated to the minimum unit of one share, and fractions of a share shall be omitted.
For employees who have terminated employment or retired, the shares subscribed during service shall still be eligible to the stipulations in the preceding two paragraphs.
The term “subscription price” as indicated in Paragraph 1 in the incentive schedule for additional purchases refers to the lowest execution price of government shares sold in the respective trench that employee subscription was conducted.

Employees may subscribe to non-transferable shares pursuant to the available subscription shares and over-subscription shares as described in Article 9, as well as and incentive subscription shares as described in Paragraph 1 of the preceding Article; the total purchase cost of subscribed shares shall be paid in full in one lump sum within the prescribed period, under-subscription and failure to make payment in full amount shall be regarded as having voluntarily forfeited the subscription rights. For employees who have terminated employment or retired, the incentive shares subscribed according to Paragraph 3 in the foregoing Article shall still be eligible to the stipulations in the preceding paragraphs.

Employees who terminate employment prior to the basis date for calculation of available subscription shares shall become ineligible for the right to subscribe to remaining available subscription and over-subscription shares.

Shares resulting from employees who voluntarily forfeit or who become ineligible for available subscription rights and over-subscription rights may be reallocated by the Ministry of Finance or the enterprise for subscription by specific individuals as stipulated in Subparagraph 3 of Paragraph 1 under Article 22-2 of the Securities and Exchange Act.

The Regulations shall come into force on the date of promulgation.