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Taiwan Stock Exchange Corporation Rules Governing Awards for Reporting on Unlawful Activities on the Securities Market  CH

Amended Date: 2015.04.02
Article 1     These Rules are adopted for the purposes of maintaining discipline on the securities market and protecting the rights and interests of investors.
Article 2     Under these Rules, reporting of the following unlawful activities is encouraged:
  1. Issuance
  2. When any of the following circumstances applies to the responsible person or a related personnel of a TWSE listed company:
    1. Violation of Article 20, Paragraph 1, and Article 32, of the Securities and Exchange Act (the "Act") in that there are misrepresentations, frauds, or any other acts which are sufficient to mislead other persons during the public offering, issuing or private placement of securities.
    2. Violation of Article 20, Paragraph 2 of the Act in that the financial reports and financial an business documents filed or publicly disclosed according to law contain misrepresentations or nondisclosures.
    3. Violation of Article 171, Paragraph 1, Subparagraph 2 of the Act by causing the company to conduct transactions to its disadvantage and not in the normal course of operation, thus causing substantial damage to the company.
    4. Violation of Article 171, Paragraph 1, Subparagraph 3 of the Act by acting contrary to duties or misappropriating company assets, thus causing damage up to NT$5 million or more to the company.
    5. Violation of Article 174, Paragraph 1, Subparagraph 8 of the Act by loaning company funds to another person, using company assets to provide security or a guarantee for another person, or endorsing a negotiable instrument in violation of an act or regulation, or the articles of incorporation, or beyond the scope authorized by the board of directors, causing substantial damage to the company.
    6. Misappropriation of funds or defalcation of assets in violation of a law or regulation or the company's articles of incorporation or internal control procedures, where the violation is likely to materially affect the company's operation and shareholders' rights and interests.
  3. Trading
    1. Violation of Article 96 of the Act by engaging in the operation of business similar to that of a centralized securities exchange market or providing business premises or facilities for such proposes.
    2. Amy of the following occurs on a centralized securities exchange market:
      1. Violation of Article 20, Paragraph 1 of the Act in that there are misrepresentations, frauds, or any other acts which are sufficient to mislead other persons during the trading of securities.
      2. Violation of Article 155, Paragraph 1 of the Act by failing to perform settlement, placing corresponding orders, speculating, consummating corresponding transactions, spreading rumors or false information, or manipulating the trading prices of securities.
      3. Short-swing trading in violation of Article 157 of the Act.
      4. Insider trading in violation of Article 157-1 of the Act.
      5. Violation of other criminal laws where the facts of the offense involves a centralized securities exchange market.
    3. Securities service enterprises
      1. Any of the following acts by a securities firm or its responsible person or employee:
        1. Violation of a law or regulation governing securities trading or an administrative disposition under a law or regulation.
        2. Violation of any provision of the Operating Rules, the Rules Governing Brokerage Contracts Of Securities Brokers of the Taiwan Stock Exchange Corporation (TWSE), or other TWSE rules or bylaws.
        3. Breach of any of the contract for use of the central securities exchange market, contract for computer connection, or contract for supply and use of trading information entered into with the TWSE.
        4. Trading activities in breach of the principle of good faith, where sufficient to cause damage to others.
      2. Operation of securities business without permission, in violation of Articles 18 and 44 of the Act.
      3. A circumstance where a responsible person or employee of a securities investment trust and consulting enterprise engages in the same type of securities trading, accepts property, or misuses fund assets or discretionary investment accounts for himself/herself or others, using information he/she becomes aware of in the performance of duties, in violation of securities investment trust and consulting laws and regulations or other criminal laws where the rights and interests of fund investors or discretionary investment customers are affected
      4. Breach by an information service provider of a contract for supply and use of trading information.
    Violations of the short-swing trading provisions in Article 157 of the Act as referred to in item 2, subparagraph 2 of the preceding paragraph shall be limited to those by an insider holding shares through a nominee.
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Article 3     A violation report submitted to the TWSE shall be made in writing and include the particulars listed below, and the informant shall sign or fingerprint the report. However, in case of emergency or for other reasonable cause, the report may be made orally.
  1. The name, address, and national identity card number of the informant.
  2. The name and domicile/residence of the respondent or other information sufficient to identify the respondent; or in the case of a company, firm, or other incorporated entity, its name, the name of its responsible person, and its place of business or office.
  3. Concrete evidence for investigation.
    For a violation report made orally, the informant shall appear in person at the TWSE and state the particulars set forth in the subparagraphs of the preceding paragraph. The TWSE shall prepare an interview record for the informant to sign as confirmation.
    Except for provision of information to a competent authority as required by law, the TWSE will keep confidential the informant's name, age, domicile/residence, telephone number, and all other information sufficient to identify the informant.
Article 4     No violation report to which any of the following circumstances applies will be entertained:
  1. The report is submitted anonymously or under a false name.
  2. The report does not comply with any provision of paragraph 1 of the preceding article.
  3. The matter reported does not fall within the scope set forth in Article 2.
  4. The facts have already been reported by the news media, and no further concrete evidence is provided.
  5. The matter reported is already under investigation by the TWSE or another agency, or has already been reported by another person first. However, this does not apply if a subsequent informant can produce material evidence more favorable to the investigation.
  6. The TWSE has already decided not to entertain the matter reported, or the case is closed following investigation and disposition. However, this does not apply if the informant can produce new, concrete evidence establishing the necessity of reinvestigation of the case.
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Article 5     If a violation report leads to any of the following results, the TWSE will, depending on the seriousness of the case, give at its discretion a reward of not more than NT$3 million:
  1. A final and unappealable criminal conviction is handed down by a court.
  2. The prosecutor assesses the facts of the crime in relation to the persons identified in the violation report and makes a disposition of deferred prosecution under Article 253-1 of the Code of Criminal Procedure, or makes a final and unappealable disposition of non-prosecution under Article 253 or 254 of the same Code.
  3. The competent authority renders a disposition under Article 56 or 66 of the Act, Article 103 of the Securities Investment Trust and Consulting Act, or renders another disposition, and the disposition is final and unappealable.
  4. In the case of a reported matter falling within the scope set forth in Article 2, paragraph 2, the respondent disgorges the profit to the company, or the right to disgorgement has been confirmed in a final and unappealable court judgment.
  5. The TWSE suspends the provision of trading information or terminates the contract for supply and use of trading information pursuant to the TWSE Regulations Governing the Use of Trading Information.
  6. The TWSE suspends trading of the securities of the respondent or terminates a contract for use of the market pursuant to any provision of Articles 139 to 141 of the TWSE Operating Rules.
  7. The TWSE alters the trading method or suspends trading of, or delists, the securities of the respondent pursuant to any provision of Articles 49 to 50-3 of the TWSE Operating Rules.
  8. The TWSE takes dispositive measures other than those set forth in the preceding three subparagraphs.
    If the same violation report leads to both or all of a court judgment of guilt, a disposition by the competent authority, or dispositive measures by the TWSE, the grand total of the rewards given by the TWSE shall not exceed NT$3 million.
    If a violation report is filed in the names of multiple informants, the reward money shall be distributed evenly among all of the informants. If multiple informants successively file reports addressing the same violation, the reward shall be given to the informant who first provides concrete evidence. However, if evidence or materials submitted by a subsequent informant provide important assistance toward dispositive measures by the TWSE, a disposition by the competent authority or a prosecutor, or a criminal conviction by a court judgment, the TWSE may also after deliberation give a reward to the subsequent informant.
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Article 6     If a violation report is filed with the competent authority for securities or a judicial/investigatory agency and the informant makes a request for a reward to the TWSE, the informant shall, after a final and unappealable disposition or judgment of guilt is rendered, provide the TWSE with the documentary proof of the violation report that he or she files with the competent authority for securities or the judicial/investigatory agency, and the TWSE will give a reward after deliberation.
Article 7     An informant to whom the TWSE grants a reward after deliberation shall claim the reward within 3 months from the date of receipt of notice from the TWSE. Failure to claim the reward by the deadline shall be deemed forfeiture.
    To claim the reward, the informant shall bring his or her original national identity card and personal seal. If the informant instructs another person to claim the reward on his or her behalf, a power of attorney and that other person's original national identity card and personal seal shall also be produced.
Article 8     The provisions regarding rewards herein do not apply to the following persons, who are not eligible for rewards hereunder:
  1. A responsible person or employee of the Taiwan Futures Exchange, Gretai Securities Market, Taiwan Depository & Clearing Corporation, a securities dealers association, the Securities and Futures Institute, or a securities services enterprise as set forth in Article 18 of the Act.
  2. A staff member or employee of the competent authority for securities or the TWSE.
  3. A civil servant filing a violation report of a case to which he or she bears an official duty of inquiry, prosecution, or hearing of the crime.
  4. A person who files a complaint or violation report, for the purpose of preserving his or her rights and interests, with respect to a dispute case between him or her and a securities broker or its responsible person or employee in connection with a securities brokerage trading order.
  5. A party involved in any of the circumstances listed in Article 5, paragraph 1.
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Article 9     If the matter addressed in a report involves a violation of any rules or bylaws of the TWSE, the case shall be handled in accordance with the rules of the TWSE. If there is found to be no concrete evidence, the case shall be closed and kept on file. If the matter addressed in the report involves a violation of any law or regulation, the case shall be reported to the competent authority.
Article 10     The provisions of these Rules regarding rewards shall apply mutatis mutandis to a case that is entertained prior to an amendment to these Regulations and in which a final and unappealable court judgment is rendered after the amendment has been publicly announced and implemented.
Article 11     These Rules, and any amendments hereto, shall be implemented upon public announcement following review and recordation by the competent authority.