Chapter I General Principles
These Regulations are adopted pursuant to Article 45-1, paragraph 1of the Regulations Governing Securities Firms, Article 11, paragraph 2 of the Standards Governing the Establishment of Securities Firms, and Article 21-1, paragraph 1 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms.
Unless otherwise provided by law or regulation, a securities broker conducting equity crowdfunding business (hereinafter "securities firm") shall fully comply with these Regulations.
For the purposes of these Regulations, the following terms are defined as follows:
- Competent authority: the Financial Supervisory Commission
- Company: a company limited by shares that is organized in accordance with the Company Act of the R.O.C., and that is not publicly traded.
- Equity crowdfunding business: a securities firm establishing a website on the Internet to conduct the business of enabling companies to publicly raise funds from unspecified persons, enabling investors to subscribe to stock of the fundraising companies, and providing additional services for purposes related to the conduct of the aforementioned business.
- Crowdfunding platform: a website established by a securities firm on the Internet for companies to conduct equity crowdfunding and enabling investors to subscribe to company shares through the website.
- Information disclosure system: a website established by a securities firm on the Internet for the disclosure of information including the basic information, limitation on capital raised, and material information of the companies conducting equity crowdfunding for easy reference by investors.
A securities firm applying to conduct equity crowdfunding business shall submit the application documents specified in Article 9 or 39 of the Standards Governing the Establishment of Securities Firms to the Taipei Exchange ("TPEx"), which will review the documents and then forward them to the competent authority for the granting of permission.
After obtaining permission from the competent authority under the preceding paragraph, the securities firm shall submit the application documents specified in Article 10 or 40 of the Standards Governing the Establishment of Securities Firms to the TPEx, which will review the documents and then forward them to the competent authority for issuance or reissuance of a permission license.
A securities firm that has obtained the permission license issued or reissued by the competent authority under the preceding paragraph shall submit an application form (Attachment 1), specifying the required particulars, together with the required documents, to the TPEx to apply to enter into a contract for the conduct of equity crowdfunding business (Attachment 2).
If any circumstance that requires reporting under Article 4, paragraph 1 of the Regulations Governing Securities Firms occurs to a securities firm that has entered into the contract with the TPEx under the preceding paragraph, unless otherwise provided by law or regulation, the securities firm shall report the circumstance to the TPEx, which will forward the report to the competent authority.
Unless otherwise provided by law or regulation, a securities firm shall adopt an internal control system pursuant to the Standard Directions for the Internal Control Systems of Securities Firms adopted by the TPEx.
The conduct of the business of a securities firm shall comply with laws and regulations, its articles of incorporation, and the internal control system referred to in the preceding paragraph.
Whenever the TPEx gives notice to make any change to the internal control system referred to in paragraph 1, the change shall be made within the specified time limit.
The site and facilities of a securities firm conducting equity crowdfunding business shall comply with the standards governing sites and facilities as prescribed by the TPEx.
Unless otherwise provided by law or regulation, a securities firm shall install internal auditors to examine the company's finance and business on a monthly basis, and prepare internal audit reports and keep them available for audit.
The internal audit reports referred to in the preceding paragraph shall include comments on the compliance of the securities firm's finance and business with relevant laws and regulations and the internal control system of the company.
Unless otherwise provided by law or regulation, a securities firm shall file with the TPEx in the prescribed format, its next year's annual audit plan by the end of each fiscal year, and a report on the execution of its previous year's annual audit plan within 2 months from the end of each fiscal year.
The supervisors and personnel implementing the equity crowdfunding business, and the chief internal auditor, in a securities firm shall have the qualification of a Securities Specialist or higher, and shall receive orientation training and continuing professional on-the-job training as required by the TPEx.
Chapter II Finances and Business
Within 3 months after the end of each fiscal year, a securities firm shall file with the TPEx the annual financial reports audited and attested by CPAs.
A securities firm shall, by the 7th day of each month, submit to the TPEx a monthly accounting summary for the preceding month.
The period for which a securities firm keeps its account books and relevant source documents, vouchers, ledgers and statements, and contracts shall comply with the Business Entity Accounting Act, and also shall be subject mutatis mutandis to the Required Periods for Preservation of Accounting Statements and Vouchers by Securities Firms Trading on the TPEx.
In the case of a securities firm that conducts only equity crowdfunding business, the total amount of the securities firm's external liabilities may not exceed its net worth.
In the case of a securities firm that conducts only equity crowdfunding business, the securities firm's funds not required for business operation may not be loaned to other persons or used for other purposes.
In the case of a securities firm that conducts only equity crowdfunding business, the securities firm may not make any investment in any other enterprise, provided that this restriction does not apply to a securities firm participating in subscribing to stock of a company conducting equity crowdfunding on the securities firm's crowdfunding platform.
In the case of a securities firm that conducts only equity crowdfunding business, if the securities firm participates in subscribing to stock of a company conducting equity crowdfunding on the securities firm's crowdfunding platform pursuant to the preceding paragraph, it shall comply with the following:
- The total shares that it holds in any one company may not exceed 10 percent of the total shares of that company; furthermore the total cost of the shares that it holds in any company and that it holds in all companies respectively may not exceed 20 percent and 40 percent of the securities firm's net worth.
- The securities firm, with respect to its investment positions, shall adopt mechanisms for pre-investment decision making, post-investment management, and risk assessment.
In the case of a securities firm that conducts only equity crowdfunding business, if the securities firm participates in subscribing to stock of a company conducting equity crowdfunding on the securities firm's crowdfunding platform pursuant to the preceding two paragraphs, the counterparties to which the securities firm may subsequently transfer the stock shall be limited to investors who have previously participated in subscribing to stock of that crowdfunded company and institutional angels.
The term "institutional angel" in the preceding paragraph means an investor who meets any of the following conditions:
- A professional institutional investor, which means a domestic or foreign bank, insurance company, bills finance company, securities firm, fund management company, government investment institution, government fund, pension fund, mutual fund, unit trust, securities investment trust enterprise, securities investment consulting enterprise, trust enterprise, futures commission merchant, futures service enterprise, or other institution approved by the competent authority.
- A juristic person or fund that has shareholders equity exceeding NT$50 million according to its latest CPA-audited or reviewed financial report, and that has established a dedicated investment unit; however, the financial report of a juristic person outside of the Republic of China need not be CPA-audited or reviewed.
- A trust enterprise that has entered into a trust agreement with a settlor who meets the conditions set forth in the preceding two subparagraphs.
- A venture capital enterprise duly established in accordance with law.
A securities firm shall establish a single crowdfunding platform devoted exclusively to the operation of equity crowdfunding business.
A securities firm conducting equity crowdfunding business is prohibited from any of the following conduct:
- Accepting an equity crowdfunding application from a company that will use the funds for any controversial purpose such as purposes that violate laws or regulations or public order or good morals.
- Keeping custody of or using an investor's funds or securities.
- Any agreement between the securities firm or insiders thereof and the company or relevant personnel thereof for purposes of improper profit.
- The securities firm or insiders thereof serving as a director, supervisor, or managerial officer at the company operating equity crowdfunding on the securities firm's crowdfunding platform.
- Concealing or omitting important financial or business information of a company that conducts equity crowdfunding on its crowdfunding platform.
- Conducting equity crowdfunding for a company through a channel other than its crowdfunding platform.
- Providing a secondary market for trading of the stock of a company at the place of business of the securities firm.
- Any other matter injurious to the rights and interests of investors or in violation of any relevant law or regulation.
A securities firm conducting equity crowdfunding business may recommend only to institutional angels a company conducting equity crowdfunding on the securities firm's crowdfunding platform.
When making a recommendation to a specific customer of a subscription to the stock of a company under paragraph 1, the securities firm shall fully know and evaluate the customer's investment knowledge, investment experience, financial status, and degree of investment risk tolerance.
Before recommending a subscription to the stock of a company under paragraph 1, the securities firm shall first appoint an associated person to be responsible for explaining to the customer the potential risks of the recommended subscription to the stock of a company under paragraph 1.
A securities firm may not do any of the following when recommending to a customer a subscription to the stock of a company under Article 15-1, paragraph 1:
- Cite any information that contains any misrepresentation, falsehood, concealment, or otherwise could cause mistaken confidence on the part of others.
- Guarantee specific outcomes on recommended stock.
- Fail to clearly inform or indicate that information provided is a forecast.
- Fail to base recommendations on research reports.
- Use results of past recommendations in promoting its recommendation business.
When a securities firm recommends to a customer a subscription to the stock of a company under Article 15-1, paragraph 1, it may issue under its own name research reports that it has prepared itself or outsourced, and shall disclose any relevant conflicts of interest of the securities firm or of the persons who wrote or reviewed the research report.
A research report referred to in the previous paragraph shall be written or reviewed by a qualified securities investment analyst of a securities investment consulting enterprise or by a qualified senior associated person registered with the TPEx.
The researchers of a securities firm, prior to the release of a research report, may not discuss the content of the report with anyone outside of the research department, except for necessary discussions with the reviewing department during the research report review procedures.
The securities firm's performance evaluation method for the researchers may not affect the independence of the researchers.
When a securities firm recommends to a customer a subscription to the stock of a company under Article 15-1, paragraph 1, it shall, after having the research report signed by the responsible person of the securities firm or the head of the authorized and responsible department, have the recommendations thereunder made by an associated person.
Before making any oral recommendation to a customer, securities firm personnel handling recommendation business shall have a full understanding of the relevant research reports.
When a securities firm distributes research reports in print or delivers them directly to the customer through a system or network under the name of the securities firm, it shall clearly indicate the author, the name of the securities firm, and the date of the information, and furthermore shall add the following notations: "This recommendation material is for reference only. Investors should carefully consider their own investment risks and take sole responsibility for the outcome of their investments." and "May not be reprinted without permission."
If the media requests consent from the securities firm to reprint or report content from the research report, the content for which the securities firm gives consent for reprinting or reportage may not involve any forecasts of information such as the company's value, finances, or business.
When a securities firm recommends to a customer a subscription to the stock of a company under Article 15-1, paragraph 1, it shall retain a record, and shall keep the record at its place of business.
A securities firm shall retain records referred to in the previous paragraph for no less than 2 years; provided, if there is any dispute, it shall retain them until the dispute is eliminated.
After a securities firm recommends to a customer a subscription to the stock of a company under Article 15-1, paragraph 1, the relevant research reports shall be retained for at least 5 years; provided, if there is any dispute, it shall retain them until the dispute is eliminated.
A securities firm may engage in advertising and business solicitation activities to promote subscription by investors to stock of companies conducting equity crowdfunding on the securities firm's crowdfunding platform. It furthermore shall comply with the relevant provisions of the Regulations Governing Advertising, Business Solicitation, and Business Promotional Activities by Financial Service Enterprises and the Taiwan Securities Associations Rules Governing Advertising, Business Solicitation, and Business Promotional Activities by Members. However, the content of advertising and business solicitation activities may not involve any forecasts of information such as the company's value, finances, or business.
"Public Seminars and other Business Activities" mentioned herein refers to the promotion or solicitation of business through workshops, seminars, presentations, or any other business activity, If a securities firm holds any public activity such as an on-site workshop, seminar, or presentation, or on-site exhibition, it further shall audio- and video-record the activity from beginning to end, and retain the recordings for no less than 5 years; provided, if there is any dispute, it shall retain them until the dispute is eliminated.
A securities firm may apply to concurrently operate a securities investment consulting enterprise to conduct securities investment consulting business pursuant to Article 10 of the Standards Governing the Establishment of Securities Investment Consulting Enterprises. The department heads and associated persons of the securities investment consulting enterprise shall furthermore satisfy the qualification requirements set out in the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises. However, the subject matter about which the securities investment consulting enterprise may consult shall be limited to the stocks of companies conducting equity crowdfunding on its crowdfunding platform.
A securities firm shall keep confidential all secrets with respect to a company's finances and business that it knows during the process of equity crowdfunding, provided that this rule does not apply in cases in which disclosure is required by law or regulation, or request of the competent authority, or consented to by the parties.
A securities firm's collection, use, or provision for use by the competent authority and the TPEx, of the personal information of investors participating in equity crowdfunding shall comply with the Personal Information Protection Act.
Chapter III Procedures and Management of Equity Crowdfunding
The securities that a company offers on the securities firm's crowdfunding platform for purpose of equity crowdfunding shall be limited to the company's common stock and preferred stock without debt characteristics only.
A securities firm may accept applications to conduct equity crowdfunding on its crowdfunding platform only from companies with paid-in capital of not more than NT$50 million, and shall sign a contract with such companies on a case-by-case basis.
The contract as referred to in the preceding paragraph shall specify the rights and obligations of both parties under these Regulations, and shall include the following items:
- Fee standards (kickbacks by any means or form are prohibited).
- Method for handling of breach of contract.
- The company may not refuse any request for provision of information or the conducting of any investigation as required by law or regulation or by the TPEx.
When a securities firm collects commission or other relevant service fees from investors, it shall disclose on its crowdfunding platform the principles for collection of the fees, and the method or basis of their calculation, and if there are any individual stipulations, they shall be specified in the contract.
A securities firm shall ensure that the applicant company meets the conditions set out in all of the following subparagraphs before disclosing on the crowdfunding platform the basic information of the company and information about a cash capital increase.
- The company has established an internal control system and the internal control system has been effectively implemented.
- The accounting treatment complies with the Business Entity Accounting Act.
- There is no substantial doubt about the integrity and good faith of the company, and its directors, supervisors, and general manager.
- Any other matter as prescribed by the TPEx.
A company shall engage a financial institution to collect on its behalf the payments for the shares subscribed through the fundraising, and to deposit them in the designated account opened by the company. The funds in the designated account may not be utilized during the fundraising period. If the target capital raising amount cannot be fully collected during the fundraising period, the funds in the designated account may not be remitted to the company, and the company shall carry out the procedures to refund the share payments, plus interest accrued on the designated account, to all the investors who made the payments, and the company shall bear the remittance handling fees for the refunds.
The company may engage a professional shareholder services agent to handle shareholder services for the company.
If the company handles shareholder services on its own, it shall establish an internal control system for the shareholder services operations.
When the company conducts a cash capital increase it shall, in compliance with related laws and regulations, in addition to making available a certain percentage of shares for subscription by employees, make the remainder available for subscription by shareholders in respective proportion to their shareholding percentage. If the employees or shareholders do not fully subscribe the shares and waive their rights to the unsubscribed shares, the company may, through a single securities firm's crowdfunding platform, make the unsubscribed shares available for subscription by investors, or make them available for subscription by institutional angels only.
The provisions of the Financial Consumer Protection Act do not apply to institutional angels referred to in the preceding paragraph.
When a company conducts a cash capital increase, within 5 days from the date it confirms the number of shares for which subscription rights are waived by employees or shareholders, it shall file with the securities firm a written fundraising plan (Attachment 3) containing the basic company information, capital raising and utilization records for the past 3 years, capital utilization plan for the current cash capital increase, the fees or any other form of consideration paid to the securities firm, and other expenses in connection with the issuance. The securities firm shall conduct due diligence to verify that no material irregularities exist, after which it shall disclose the fundraising plan through the securities firm's crowdfunding platform for no less than 5 business days. Only then may investors begin to subscribe the shares.
The company shall disclose the crowdfunding progress through the securities firm's crowdfunding platform from the beginning of the equity crowdfunding until the completion of company amendment registration.
During the period of equity crowdfunding, the company may not externally state or issue any forecasted financial or business information.
The company and its board of directors, supervisors, and managerial officers shall assist in the due diligence process conducted by the securities firm and provide any needed materials.
If any of the following circumstances occurs when a company conducts equity crowdfunding, the company shall note the circumstance in a prominent typeface in the fundraising plan. Furthermore, the securities firm shall disclose the circumstance prominently when disclosing the fundraising plan on its crowdfunding platform.
- The company is a close company as defined in Article 356-1 of the Company Act.
- The current equity crowdfunding offer is available to institutional angels only.
- The securities offered in the current equity crowdfunding are preferred stock without debt characteristics.
The company shall be solely liable in the event there is any misrepresentation, falsehood, or concealment in any relevant information filed by the company with the securities firm under paragraph 1.
The total amount of funds raised by a company from equity crowdfunding through all securities firms' crowdfunding platforms in a fiscal year may not exceed NT$30 million
A fiscal year referred to in the preceding paragraph shall be from 1 January to 31 December.
An investor intending to subscribe shall first confirm a Risk Disclosure Statement (Attachment 4) through the securities firm's crowdfunding platform and agree to comply with the provisions of the Personal Information Protection Act before the investor may carry out subscription procedures. When the platform has checked and verified that the subscription does not exceed the investor's investment limit, it will complete the investor's subscription. Institutional angels, however, are not subject to this restriction.
The "investment limit" of the preceding paragraph refers to the amount of investment made by an investor through a single securities firm's crowdfunding platform, which may not exceed NT$50,000 for each subscription through equity crowdfunding, and may not exceed NT$100,000 for the aggregate subscription during a period as defined in paragraph 2 of the preceding Article. This limit, however, does not apply to the amount that may be invested by an institutional angel for subscription to the shares of any company, nor does it apply to the amount that may be invested by a member of the board of directors, a supervisor, or a 10 percent or greater shareholder of the fundraising company.
The point in time for determination of "a member of the board of directors, a supervisor, or a 10 percent or greater shareholder" as referred to in paragraph 2 shall be the record date of book closure before the company conducts the equity crowdfunding.
With respect to institutional angels meeting the requirements of Article 13, paragraph 4, with the exception of a professional institutional investor under subparagraph 1 thereof or of a public company under subparagraph 2 thereof, for which the securities firm may directly create a file for the investor with no need for an application to be submitted, any institutional angel under the other subparagraphs thereof shall submit an application accompanied by the relevant supporting documents to the securities firm, to assist the securities firm in executing investment limit control operations after the securities firm has examined the application and found the requirements for investment are met.
When a company conducts a cash capital increase, and makes the portion of shares to which its employees and shareholders have waived subscription rights available for subscription by investors, or available for subscription by institutional angels only, through the crowdfunding platform of a securities firm, if in the first round of subscription, the shares are not fully subscribed, or are fully subscribed but some of the subscribers fail to make payment for the shares by the deadline, unless the securities firm and the company mutually agree not to do so, the company shall set an appropriate period of time for a second round of subscription. If the parties have mutually agreed not to hold a second round of subscription as mentioned above, or if in the second round of subscription, the shares are not fully subscribed, or are fully subscribed but some of the subscribers fail to make payment for the shares by the deadline, the subscriptions of the investors who have expressed the willingness to subscribe shall be voided, and the share payments, plus interest accrued on the account, shall be refunded out of the company's deposit account to all those who have already made the payments, and the company shall bear the remittance handling fees for the refunds.
If the shares have been fully subscribed in the first or second round of subscription, the securities firm shall follow the will of the company in confirming the list of subscribers, and notify the subscribers on the list to carry out payment procedures, and shall also notify the company or the professional shareholder services agent to confirm that the share payments have been collected in full and related matters.
If it is confirmed that share payments under the preceding paragraph have not been collected in full, the company shall follow the provisions of paragraph 1. If it is confirmed that the share prices have been collected in full, the company shall carry out relevant matters including information reporting, amendment of its company registration, and delivery of the physical share certificates if any are printed by the issuing company; if the issuing company does not print physical share certificates, it shall register its issued shares with a central securities depository in accordance with Article 161-2 of the Company Act.
During the period from the date of completion of the fundraising to 31 December of the fiscal year following the date of completion of utilization of the funds, the company shall input and disclose the following information, in the prescribed format, through the information disclosure system designated by the securities firm:
- Basic company information, including a company overview, basic information on the board of directors, supervisors, and management team: shall be input within 5 days from the time the company knows of any change in the above.
- A business report, annual financial statement, and the surplus earning distribution or loss offsetting proposal submitted for recognition by a regular shareholders meeting: shall be input at least 10 days prior to the date on which the regular shareholders meeting is convened. The annual financial statements shall include a balance sheet, income statement, statement of changes in shareholders equity, and a statement of cash flows. If a company reaches a certain equity capital or scale criteria, as provided in Article 20, paragraph 2 of the Company Act, it shall submit a CPA audited financial statement.
- Dividend distribution for the current year: shall be input on the next business day following the resolution by the board of directors or confirmation by the shareholders meeting.
- Information on the cash capital increase:
- Fundraising plan items and progress: shall be input within 10 days from the date of full collection of the share payments collected in the fundraising. Any changes in related information shall be entered into the system within 5 days from the time of the change.
- Quarterly statement on utilization of the funds raised: shall be input within 20 days after the end of each quarter.
No misrepresentation, concealment, or information that could mislead others in the content of the information reported pursuant to any subparagraph of the preceding paragraph is allowed.
If any of the following events occurs to the company during the period from the date of completion of the fundraising to December 31 of a fiscal year following the date of completion of utilization of the funds, the company shall input and disclose the relevant information, in the prescribed format, through the information disclosure system designated by the securities firm, within 5 days from the occurrence of the fact:
- Dishonor of a negotiable instrument due to insufficient deposits, refusal by a financial institution to honor a transaction, or any other loss of credit.
- Any litigious or non-litigious matter, administrative disposition, administrative dispute, injunctive proceeding, or compulsory execution matter with a material effect on the finances or business of the company.
- Any effect on company operations resulting from any serious decrease in production, complete or partial stoppage of work, leasing out of a company plant or principal equipment, or pledge of all or a principal portion of company assets.
- Any circumstance set forth in paragraph 1 of Article 185 of the Company Act.
- Any change in chairman or general manager.
- Any material effect on company finances or business resulting from any signing, amendment, termination, or rescission of an important memorandum of understanding, a plan for a strategic alliance or other business cooperation.
- Resolution by the board of directors to carry out a capital increase through a new share issue or the record date of a cash capital increase, or a material change in the above.
- Any other circumstances with a material effect on shareholder equity.
If any event in the preceding paragraph applies to the company and it has not made a public disclosure of material information, the securities firm may notify the company by fax, telephone, or email of the requirement to enter the related information into a designated information disclosure website within a specified deadline.
No information disclosed pursuant to the subparagraphs of paragraph 1 may make any description of an exaggerated nature or that resembles advertising or promotional language, nor may the information involve any misrepresentation, concealment, or anything that could mislead others.
To ensure the correctness of and equal access to information, an issuer may not disclose any information in private before publishing material information.
If there is any material change in the development of subsequent events with respect to material information that an issuer has published, the issuer shall update or supplement in a timely manner the content of the relevant information in accordance with the provisions under which the information was reported.
If an error is found in information reported by a company, then upon discovery of the error or receipt of notification from the securities firm, the company shall immediately enter the correct information to rectify the error.
If information reported by a company contains any misrepresentation or falsehood, it will be handled pursuant to the contract entered into between the securities firm and the company, and the company shall solely bear any related legal liability.
Chapter IV Management of Securities Firms and Handling of Breach of Contract
The securities firm shall input the details of its acceptance of a company's crowdfunding plan, the tracking table specifying the fundraising progress and the utilization of the funds following the fundraising, and the list of names of the principal investors into the information reporting website designated by the TPEx, in the prescribed format and by the deadline.
The TPEx may send personnel to conduct on-site examination of a securities firm's crowdfunding business. The securities firm may not refuse to provide information or to accept examination by the TPEx. If any deficiency is discovered, the TPEx may carry out follow-up monitoring and assessment, and may issue a letter requiring the securities firm to submit a corrective plan.
When it considers necessary, the TPEx may require the securities firm to engage CPAs or a professional institution designated by the TPEx, to conduct a targeted examination within the examination scope designated by the TPEx, and to submit the results of the examination to the TPEx, and the relevant examination fees shall be borne by the securities firm.
In any of the following events, the TPEx may, according to the severity of the circumstances, impose a penalty from NT$30,000 to NT$1 million.
- Any of the conduct listed in Article 15, paragraph 1.
- Failure to comply with Articles 15-1 to 15-6 when conducting recommendations, advertising, business solicitation, or securities investment consulting business.
- Failure to confirm or control in accordance with regulations, for a fiscal year, the limit on the amount of capital raised by a company through equity crowdfunding, or the limits on subscription by an investor.
- Failure to input information in the prescribed format into the information reporting system designated by the TPEx by the deadline in accordance with Article 30.
- Failure to complete corrections by the specified deadline when any deficiency is discovered from the results of an audit under Article 31.
- Refusal, obstruction, or evasion of an examination conducted by the TPEx, CPAs, or a professional institution designated by the TPEx.
- Failure to present, within the deadline, account books, statements, documents, or other reference or report materials to the TPEx , CPAs, or a professional institution designated by the TPEx.
- Misrepresentation, concealment, material omission, or obvious error in any relevant material presented as referred to in the preceding subparagraph.
- Occurrence of a material network information security event to the crowdfunding platform.
- Material breach of a contract signed with the TPEx.
- Violation of laws or regulations of the competent authority, where the circumstances are serious.
In any of the events set out in the preceding paragraph, the TPEx, in addition to imposing a penalty under the preceding paragraph, also shall notify the securities firm to take supplementary or corrective measures within a prescribed time period. If it fails to take the supplementary or corrective measures within the time period, the TPEx may continually order it to take supplementary or corrective measures within prescribed time periods, and may impose a penalty from NT$30,000 to NT$1 million until the measures have been carried out in each instance.
In any of the events set out in paragraph 1, if the securities firm timely presents specific evidence, proving that the event is not attributable to it, the TPEx, after examining the evidence, may consent to reduce the liability of the securities firm or exempt it from liability.
If the cumulative number of times that the securities firm has been penalized for violation of any provision set out in paragraph 1 within the most recent year, inclusive of the current penalty, reaches two or more, or the circumstances in a specific case arise out of intent or a material deficiency, or have a material effect on shareholder equity, the TPEx may report the matter to the competent authority for it to take necessary dispositive measures.
If an employee of a securities firm violates these Regulations or other relevant provisions and the circumstances are serious, the TPEx may report the matter to the competent authority for it to take necessary dispositive measures.
Chapter V Supplementary Provisions
These Regulations, and any amendments hereto, shall enter into force after submission to the competent authority for recordation. Any addition, deletion, or amendment to an attachment of these Regulations shall enter into force after approval by the CEO of the TPEx.