Chapter I General Principles |
| Article 1 | This Act is enacted for the purposes of developing the national economy and protecting investment. |
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| Article 2 | The regulation and supervision of public offering, issuance, and trading of securities shall be governed by this Act. Matters not provided for in this Act shall be governed by the provision of the Company Act and other relevant laws. |
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| Article 3 | The term "Competent Authority" as used in this Act means the Financial Supervisory Commission. |
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| Article 4 | The term "company" as used in this Act means a company limited by shares organized under the Company Act.
The term "foreign company" as used in this Act means a company, for the purpose of profit making, organized and incorporated in accordance with the laws of a foreign country. |
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| Article 5 | The term "issuer" as used in this Act means either a company that publicly offers and issues securities or promoters who publicly offer securities. |
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| Article 6 | The term "securities" as used in this Act means government bonds, corporate stock, corporate bonds, and other securities approved by the Competent Authority.
Any stock warrant certificate, certificate of entitlement to new shares, and certificate of payment or document of title to any of the securities referred to in the preceding paragraph shall be deemed as securities.
Any securities referred to in the preceding two paragraphs, even without a physical certificate representing the title being printed, shall still be deemed securities. |
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| Article 7 | The term "public offering" as used in this Act means the act of offering securities to the general public by the promoters prior to the incorporation of the company or by the issuing company prior to the issuance of the securities.
The term "private placement" as used in this Act means the act of offering securities to specific persons pursuant to paragraphs 1 and 2 of Article 43-6 by a public company. |
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| Article 8 | The term "issuance" as used in this Act means the act whereby an issuer, following a public offering, prepares and delivers securities or delivers securities through book-entry transfer.
Securities delivered by book-entry transfer referred to in the preceding paragraph may be issued without printing physical securities. |
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| Article 9 | (Deleted) |
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| Article 10 | The term "underwriting" as used in this Act means the act of underwriting securities issued by an issuer on a firm commitment or best efforts basis in accordance with an agreement between the parties. |
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| Article 11 | The term "stock exchange" as used in this Act means a juristic person that, in accordance with the provisions of this Act, establishes premises and facilities for the purpose of providing a centralized securities exchange market. |
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| Article 12 | The term "centralized securities exchange market" as used in this Act means a marketplace maintained by a stock exchange for the purchase and sale of securities through a competitive bidding process. |
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| Article 13 | The term "prospectus" as used in this Act means an explanatory written statement that an issuer provides to the general public in compliance with this Act for the purpose of offering or selling securities. |
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| Article 14 | The term "financial reports" as used in this Act means the financial reports that issuers, securities firms, and stock exchanges are required to periodically prepare and file with the Competent Authority in compliance with laws and regulations.
Regulations governing the preparation of financial reports with respect to the content, scope, procedures, preparation, and other matters required to be complied with for the financial reports referred to in the preceding paragraph shall be prescribed by the Competent Authority, and Chapters 4, 6, and 7 of the Business Entity Accounting Act shall not apply to those financial reports.
The financial reports referred to in paragraph 1 shall be signed or stamped with the seal of the chairperson, managerial officer, and accounting officer, who shall also issue a statement that the report contains no misrepresentation or concealment.
The accounting officer referred to in the preceding paragraph shall possess certain qualifications and undergo continuing professional education while holding the position. Regulations governing the qualifications of an accounting officer, the minimum hours of continuing professional education required, and the qualifications required of the institution offering the continuing education curriculum shall be prescribed by the Competent Authority.
When a company whose stock is listed for trading on a stock exchange or over-the-counter securities exchange prepares its annual financial report in accordance with paragraph 2, it shall additionally disclose relevant information, including the company's remuneration policy, the average salary of all the company's employees and any adjustments thereto, and the remuneration of the directors and supervisors, in accordance with the regulations prescribed by the Competent Authority.
A company referred to in the preceding paragraph shall specify in its articles of incorporation that a certain percentage of its annual earnings shall be allocated for salary adjustments or compensation distributions for its non-executive employees. However, the company's accumulated losses shall have been covered.
The amount of salary adjustments or compensation distributions under the preceding paragraph is deductible from the amount of its profit-seeking enterprise income for the current fiscal year. |
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| Article 14-1 | Public companies, securities exchanges, securities firms, and enterprises set forth in Article 18 shall establish financial and operational internal control systems.
The Competent Authority may prescribe regulations governing the internal control systems of companies or enterprises under the preceding paragraph.
A company or enterprise under paragraph 1 shall file a statement of internal control with the Competent Authority within three months after the close of each fiscal year, unless approval otherwise has been granted by the Competent Authority. |
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| Article 14-2 | A company that has issued stock in accordance with this Act may appoint independent directors in accordance with its articles of incorporation. However, the Competent Authority, shall, as necessary in view of the company's scale, shareholder structure, nature of business, and other essential factors, require it to appoint independent directors, who furthermore shall be not less than two in number and not less than one-fifth of the total number of directors.
Independent directors shall possess professional knowledge, and there shall be restrictions on their shareholdings and the positions they may concurrently hold. They shall maintain independence within the scope of performance of their duties, and may not have any direct or indirect interest relationship with the company. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, determination of independence, method of nomination, and other required matters for compliance with respect to independent directors shall be prescribed by the Competent Authority.
The company may not impede, refuse, or evade the actions of the independent directors in performing their duties. As the independent directors deem necessary to perform their duties, they may request the board of directors to appoint relevant personnel, or may at their own discretion hire professionals to provide assistance. The related necessary expenses will be borne by the company.
In any of the following circumstances, a person may not act as an independent director, or if already acting in such capacity, shall ipso facto be dismissed:
1. Any circumstance set out in a subparagraph of Article 30 of the Company Act.
2. Election of a person that is a government agency, juristic person, or representative thereof as set out with Article 27 of the Company Act.
3. Failure to meet the qualifications for independent director set forth in paragraph 2.
The transfer of an independent director's shareholdings is not subject to the latter part of paragraph 1, or to paragraph 3, of Article 197 of the Company Act.
When an independent director is dismissed for any reason, resulting in a number of directors lower than that required under paragraph 1 or the company's articles of incorporation, a by-election for independent director shall be held at the next shareholders meeting. When all independent directors have been dismissed, the company shall convene a special shareholders meeting to hold a by-election within 60 days from the date the situation arose. |
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| Article 14-3 | A company that has selected independent directors as set forth in paragraph 1 of the preceding article, unless it has otherwise obtained approval from the Competent Authority, shall submit the following matters to the board of directors for approval by resolution; if an independent director has a dissenting opinion or qualified opinion, it shall be noted in the minutes of the directors meeting:
1. Adoption or amendment of an internal control system pursuant to Article 14-1.
2. Adoption or amendment, pursuant to Article 36-1, of handling procedures for financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, monetary loans to others, or endorsements or guarantees.
3. A matter relating to the personal interest of a director or supervisor.
4. A material asset or derivatives trade.
5. A material monetary loan, endorsement, or provision of a guarantee.
6. The offering, issuance, or private placement of any equity-type securities.
7. The engagement, discharge, or compensation of an attesting certified public accountant (CPA).
8. The appointment or discharge of a financial, accounting, or internal auditing officer.
9. Any other material matter so required by the Competent Authority. |
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| Article 14-4 | A company that has issued stock in accordance with this Act shall establish either an audit committee or supervisors. However, a company that falls within the conditions set by the Competent Authority based on company scale, type of operations, or other essential considerations shall establish an audit committee in lieu of supervisors.
The audit committee shall be composed of the entire number of independent directors. It shall not be fewer than three persons in number, one of whom shall be convener, and at least one of whom shall have accounting or financial expertise.
For a company that has established an audit committee, the provisions regarding supervisors in this Act, the Company Act, and other laws and regulations shall apply mutatis mutandis to the audit committee.
The following provisions of the Company Act shall apply mutatis mutandis with regard to independent directors who are members of the audit committee: Article 200; Article 216, paragraphs 1, 3, and 4; Article 218, paragraphs 1 and 2; Article 218-1; Article 218-2, paragraph 2; Articles 224 to 226; and Article 245, paragraph 2. The provisions of Article 214, Article 215, and the proviso of Article 227 of the Company Act shall apply mutatis mutandis with regard to litigation brought against independent directors.
Regulations governing the exercise by the audit committee and its independent director members of the powers set out in the preceding two paragraphs, and the operation procedures, matters to be recorded in the meeting minutes, and other matters related thereto, shall be prescribed by the Competent Authority.
A resolution of the audit committee shall require the approval of one-half or more of all members. |
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| Article 14-5 | If a company that has issued stock in accordance with this Act has established an audit committee, the following matters shall require the approval of one-half or more of all audit committee members and be submitted to the board of directors for a resolution, and the provisions of Article 14-3 shall not apply:
1. Adoption or amendment of an internal control system pursuant to Article 14-1.
2. Assessment of the effectiveness of the internal control system.
3. Adoption or amendment, pursuant to Article 36-1, of handling procedures for financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, monetary loans to others, or endorsements or guarantees for others.
4. A matter relating to the personal interest of a director.
5. A material asset or derivatives trade.
6. A material monetary loan, endorsement, or provision of guarantee.
7. The offering, issuance, or private placement of any equity-type securities.
8. The engagement, discharge, or compensation of an attesting CPA.
9. The appointment or discharge of a financial, accounting, or internal auditing officer.
10. Annual financial reports and second quarter financial reports that must be audited and attested by a CPA, which are signed or sealed by the chairperson, managerial officer, and accounting officer.
11. Any other material matter so required by the company or the Competent Authority.
With the exception of subparagraph 10, any matter under a subparagraph of the preceding paragraph that has not been approved by one-half or more of all audit committee members may be undertaken upon the approval of two-thirds or more of all directors, without regard to the restrictions of the preceding paragraph, and the resolution of the audit committee shall be recorded in the minutes of the directors meeting.
If, for good cause, it is impossible to hold a meeting of the audit committee, the matters in the subparagraphs of paragraph 1 shall be adopted with the approval of two-thirds or more of all directors. However, the matters in paragraph 1, subparagraph 10 shall still require the opinion of the independent directors indicating their approval.
A company that has established an audit committee is not subject to the provisions of Article 36, paragraph 1 requiring that its financial reports be recognized by the supervisors.
"All audit committee members" and "all directors" as used in paragraphs 1 to 3 and the preceding article shall be calculated as the actual number of persons currently holding those positions. |
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| Article 14-6 | A company whose stock is listed on a stock exchange or traded over-the-counter shall establish a remuneration committee. Regulations governing the professional qualifications of its members, the exercise of their powers of office, and related matters shall be prescribed by the Competent Authority.
The remuneration referred to in the preceding paragraph shall include salary, stock options, and any other substantive incentive measures for directors, supervisors, and managerial officers. |
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| Article 15 | The types of securities business operated in accordance with this Act are:
1. Securities underwriting and other relevant business approved by the Competent Authority.
2. Securities dealing and other relevant business approved by the Competent Authority.
3. Securities commission agency, brokerage, agency, and other relevant business approved by the Competent Authority. |
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| Article 16 | An operator of any business specified in the subparagraphs of the preceding Article is a securities firm and shall be categorized as follows:
1. If it operates the business specified in subparagraph 1 of the preceding Article, it is a securities underwriter.
2. If it operates the business specified in subparagraph 2 of the preceding Article, it is a securities dealer.
3. If it operates the business specified in subparagraph 3 of the preceding Article, it is a securities broker. |
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| Article 17 | (Deleted) |
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| Article 18 | Approval from the Competent Authority is required for the operation of any securities finance enterprise, centralized securities depository enterprise, or any other securities-related service enterprise.
Regulations governing the conditions for establishment, application and approval procedures, finances, operations, management, and other required matters for compliance with respect to the enterprises referred to in the preceding paragraph shall be prescribed by the Competent Authority. |
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| Article 18-1 | The provisions of Article 38, Article 39, and Article 66 of this Act shall apply mutatis mutandis to enterprises referred to in the preceding Article.
The provisions of Article 53, Article 54, and Article 56 of this Act shall apply mutatis mutandis to employees of enterprises referred to in the preceding Article. |
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| Article 18-2 | (Deleted) |
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| Article 18-3 | (Deleted) |
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| Article 19 | All contracts entered into pursuant to this Act shall be in writing. |
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| Article 20 | During the public offering, issuance, private placement, or trading of securities, there shall be no misrepresentation, fraud, or any other act sufficient to mislead other persons.
Financial reports and financial and business documents filed or publicly disclosed by an issuer in accordance with this Act shall contain no misrepresentation or concealment.
Anyone who violates the provisions of paragraph 1 shall be liable for compensation for damage sustained by bona fide acquirers or sellers of the securities.
The principal who engages a securities broker to purchase or sell securities as a commission agent shall be deemed as an "acquirer" or "seller" for the purpose of the preceding paragraph. |
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| Article 20-1 | If there is any misrepresentation or concealment in the essential content of any financial report or financial or business document referred to in paragraph 2 of the preceding article or of financial reports filed or publicly disclosed pursuant to Article 36, paragraph 1, the persons in the following subparagraphs shall bear liability for compensation for damage suffered by the bona fide acquirers, sellers, or holders of the securities issued by the issuer:
1. The issuer and its responsible person(s).
2. Employees of the issuer who placed their signatures or seals on the financial report or the financial or business document in question.
With the exception of the issuer, a person under any subparagraph of the preceding paragraph shall not be liable for damages if they can demonstrate that they exercised all due diligence and had good cause to reasonably believe that there was no misrepresentation or concealment in the reports or documents.
A CPA who performs attestation of the financial reports or financial and business documents referred to in paragraph 1 shall be liable for compensation for any damage as set forth in paragraph 1 that arises out of their misconduct or their violation or neglect of their professional duties.
With respect to a CPA's liability for compensation under the preceding paragraph, a bona fide acquirer, seller, or holder of securities may file a motion to the court to access the CPA's working papers and request to review or make copies of them. The CPA and the accounting firm may not refuse such a motion or request.
With the exception of the issuer, when the negligence of a person(s) under any subparagraph of paragraph 1 or paragraph 3 results in the occurrence of damage set forth in paragraph 1, each such person shall bear liability for compensation in proportion to their degree of responsibility.
The provisions of paragraph 4 of the preceding Article shall apply mutatis mutandis to paragraph 1. |
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| Article 21 | The rights to claim damages prescribed in this Act shall be extinguished if not exercised within two years from the time the claimant learns of the cause that entitles them to claim the damages or within five years from the date of the offering, issuance, or trading. |
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| Article 21-1 | To further international cooperation between the securities market authorities of Taiwan and other countries, the Taiwan government or institutions authorized by it may, based on the principle of reciprocity, sign cooperative treaties or agreements with foreign governments, institutions, or international organizations, to facilitate matters such as information exchange, technical cooperation, and investigation assistance.
Unless it would jeopardize the national interest or the rights or interests of the investing public, the Competent Authority may, in accordance with a treaty or agreement signed pursuant to the preceding paragraph, request related authorities or require related institutions, juristic persons, associations, or natural persons to provide necessary information in accordance with the treaty or agreement, and based on the principles of reciprocity and confidentiality, provide such information to the foreign government, institution, or international organization that has signed the treaty or agreement with Taiwan.
To further international cooperation in securities markets, in cases in which a foreign government has undertaken investigation, prosecution, or judicial procedure in connection with any suspected violation of foreign financial regulatory legislation, when the foreign government requests assistance with investigation in accordance with a treaty or agreement signed pursuant to paragraph 1, the Competent Authority may require institutions, juristic persons, associations, or natural persons related to securities trading to present relevant account books or documents or to appear at its offices to give statements. When necessary, the Competent Authority may request the foreign government to send personnel to assist in its investigations.
A party who is required to appear at the offices of the Competent Authority to give statements under the preceding paragraph may select and retain, to appear with the party, a lawyer, CPA, other agent, or other assisting personnel that the Competent Authority has given permission to accompany the party.
An institution, juristic person, association, or natural person referred to in paragraph 2 and paragraph 3 may not evade, impede, or refuse any requirement by the Competent Authority to provide relevant account books or documents or to appear at its offices to give statements. |
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