Wiwynn (6669), an AI server manufacturer in Taiwan, has announced a remedial plan after a high-ratio ex-rights distribution triggered complaints from odd-lot shareholders under the market’s current fractional share cash settlement rules.
The company released a material disclosure late on Sept. 8, and Chairperson Hung Li-ning addressed the issue on Sept. 9, saying the arrangement was meant to prioritize small shareholders who were most affected.
High stock dividend ratio collided with odd-lot rules
In this ex-rights distribution, Wiwynn set a stock dividend ratio of about 1,982.79 shares for every 1,000 shares held. The conversion of its overseas exchangeable corporate bonds, or ECBs, also diluted the number of outstanding shares, leaving some shareholders with allocations that included fractional amounts.
Under current Taiwan Company Act practice and market operations, any post-distribution entitlement of less than one full share must be handled as an odd lot. If a shareholder does not combine those fractions into a round lot on their own, the company can only repurchase the portion for cash at the par value of NT$10 per share.
That mechanism became controversial because Wiwynn is a high-priced stock whose market price can run into the thousands of New Taiwan dollars. Some investors holding only one or two shares calculated that stock dividends which would otherwise have market value in the thousands could end up being settled at par value, or effectively reduced to zero after transfer processing fees were offset against the amount.
Hung: the smallest holders took the biggest hit
Speaking on Sept. 9, Hung said the company had acted in line with regulatory requirements and had been communicating to find a lawful and compliant solution.
She said that in ex-rights practice, a large shareholder or institutional holder losing 0.9 of a share would see a loss of less than NT$10, a negligible proportion of total assets. For retail investors holding only one or two shares, however, the relative impact was much larger.
According to Hung, shareholders holding 1 to 15 shares account for more than 50% of Wiwynn’s shareholder registry. The company therefore decided to designate this group as specific subscribers and give each eligible holder the right to subscribe to one common share at the NT$10 par value.
Eligibility and payment schedule
According to Wiwynn’s material disclosure, the subscription arrangement for affected small shareholders is as follows:
- Eligibility will be based on the shareholder registry as of the final share transfer date for the ex-rights event, covering holders with 1 to 15 shares, inclusive.
- Each eligible shareholder may subscribe to one common share at par value, NT$10 per share.
- The subscription right is non-transferable.
- Wiwynn will send payment notices to eligible specific subscribers.
- The payment window runs from Sept. 16 to Sept. 30 at 3:30 p.m.
- Eligible shareholders must remit funds to the bank account and in the amount specified on the notice within that period. Late payment will be treated as a waiver, with no make-up payment allowed.
If any eligible holder declines to subscribe, or if odd-lot shares remain unsubscribed, Wiwynn said it plans to arrange subscriptions at par value by two public-interest and educational institutions: the Public Welfare Platform Foundation and National Taiwan University. The company also said the arrangement is not intended to create treasury stock.
Broader attention on Taiwan’s odd-lot framework
According to ABMedia, market participants said the case highlights a gap between Taiwan’s long-standing NT$10 par-value odd-lot settlement practice and the realities of high-priced stocks with large stock dividend ratios. Wiwynn’s plan through a material disclosure has eased some of the frustration from retail investors for now, but any future revision to the odd-lot mechanism by regulators remains a point the market is watching.