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Guidelines for Handling Defects in Filing of Supervisory Information by Securities Firms  CH

Announced Date: 2020.04.06 
Categories: Market Supervision > Regulation of Securities Firms
1     Basis and purpose
    As required by Article 4, paragraph 1, subparagraph 5, and Article 21 of the Regulations Governing Securities Firms, Article 26 of the Operating Rules of the Taiwan Stock Exchange Corporation (TWSE), and the Guidelines Governing the Electronic Filing of Financial Statements by Securities Firms, a securities firm shall file information about its financial and business matters to the TWSE. These Guidelines are established specifically to improve accuracy and timeliness of information filed by securities firms and to provide objective standards to be applied by the TWSE in the determination and handling of defects in the filing by securities firms.
2     When demerit points apply and exclusions
  1. Under these Guidelines, demerit points may apply if a securities firm has the following defects in the filing of necessary information described in Point 1.
    1. Delay in filing: Failing to complete the filing procedure within the deadline for filing.
    2. Error in filing:
      1. The TWSE discovers errors in filing when reviewing information about financial and business matters of a securities firm.
      2. Errors in the filed information are discovered by the Securities and Futures Bureau and the Financial Examination Bureau of the Financial Supervisory Commission, the Central Bank of the Republic of China, Taipei Exchange, and/or Taiwan Futures Exchange which have notified the TWSE of the errors.
      3. Errors are discovered by other external individuals who have notified the TWSE of the errors which have been proven upon investigation.
  2. Exclusions
    1. Demerit will not apply to errors in the filing of a new statement or amended item in a statement that are less than six months old.
    2. Demerit will not apply if a securities firm has corrected an error as described in Point 2 (1) b. before it is discovered.
3     Standards for applying demerit points
    In both cases of delays in filing and errors in filing, one demerit point will be applied for one error in the filing and more demerit points may be added depending on severity of defects, cause of occurrence, and implications, among others. More demerit points may be added as follows:
  1. For delays in filing or errors in filing, if a notice requesting late filing or corrections to be made before a specified date, and no filing or corrections are made by the deadline, two more demerit points will be applied.
  2. If there are still errors in the information filed after a notice requesting corrections is given, two more demerit points will be applied.
  3. If the current errors in filing are resulted from past errors in earlier filing, two more demerit points will be applied.
  4. For other delays or errors, one to three more points may be applied depending on an individual case.
4     Statistical data and handling of demerit
    After putting together information about types of defects in filing by securities firms and how demerit points are applied on a quarterly basis, the TWSE will publish a summary at the TWSE One-Stop Site for Filing by Securities Firm, and take the following management measures:
  1. If a securities firm has accumulated more than 10 points in the current quarter, the TWSE will issue a letter requesting the securities firm to report specific improvement measures, which will be reviewed by the internal audit unit before a reply letter about its improvement will be sent.
  2. If a securities has accumulated more than 15 points in the current quarter, in addition to the above measures, the TWSE will send a letter to the general manager of the securities firm, asking him or her to supervise the educational trainings for the filing work, and issue a separate letter to certified public accountant to perform enhanced audit work on internal control operation during its audit.
  3. If a securities firm has accumulated more than 20 points in the current quarter, it will be subject to measures under Article 136 of the Operating Rules of the TWSE depending on specific circumstances involving defects in filing.
  4. If a securities firm has made errors in the filed information to such an extent they have exceeded the statutory maximum ratio or more than 30 points have been accumulated in a year, the TWSE will escalate the case, accompanied with relevant information, to the competent authority for decision on measures to be taken.
5     These Guidelines shall take effect after having been submitted to and approved by the competent authority. Subsequent amendments thereto shall be effected in the same manner.