Chapter II The Establishment of Securities Firms |
| Article 3 | A securities firm shall be established as a company limited by shares. The minimum paid-in capital for a securities firm, according to the type of business which it operates, shall be as follows:
- A securities underwriter: NT$400 million.
- A securities dealer: NT$400 million; if the securities dealer operates only the business of proprietary trading of security tokens (virtual currencies that have the nature of securities), the minimum paid-in capital shall be NT$100 million.
- A securities broker: NT$200 million. However, if the securities broker operates only the following business, the minimum paid-in capital shall be NT$50 million:
- Operates only equity crowdfunding business.
- Operates only brokerage business for trading and exchanging beneficial certificates of funds.
The minimum paid-in capital required in the preceding paragraph shall be fully collected by the promoters at the time of incorporation.
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| Article 4 | The promoters of a securities company shall be disqualified should any of the following circumstances apply:
- Where the person is finally convicted of having committed an offense against the internal/external security of the state, or is at large for such offenses pending the closing of the case.
- Where the person has been sentenced to imprisonment for 1 year or more for having committed fraud, breach of trust, misappropriation, or for having violated applicable laws or regulations governing the regulation of business and industry, and 2 years have not elapsed since the completion of the term of such imprisonment.
- Where the person is convicted of having committed embezzlement during his/here years of service as a government employee and 2 years have not elapsed since the completion of the term of imprisonment.
- Where the person is adjudicated bankrupt and his/her civil rights have not been restored; or when acting as a director, supervisor or manager for a juristic person who has been adjudicated bankrupt, and that the termination of bankruptcy proceedings has not exceeded 3 years, or the reconciliation to resolve his/her bankruptcy has not been fulfilled.
- Where there is an event causing serious loss of good credit standing, and time has not been settled or 2 years have not elapsed since the settlement; or in the last 3 years any financial institution has refused to transact with the person or there is a record of loss of good credit standing.
- Where the person has no legal capacity, limited legal capacity, or is placed under assistance by court order.
- Where the person has been punished more severely than a fine under the Act or Futures Trading Act, and that the execution, probation, or pardon of such a judgment has not exceeded 3 years.
- Where 3 years have not elapsed since the person has been dismissed or replaced of his duties by the FSC.
- Where the person has, as supported by facts, engaged in or been involved in other bad faith or inappropriate activities, demonstrating unsuitability to work in the securities industry.
Where the promoter is a juristic person, the provisions of the preceding paragraph shall apply mutatis mutandis to any representative of or any designated individual executing business for the juristic person.
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| Article 5 | (deleted)
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| Article 6 | The business floor and the facilities of a securities firm shall be in accordance with the standards prescribed by a securities dealers' association or the Taipei Exchange (TPEx); for a securities firm which engages in brokerage or proprietary trading business in the stock exchange, they shall also be in accordance with the floor and facilities standards prescribed by the Taiwan Stock Exchange Corporation (TWSE).
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| Article 7 | In filing an application with the FSC for approval, the promoters of a securities firm shall according to the type of business which it operates, deposit the amount prescribed below with the bank designated by the FSC:
- A securities underwriter: NT$40 million.
- A securities dealer: NT$10 million.
- A securities broker: NT$50 million. However, if the securities broker will operate only the following business, the amount shall be NT$10 million:
- Operates only equity crowdfunding business.
- Operates only brokerage business for trading and exchanging beneficial certificates of funds.
The deposit prescribed in the preceding paragraph may be substituted by government bonds or financial bonds.
The fund deposited in compliance with paragraph 1 shall not be removed before the company deposits the operation bond and obtains the incorporation registration; for a company whose application for the permit is rejected or whose permit is revoked, the fund may be removed after the FSC informs the company.
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| Article 8 | Prior to filing an application with the FSC for approval to engage in brokerage or proprietary trading business in the stock exchange, the applicant shall receive the consent of computer linkage from the securities central depository enterprise and, according to the type of business which it operates, receive the consent of computer linkage from the stock exchange as required below:
- A securities dealer: the linkage of the host computer or the terminal.
- A securities broker: the linkage of the host computer or the terminal.
Prior to filing an application with the FSC for approval to engage in brokerage or proprietary trading business in the over-the-counter market by its head office and newly established branches, the applicant shall receive the consent of the computer linkage for its securities trading information from the TPEx.
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| Article 9 | In filing an application with the FSC for the permit to establish a securities firm, the promoters shall submit all of the following documentation:
- The application form (Annex 1).
- Articles of incorporation.
- A business plan which specifies: the principles of business operation; the division of internal organization; the employment of personnel; the description of facilities; and its financial projection for the next 3 years.
- The minutes of the promoters' meeting.
- The list of promoters (Annex 2).
- A statement from the promoters declaring the inapplicability of Article 4 (Annex 3).
- The certification of the deposit made under Article 7.
- The documentation affirming the availability to the computer linkage as required under Article 8.
- Other documents that the FSC may so require.
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| Article 10 | The incorporation registration of a securities firm shall be completed within 6 months from the date of the permit issued by the FSC and all of the following documentation shall be submitted to the FSC to apply for a securities business operation license:
- The application form (Annex 4).
- A photocopy of the company license.
- Articles of incorporation.
- The system of internal control.
- The balance sheet 1 month preceding the date of application.
- The list of shareholders.
- The list of directors and the minutes of the board of directors.
- The list of supervisors.
- The list of managerial and associated persons with certification of their qualifications.
- A statement declaring the inapplicability of Article 53 of the Act in respect of directors, supervisors, and managers.
- The documentation certifying the compliance with Article 6.
- The documentation certifying the deposit of operation bond.
- The contract affirming the availability to utilize the computer linkage facilities under Article 8.
- Other documents that the FSC may so require.
The permit for the establishment of a securities firm shall be revoked if the said securities firm fails to apply for the license within the duration prescribed in the preceding paragraph. The duration prescribed in the preceding paragraph may be extended, however, should the said securities firm apply to the FSC, with just cause, prior to the expiration of the duration. Such an extension shall not be more than 6 months and may be applied only once.
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| Article 10-1 | In any of the following circumstances, the FSC may reject an application for a permit to establish a securities firm:
- Any of the circumstances in Article 4 applies with respect to a promoter.
- Any of the circumstances in Article 53 of the Act applies with respect to a director, supervisor, or managerial officer.
- Any misrepresentation or falsehood is found in any content or information in the application documents.
- The business plan or the internal control system is not concrete enough, or cannot be implemented effectively.
- Other circumstances under which denial of permission is considered necessary to protect the public interest.
If the application documents submitted under this Chapter are incomplete or otherwise contain incomplete information, and the situation cannot be corrected within a time limit designated by the FSC, the application documents will be returned.
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| Article 11 | Securities firms shall establish a system of internal control referred to in Article 10, paragraph 1, subparagraph 4 in accordance with the Regulations Governing Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets and the regulations for establishing internal control systems by securities firms jointly prescribed by the TWSE and other related institutions.
Securities firms operating security token proprietary trading business or equity crowdfunding business shall handle their internal control system in accordance with applicable rules adopted by the TPEx. A securities firm that operates only security token proprietary trading business or equity crowdfunding business is not subject to the provisions of the preceding paragraph. |
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| Article 12 | In the event that a securities firm engages in two or more types of securities business, the calculation in compliance with the requirement stipulated in Article 3, 7, and 8 shall be that applicable to the total of the types of business that it operates.
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