Chapter VI Management Of Regulatory Capital
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Section 1 (Deleted)
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| Article 59 | A securities firm, unless concurrently operated by a financial institution and subject to other laws or regulations, shall maintain an appropriate ratio between its regulatory capital and its operational risk equivalent amount, except as approved by the FSC.
The appropriate ratio referred to in the preceding paragraph is called the regulatory capital adequacy ratio and its calculation method is the net amount of eligible regulatory capital divided by the operational risk equivalent amount.
For those foreign securities firms having Taiwan branches, if their home-country head office have already calculated their regulatory capital adequacy ratio under their local laws with the operational risk of their Taiwan branch office already entered into the calculation, and have met the standard, they may send those documents and information relating to the regulatory capital adequacy ratio which have met the standard to the FSC to apply for a waiver of application of the provisions in this Chapter. However, unless specifically approved by the FSC, a monthly report on the head offices' regulatory capital adequacy ratio shall still be reported in accordance with Article 21, paragraph 4. |
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| Article 59-1 | The calculation of the net amount of eligible regulatory capital and the operational risk equivalent amount of the regulatory capital adequacy ratio as referred to in paragraph 2 of the preceding article is categorized into a simple calculation method and an advanced calculation method.
The securities firms to which the advanced calculation method for the regulatory capital adequacy ratio under the preceding paragraph applies, and the implementation date, shall be prescribed by the FSC. |
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Section 2 (Deleted)
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| Article 60 | (Deleted) |
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| Article 61 | (Deleted) |
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| Article 62 | (Deleted) |
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Section 3 (Deleted)
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| Article 62-1 | (Deleted) |
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| Article 62-2 | (Deleted) |
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| Article 62-3 | (Deleted) |
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| Article 62-4 | (Deleted) |
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| Article 62-5 | (Deleted) |
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| Article 62-6 | (Deleted) |
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| Article 62-7 | (Deleted) |
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Section 4 (Deleted) |
| Article 63 | Securities firms, with the exceptions of those concurrently operated by financial institutions and of foreign securities firms who have obtained FSC approval for waiver of this Chapter's regulations, shall fill out the Itemized Statement of the Regulatory Capital Adequacy of the Securities Firm monthly in accordance with the applicable calculation method, and by the 10th of the next month, report it according to the method prescribed in Article 21, paragraph 4. When necessary, the FSC also may require securities firms to file reports at any time.
The format of the Itemized Statement of the Regulatory Capital Adequacy of the Securities Firm referred to in the preceding paragraph shall be prescribed by the FSC.
In addition to disclosing capital adequacy information of the securities firm pursuant to the requirements of the FSC, the TWSE, or other relevant institutions, a securities firm shall disclose the most recent regulatory capital adequacy ratio information in the annual report. |
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| Article 64 | When the regulatory capital adequacy ratio of a securities firm is at least 120 percent but is less than 150 percent, the FSC may take the following actions:
1. Postpone any additions by the securities firm to its types of operations or business items, any establishment of additional branch offices or simple branch offices, and any equity investment in any securities, futures, financial, or other enterprises.
2. Require the securities firm to strengthen its internal controls and increase the frequency of internal auditing, and within one week of filing the report, submit a concrete, detailed explanation and correction plan to the relevant authorities in accordance with Article 21, paragraph 4.
3. If the capital adequacy ratio has not been corrected by the end of the month preceding any proposal by the board of directors for distribution of profits, in addition to requiring the securities firm to deduct from its undistributed earnings those items required to be set aside according to regulations, it shall further be required to set aside 20 percent as special reserve in accordance with Article 41, paragraph 1 of the Act. |
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| Article 65 | When the regulatory capital adequacy ratio of a securities firm is at least 100 percent but is less than 120 percent, the FSC, in addition to doing as set out in subparagraphs 1 and 2 of the preceding article, additionally may take the following actions:
1. Reduce its scope of business operations.
2. Require the securities firm to fill out and report weekly a securities firm capital adequacy reporting form.
3. If the capital adequacy ratio has not been corrected by the end of the month preceding any proposal by the board of directors for distribution of profits, in addition to requiring the securities firm to deduct from its undistributed earnings those items required to be set aside according to regulations, it shall further be required to set aside 40 percent as special reserve in accordance with Article 41, paragraph 1 of the Act. |
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| Article 66 | When the regulatory capital adequacy ratio of a securities firm falls below 100 percent, the FSC, in addition to doing as set out in Article 64, subparagraphs 1 and 2 and Article 65, subparagraphs 1 and 2 herein, additionally may take the following actions:
1. Deny approval for its application for establishment of any additional branch office or simple branch office.
2. If the capital adequacy ratio has not been corrected by the end of the month preceding any proposal by the board of directors for distribution of profits, in addition to requiring the securities firm to deduct from its undistributed earnings those items required to be set aside according to regulations, it shall further be required to set aside the total amount as special reserve in accordance with Article 41, paragraph 1 of the Act. |
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| Article 67 | Securities firms that have already set aside special reserve in accordance with Articles 64 to 66 for the previous year, when setting aside various special reserves as required for the current year pursuant to relevant regulations, shall include it as part of the undistributed earnings, and then recalculate the special reserve required to be set aside according to the actual condition of the regulatory capital adequacy ratio. |
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