Section IV Listing and Trading of Securities |
| Article 138 | A stock exchange shall, in addition to setting various rules, specify in detail in its business rules or operating rules the following particulars:
1. Listing of securities.
2. Use of the centralized securities exchange market.
3. Trading orders of securities brokers or securities dealers.
4. Closing and suspension of the market.
5. Types of trades.
6. Procedures for trading securities among securities dealers or securities brokers and the methods by which trading contracts are established.
7. Trading units.
8. Price fluctuation units (ticks) and price limits.
9. Clearing and settlement times and methods.
10. Real-time disclosure of trade information for securities trading, including order quantity, price, and the status of matching and execution.
11. Other matters related to trading.
The determination of matters prescribed in the preceding paragraph shall not violate any law or regulation. In matters affecting the interests of securities firms, opinions shall be solicited in advance from the securities association. |
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| Article 139 | An issuer of securities publicly issued under this Act may file an application with a stock exchange for its listing.
When a company whose stock is listed issues new shares, the new shares shall be listed for trading on the stock exchange from the day they are delivered to the shareholders. The Competent Authority may, however, impose restrictions on their trading on a stock exchange in case any of the items provided in paragraph 1 of Article 156 is applicable.
Any company that lists new shares as referred to in the preceding paragraph shall forward the relevant documents to the stock exchange within ten days after the listing of new shares. |
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| Article 140 | A stock exchange shall adopt rules governing the review of securities listings and rules governing listing contracts and file such rules with the Competent Authority for its approval. |
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| Article 141 | A stock exchange shall enter into a securities listing contract with a company whose securities will be listed. The contents of the contract shall not contradict the rules governing listing contracts, and such contracts shall be filed with the Competent Authority for recordation. |
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| Article 142 | Securities publicly issued by an issuer may be traded on the centralized securities exchange market of a stock exchange only after the issuer and the stock exchange have entered into a securities listing contract. |
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| Article 143 | The securities listing fees shall be specified in the listing contract. A stock exchange shall file fee rates with the Competent Authority for approval. |
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| Article 144 | A stock exchange may, pursuant to laws and regulations or the provisions of the listing contract, delist securities, and such delisting shall be filed with the Competent Authority for recordation. |
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| Article 145 | An issuer of securities publicly listed on a stock exchange may, pursuant to the provisions of the listing contract, file an application with the stock exchange for delisting.
The stock exchange shall draft procedures for handling applications for delisting and submit the procedures and any subsequent amendments thereto to the Competent Authority for approval. |
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| Article 146 | (Deleted) |
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| Article 147 | A stock exchange shall file a report with the Competent Authority for recordation whenever it suspends or resumes the trading of listed securities pursuant to laws or regulations, the provisions of the listing contract, or for the protection of public interest. |
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| Article 148 | When a company whose securities are listed on a stock exchange violates this Act or any order promulgated hereunder, the Competent Authority may, for the purpose of protecting the public interest or the interests of investors, order the stock exchange to suspend the trading of or delist those securities. |
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| Article 149 | The listing of government bonds shall be effected by an order of the Competent Authority, and the listing requirements of this Act shall not apply. |
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| Article 150 | The trading of listed securities shall be conducted on a centralized securities exchange market established by a stock exchange. However, this restriction shall not apply in the following circumstances:
1. Trading of government bonds.
2. Due to the operation of a law or regulation, it is impossible to acquire or dispose of the ownership of the securities through trading on the centralized securities market.
3. Direct transfer of securities between private persons, the quantity of which does not exceed one trading unit of the securities, with an interval between any two such transfers of not less than three months.
4. Other circumstances as prescribed by the Competent Authority. |
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| Article 151 | Persons who trade on a centralized securities exchange market shall be limited, on a membership stock exchange, to members, and on a company-type stock exchange, to securities dealers or securities brokers that have entered into a contract for usage of the centralized securities exchange market. |
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| Article 152 | A stock exchange shall be required to file a report with the Competent Authority in the event the centralized securities exchange market is suspended due to any event of force majeure. The same shall apply when the market reopens. |
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| Article 153 | In trading on the stock exchange market by stock exchange members or securities brokers or securities dealers, when either party to a trade fails to fulfill its delivery obligation, the stock exchange shall designate another member or securities broker or securities dealer to perform delivery in place of the non-performing party. For any resultant price difference and all expenses incurred, the stock exchange shall first utilize the settlement and clearing fund for indemnification. If the fund is insufficient, the stock exchange shall advance the payment. In all such cases, recovery shall be pursued from the party that failed to perform delivery. |
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| Article 154 | A stock exchange may set aside a compensation reserve out of its securities transaction fees to cover the payments specified in the preceding Article. The method of setting aside the reserve, the rate at which it is set aside, the conditions for suspension of setting aside the reserve, and the method of custody and utilization of the reserve shall be prescribed by an order of the Competent Authority.
Claimants in cases arising from trading on the centralized securities exchange market shall have the preferential right to the satisfaction of their claims from the settlement and clearing fund specified in Article 108 and Article 132 in the following order of priority:
1. The stock exchange.
2. The principal in a brokerage trade.
3. Securities brokers and securities dealers.
When the settlement and clearing fund is insufficient to satisfy such claims, the unsatisfied portion of the claims may be satisfied in accordance with the provisions of paragraph 2 of Article 55 of this Act. |
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| Article 155 | The following acts are prohibited with respect to securities listed on a stock exchange:
1. Placing an order to trade or a quote to trade on a centralized securities exchange market and failing to perform settlement after the trade is executed, where sufficient to affect the market order.
2. (Deleted)
3. Conspiring with another party in a scheme in which one party sells or buys a certain security at an agreed price while the other party buys or sells it in a corresponding trade(s), with the intent to inflate or deflate the trading price of that security on the centralized securities exchange market.
4. Continuously buying a certain security at high prices or selling it at low prices oneself or under the name of another with the intent to inflate or deflate the trading price of that security on the centralized securities exchange market, with a likelihood that market prices or market order will be affected.
5. Continuously placing orders for trades or quotes for trades and completing corresponding trades oneself or under the name of another, with the intent to create an impression of brisk trading in a certain security on the centralized securities exchange market.
6. Spreading rumors or false information with the intent to affect the trading prices of securities traded on the centralized securities exchange market.
7. Directly or indirectly engaging in any other act of manipulation to affect the trading prices of securities traded on the centralized securities exchange market.
The provisions of the preceding paragraph shall apply mutatis mutandis to trades conducted on the over-the-counter market.
Persons who violate the preceding two paragraphs shall be liable to compensate the damage suffered by bona fide buyers or sellers of the securities.
The provisions of paragraph 4 of Article 20 of this Act shall apply mutatis mutandis to the preceding paragraph. |
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| Article 156 | In the occurrence of any of the following events with respect to securities listed on the stock exchange, when there is a likelihood that the event will affect market order or damage the public interest the Competent Authority may issue an order suspending the trading of the securities in whole or in part, or restricting the quantity of trading thereof by securities dealers and securities brokers:
1. The company that issued the securities becomes involved in litigation or other non-litigious matters, which is sufficient to result in the company's dissolution or changes in its organization, capital, business plans, financial condition, or suspension of production.
2. The company that issued the securities becomes involved in a major disaster, signs a major agreement, experiences an exceptional event, changes to the material content of business plans, or dishonors of a negotiable instrument, the result of which is sufficient to cause a significant material change in the financial condition of the company.
3. The company that issued the securities engages in any deceptive, dishonest, or illegal act, the result of which is sufficient to affect the prices of its securities.
4. The market price of the securities has undergone continuous major rises or major declines, resulting in abnormal fluctuations in the prices of other securities.
5. The company that issued the securities is involved in any material public hazard or food or drug safety event.
6. Other events of material significance. |
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| Article 157 | In the event that any director, supervisor, managerial officer, or shareholder holding more than ten percent of the shares of a stock issuing company sells listed stock of the company within six months after acquiring it, or repurchases listed stock of the company within six months after selling it, the company shall claim for the disgorgement of any profit therefrom.
If the board of directors or the supervisors of the company fail to exercise the right of claim for disgorgement under the preceding paragraph on behalf of the company, its shareholders may request the directors or supervisors to exercise the right of claim within thirty days. If the directors or supervisors do not exercise that right within that deadline, the requesting shareholders may exercise the right of claim under the preceding paragraph on behalf of the company.
If the directors or supervisors fail to exercise a claim under paragraph 1, they shall be jointly and severally liable to the company for compensation for any resultant damage suffered by the company.
The right of claim under paragraph 1 shall be extinguished if not exercised within two years from the date on which the profit is obtained.
The provisions of paragraph 3 of Article 22-2 hereof shall apply mutatis mutandis to paragraph 1 of this Article.
This Article shall apply mutatis mutandis to other securities with equity characteristics issued by a company. |
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| Article 157-1 | Upon actually knowing any information of a company that issues stock that would have a material impact on its stock price, after the information is precise, and prior to the public disclosure of such information or within 18 hours after its public disclosure, the following persons shall not buy or sell, themselves or in the name of another, any stock or other securities with equity characteristics of that company that are listed on an exchange or traded over-the-counter:
1. A director, supervisor, or managerial officer of the company, or a natural person designated to exercise powers as representative pursuant to Article 27, paragraph 1 of the Company Act.
2. A shareholder holding more than ten percent of the shares of the company.
3. Anyone who has learned the information based on occupation or a control relationship.
4. Anyone who has lost the status under any of the preceding three subparagraphs for a period of less than six months.
5. Anyone who has learned the information from any of the persons in the preceding four subparagraphs.
Upon actually knowing any information of a company that issues stock that would have a material impact on its ability to pay principal or interest, after the information is precise, and prior to the public disclosure of such information or within 18 hours after its public disclosure, the persons listed in the preceding paragraph shall not sell, themselves or in the name of another, any non-equity corporate bonds of that company that are listed on an exchange or traded over-the-counter.
Persons in violation of the provisions of paragraph 1 or the preceding paragraph shall be liable, to trading counterparties who on the day of the violation made an opposite trade with bona fide intent, for damages in the amount of the difference between the buy or sell price and the average closing price for ten business days after the date of public disclosure. The court may also, upon the request of the trading counterparty who made an opposite trade with bon fide intent, treble the damages payable by the violator if the violation is severe. The court may reduce the damages if the violation is minor.
The persons referred to in subparagraph 5 of paragraph 1 shall be jointly and severally liable with the persons referred to in subparagraphs 1 through 4 of paragraph 1 who provided the information for the damages referred to in the preceding paragraph. However, if the persons referred to in subparagraphs 1 through 4 of paragraph 1 who provided the information had good cause to believe the information had already been publicly disclosed, they shall not be liable for damages.
The phrase "information that would have a material impact on its stock price" in paragraph 1 shall mean information relating to the finances or businesses of the company, or the market supply and demand of those securities, or to a public tender offer, the specific content of which would have a material impact on its stock price, or would have a material impact on the investment decision of a reasonably prudent investor. Regulations governing the scope of the information, the means of its disclosure and related matters shall be prescribed by the Competent Authority.
Regulations governing the scope of information that would have a material impact on the ability of the issuing company to pay principal or interest as mentioned in paragraph 2, the means of its disclosure, and related matters shall be prescribed by the Competent Authority.
The provisions of paragraph 3 of Article 22-2 shall apply mutatis mutandis to subparagraphs 1 and 2 of paragraph 1 of this Article; the same shall apply with respect to those who have lost the status for a period of less than six months. The provisions of paragraph 4 of Article 20 shall apply mutatis mutandis to the trading counterparty referred to in paragraph 2 of this Article. |
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