Chapter I General Provisions |
| Article 1 | These Regulations are prescribed in accordance with paragraph 4 of Article 44 of the Securities and Exchange Act (hereinafter referred to as "the Act"). |
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| Article 2 | A securities firm shall, according to the Criteria Governing Internal Control Systems of Services Enterprises in the Securities and Futures Market set by the Financial Supervisory Commission (the FSC), and other securities firm internal control regulations set by the Taiwan Stock Exchange Corporation (the TWSE), and other securities-related institutions, establish its own internal control system.
The operation of securities firm shall be in accordance with laws and regulations, articles of incorporation, and the internal control system referred to in the preceding paragraph.
Any amendments to be made to the internal control system referred to in paragraph 1 per the notice of the FSC or a securities-related institution shall be made within the specified time limit. |
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| Article 3 | In case of any of the following events, a securities firm shall report to the FSC for approval in advance:
1. Change of name of the firm;
2. Change of capital amount, working capital, or the fund for operating business;
3. Change of the business premises of the firm or its branch office;
4. Acquisition of the entire or major part of the business or assets of another person, or transfer of the entire or major part of the business or assets of the firm to another person;
5. Merger or dissolution;
6. Investment in foreign securities firms;
7. Any other matters which under the regulation of the FSC shall be reported to and approved by the FSC in advance.
Where a securities firm has entered into a contract for using the centralized securities market with the TWSE , matters to be reported and approved as referred to in the preceding paragraph shall be submitted to the TWSE for transmittal to the FSC. Where a securities firm only entered into a contract for trading securities on the Taipei Exchange (the TPEx), the said submission shall be made to the FSC through the TPEx. Where no contract has been entered into, the submission shall be made to the FSC through a securities dealers' association. |
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| Article 4 | In case any of the following events occurs, a securities firm shall report to the FSC:
1. Where the business operation is commenced, suspended, resumed or terminated;
2. Where, through operating or engaging in securities business, a securities firm, or any of its directors, supervisors, or employees becomes involved in litigation or arbitration, or is subject to compulsory execution as an obligor, or a securities firm is a bankrupt or is refused services or has a check dishonored by a bank;
3. Where any director, supervisor, or managerial officer has any of the conditions referred to in Article 53 of the Act;
4. Where any director, supervisor, or employee has violated the order promulgated by the FSC in accordance with the Act;
5. Where there is any change in the shareholding of any director, supervisor, manager or shareholder holding more than 10 percent of the shares of the company; or
6. Where there is any matter required to be reported by the FSC.
For the matters in subparagraph 1 in the preceding paragraph, the securities firm shall report in advance; for the matters in subparagraphs 2 through 4, the securities firm shall report within 5 days from the day on which it becomes aware thereof or on which the matters occur; for matters in subparagraph 5, the securities firm shall report by the 15th day of the following month.
Where a securities firm has entered into a contract for using the centralized securities market with the TWSE , matters to be reported and approved as referred to in paragraph 1 above shall be submitted to the TWSE for transmittal to the FSC. Where a securities firm only entered into a contract for trading securities on the TPEx, the said submission shall be made to the FSC through the TPEx. Where no contract has been entered into, the submission shall be made to the FSC through a securities dealers' association.
The term "business day," as used in these Regulations, means a trading day on the domestic securities markets. |
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| Article 5 | A securities firm shall operate its business in a fair and reasonable manner. Factors including operating costs, transaction risks, reasonable profits, and a customer's overall contribution shall be taken into consideration in determining the fees to be collected. It is not permitted to use unreasonable fees to solicit or engage in business.
The advertisements produced and broadcasted by a securities firm shall not be exaggerated or biased.
The self-regulatory rules governing the production and broadcasting of advertisements by securities firms referred to in the preceding paragraph shall be prescribed by the securities dealers' association and submitted to the FSC for recordation. |
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| Article 6 | A securities firm shall install internal auditors to regularly or from time to time examine the company's finance and business and prepare audit reports and keep them available for audit.
The audit reports referred to in the preceding paragraph shall include comments on the compliance of the company's finance and business with relevant laws and regulations and the internal control system of the company. |
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| Article 7 | A securities firm which engages in more than two types of securities businesses shall independently operate the business based on the types thereof.
Different departments may be established for the operation of each type of business under the preceding paragraph based on the nature of the business. |
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| Article 8 | In operating securities business, a securities firm shall have its duly registered qualified associated persons business in accordance with the Regulations Governing the Responsible Persons and Associated Persons of Securities Firms. |
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