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Operating Rules for Securities Business Money Lending by Securities Firms  CH

Amended Date: 2021.04.01 (Articles 19 amended,English version coming soon)
Current English version amended on 2020.12.31 
Categories: Securities Exchange Market > Borrowing of Money
   Chapter II Signing of a Financing Contract and Account Management
Article 9    A securities firm conducting securities business money lending, when processing a customer's application, may commence such lending only after reviewing that customer's credit and agreeing to sign a loan contract with that customer.
    The securities firm's signing of a loan contract with a customer under the preceding paragraph shall be conducted in accordance with the following provisions:
  1. A customer that is a domestic natural person shall present, in person, the original of their national ID card and submit relevant documents to verify their income and assets.
  2. A customer that is a domestic juristic person shall have its authorized person submit a power of attorney, the original national ID cards of customer's authorized person and representative, the customer's original corporate registration (or registration amendment) card, and its original certification of incorporation.
  3. An onshore overseas Chinese or foreign national intending to sign a loan contract shall obtain an ID number and submit an application to the securities firm accompanied by relevant documents verifying their income and assets as well as the documents listed below:
    1. A natural person that is an overseas Chinese or foreign national: passport, and Overseas Compatriot Identity Certificate (or Alien Resident Certificate).
    2. Foreign institutional investor (FINI): Documentation evidencing company registration with the domestic competent authority, and the responsible person's national ID card (or Alien Resident Certificate, or passport).
  4. An offshore overseas Chinese or foreign national intending to sign a loan contract shall have their designated domestic agent or representative obtain an ID number and submit an application to the securities firm accompanied by photocopies of their national ID card or Alien Resident Certificate, or up-to-date documentation of corporate registration (or amendment registration).
    The photocopies of the identity verification documents and corporate registration (or amendment registration) cards and the original power of attorney referred to in the preceding paragraph shall be retained, and those that are photocopied shall be stamped with an official seal bearing the words, "The application is confirmed to have been made in person by the applicant or by the applicant's authorized person; this is a true and faithful copy of the original."
    Where the conditions for application in the second paragraph are met, a securities firm may accept an application of a client for signing a loan contract, by correspondence or electronic means that is sufficient to identify the client as the applicant itself or its indication of intent, if a transaction account has been opened.
    The Taiwan Securities Association shall draft a template loan contract referred to in paragraph 1.
Article 9-1     The securities firm shall approve the financing limit that may be extended to a customer based on the results of the credit investigation under Article 4. If any customer, prior to entering into a loan contract, has had an application for a line of credit approved under any other credit extension business conducted by the securities firm, the financing limit and the already approved line of credit shall be calculated in the aggregate, and the proof of assets provided by the customer shall be at least 30 percent of the amount of the total aggregate credit line. Any line of credit that the customer applies for under any other credit extension business at the securities firm after entering into the loan contract shall be calculated as part of the aggregate.
     The proof of assets that shall be provided for the customer's total aggregate line of credit under the preceding paragraph shall mean documentary proof of income and all types of assets within the preceding year provided by the customer.
     The proof of income and assets under paragraph 1 shall be limited to the following paper or document of the customer or his or her spouse, parent or adult child:
  1. Photocopy of a certificate of ownership, registration records, or a tax return for real property. The securities firm shall also perform a check of whether there are other encumbrances on the real property and calculate its value.
  2. Documentation of deposits with a financial institution (e.g. certificate of deposit balance, passbook, certificate of deposit). The basis of calculation shall be the average balance within the past month.
  3. Proof of holdings in securities.
  4. Documentation of deposit balance in a gold account issued by a financial institution (e.g. a gold passbook or the certificate of balance for the gold passbook or gold account).
  5. Documentary proof of trust property for money trust, securities trust, or real property trust issued by a trust enterprise (e.g., a reconciliation statement, list of trust assets, or certificate of trust property). Both the trustor and the beneficiary of the trust must be the customer, and the trust property may consist only of real property, deposits at financial institutions, securities, and the balance of a gold account at a financial institution.
    When the customer is not the owner of assets shown on the provided proof of assets, the owner of the assets shall be a joint and several guarantor.
Article 10    A securities firm conducting securities business money lending shall set up a separate account for each customer, and make itemized entries for all relevant transaction matters:
  1. Details of loans.
  2. Financing collateral.
  3. Collateral calls and disposal of collateral.
    The securities firm shall prepare a reconciliation statement each month based on the account entry records of the preceding paragraph and deliver it to the customer, provided that this requirement shall not apply when there is no recorded transaction for the given month, and the customer has not requested such statement in writing.
Article 11    The customer shall notify the securities firm in writing whenever there is a change in the name, national ID number, ID number of the Overseas Compatriot Identity Certificate or Alien Resident Certificate, uniform ID number of the juristic person, address, or mailing address of the customer, agent, or representative recorded in the loan contract.
Article 12    Notice of matters by a securities firm to its customer as required under these Operating Rules shall be effected by mail or signed for in person by the customer.
    Where the securities firm's notice sent by mail is not delivered on time due to the customer's failure to give notice under the preceding article, or some other reason attributable to the customer, the notice shall be deemed effective from the day of the first delivery attempt by the post office.
    Where the customer signs in person to acknowledge receipt of a securities firm's notice, the customer's signature or seal shall match the signature on the original loan contract or the original seal/signature-of-record, and shall be accompanied by the date.