Chapter V Investment In Foreign And Mainland Chinese Securities Enterprises |
| Article 49 | Investment by securities firms in foreign enterprises shall be limited to investments set forth in the following subparagraphs:
1. Securities enterprises, including securities, futures, and financial business they are allowed to operate under the local laws and regulations of the country of the investment.
2. Other related enterprises in which the FSC has approved investment. |
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| Article 49-1 | Securities firms or their subsidiaries investing in securities or futures institutions in the Mainland China area shall comply with the provisions of the Regulations Governing Permission and Administration of Securities and Futures Business Dealings and Investment Between the Taiwan Area and the Mainland Area.
Securities firms or their subsidiaries investing in non-securities/non-futures institutions in the Mainland China area shall apply to the FSC for permission. |
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| Article 50 | A securities firm applying to invest in a foreign enterprise, unless otherwise provided by laws or regulations, shall meet the requirements listed below; however, if a securities firm does not meet a condition in subparagraphs 1 to 5, but concrete improvement has been made, and the improvement has been recognized by the FSC, it may be exempted therefrom:
1. Have not received any disciplinary warning from the FSC in the most recent 3 months.
2. Have not been ordered by the FSC to relieve or replace the duties of its director, supervisor, or managerial officer in the most recent 6 months.
3. Have not had business suspended as punishment from the FSC within the last 1 year.
4. Have not had the license of branch offices or of a portion of the business invalidated by the FSC as punishment within the last 2 years.
5. Have not had trading terminated or restricted by the TWSE, the TPEx, or the TAIFEX as punishment under each of their regulations or rules.
6. The regulatory capital adequacy ratio has not been below 200 percent within the most recent 3 months, and its CPA audited or reviewed financial report for the most recent period shows no accumulated deficit, and its financial condition meets the provisions of Articles 13, 14, 16, 18, 18-1 and 19, provided that the requirement regarding the aforementioned regulatory capital adequacy ratio does not apply if special-case approval has been obtained due to special needs.
7. The combined total amount invested in foreign enterprises plus the funds that a securities firm establishing an overseas branch office(s) appropriates there for local operations and the amount invested in Mainland China enterprises do not exceed 40 percent of the securities' firm's net worth. However, when there is special need and approval as a special case has been received, this provision does not apply. |
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| Article 51 | Securities firms applying for investment in a newly formed foreign enterprise shall provide the following documents to the FSC in their application:
1. The company's articles of incorporation/by laws or a document equivalent to the company's constitution/regulations.
2. The plan for investment, the contents of which shall include the following items:
A. The plan for investment including: the purpose of investment, the estimated effect, the origin of capital, the implementation plan, the operation plan, the recapitalization plan, etc. If the type of investment is company, then its reinvestment plan shall be included as well.
B. Guidelines for business operations including: the establishment location, amount of capital, the business to be operated, the scope/items of business, business operation strategies, etc. of the company.
C. Structure and functions of the organization including: a chart of the organization of the company or a group organizational chart for a holding company, functions and allocation of duties of departments, etc.
D. Personnel plan including: personnel allocation/structuring, personnel training, and regulations of personnel management, etc.
E. Condition of the site and facilities including: site layout, the summary of important equipment/facilities, etc.
F. Financial projection for the next 3 years including: opening costs, financial estimates and notes for financial statement for the next 3 years, etc.
3. The minutes of the board of directors' or board of governors' meeting or minutes of the shareholders' meeting resolution.
4. The most recent financial report, audited and attested or reviewed by the certified public accountant.
5. Management/administration rules shall be set up for those invested or sub-invested foreign enterprises where the investment shareholding percentage is 50 percent or above. The contents of such management/administration rules shall include the following items:
A. the scope of management
B. the direction and principles of management
C. the management of financial, business, and accounting affairs.
D. the management of assets
E. the financial statements to be regularly prepared
F. the method of regular auditing of internal financial and business affairs
G. others, such as: management of personnel operations, internal control auditing of the invested enterprises, etc.
6. A list detailing the domestic and foreign invested enterprises as of the date of application.
7. Other documents required by the FSC. |
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| Article 52 | Securities firms applying for investment in foreign enterprises shall provide the following documents to the FSC with the application for an approval:
1. The company's articles of incorporation/bylaws or a document equivalent to the company's constitution/regulations.
2. The plan for investment including: the purpose of investment, the estimated effect, the origin of capital, the recapitalization plan, the estimated income/expenses/profits of the invested foreign enterprise of each year for the next 3 years, etc.
3. The minutes of the board of directors' or board of governors' meeting or minutes of the shareholders' meeting resolution.
4. The most recent financial report, audited and attested or reviewed by the certified public accountant.
5. Management/administration rules shall be set up for those invested or sub-invested foreign enterprises where the investment shareholding percentage has exceeded 50 percent. The contents of such management/administration rules shall include the following items:
A. the scope of management
B. the direction and principles of management
C. the management of financial, business, and accounting affairs.
D. the management of assets
E. the financial statements to be regularly prepared
F. the method of regular auditing of internal financial and business affairs
G. others, such as: management of personnel operations, internal control auditing of the invested enterprises, etc.
6. A list detailing the domestic and foreign invested enterprises as of the date of application.
7. General description of the invested foreign enterprise including: a synopsis of the company, the company organization, capital and shares, scope of business, and financial condition for the most recent 3 fiscal years, etc.
8. The investment (or joint venture) agreement.
9. Other documents required by the FSC. |
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| Article 52-1 | Regarding investments that have been approved by the FSC under the preceding two articles, if a securities firm meets the qualification requirements set out in subparagraphs 1 to 5 of Article 50, it may submit the documents set out in subparagraphs 1 to 3 and 7 of the preceding article to apply to the FSC for approval of an increase in the amount of investment in the overseas enterprise. |
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| Article 53 | When any of the following circumstances occurs in connection with any investment by the securities firm as approved by the FSC, the securities firm shall report the reasons to the FSC along with relevant documentation:
1. Change in business items or material operating policies.
2. Change in the original shareholding ratio of the securities firm or its overseas subsidiary.
3. Dissolution or suspension of operations.
4. Change in the institution's name.
5. Merger with another financial institution, or assignment to or receipt of assignment from another of all or a major part of assets or operations.
6. Occurrence of reorganization, liquidation, or bankruptcy.
7. Occurrence or foreseeable occurrence of any instance of material loss.
8. Material violation of law or regulation or the voidance or revocation of the business permit by the overseas competent authority.
9. Any other material matter.
For any circumstance under subparagraphs 1 to 6 of the preceding paragraph, unless otherwise provided by the FSC, the securities firm shall report in advance; for any circumstance under subparagraphs 7 to 9 of the preceding paragraph, the securities firm shall report within 3 business days from the day on which it becomes aware of the circumstance or on which the circumstance occurs. |
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| Article 53-1 | Unless otherwise provided by the FSC, a securities firm that has made an equity investment in an overseas enterprise(s) as approved by the FSC shall do the following:
1. Submit to the FSC, within 15 days after the end of each quarter, an operations report on the invested overseas subsidiary(ies), including status of operations, revenues and expenditures, and an efficiency assessment.
2. Submit a report on the operational status of the invested overseas enterprise(s) along with the monthly accounting summary.
3. Report basic company information on the invested overseas enterprise(s) through the information reporting system designated by the FSC.
4. Submit other information or documentation as required by the FSC. |
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| Article 54 | Where the overseas subsidiary company invested by the securities firm invests in another institution or where the institution invested by the overseas subsidiary company sub-invests in another institution, if such investment has constituted the substantial controlling and subordinating relationship as regulated under the Chapter governing related enterprises of the Company Act, unless otherwise provided by the FSC, a report shall be made to the FSC for approval before proceeding with the investment.
For the investment of the preceding paragraph that has been approved by the FSC, within 10 days after the actual investment, the related documents shall be provided to the FSC for recordation.
Securities firms investing in overseas enterprises according to paragraph 1 above, may submit the management rules for the foreign invested enterprises required under subparagraph 5 of Article 51 and subparagraph 5 of Article 52 along with the documents referred to in the preceding paragraph to the FSC for recordation within 10 days after the actual investment. |
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| Article 55 | An overseas subsidiary of a securities firm may not further invest in any securities-related enterprise in the Republic of China (ROC). |
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| Article 56 | The means by which a securities firm investing in a foreign enterprise may put up the capital are limited to the following:
1. Outward remittance.
2. Net profit or other benefits obtained from outward investment.
3. Remuneration or other benefits obtained from outward technical cooperation. |
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| Article 57 | (deleted) |
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| Article 58 | After the securities firm has been approved and invested in foreign enterprises, within 5 days after receiving documents concerning outward remittance of capital, or the registration or any change in the registration of the invested foreign securities enterprises, these documents shall be reported to the FSC for recordation. |
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