Chapter II Finances and Business |
| Article 10 | Within 3 months after the end of each fiscal year, a securities firm shall file with the TPEx the annual financial reports audited and attested by CPAs.
A securities firm shall, by the 7th day of each month, submit to the TPEx a monthly accounting summary for the preceding month.
The period for which a securities firm keeps its account books and relevant source documents, vouchers, ledgers and statements, and contracts shall comply with the Business Entity Accounting Act, and also shall be subject mutatis mutandis to the Required Periods for Preservation of Accounting Statements and Vouchers by Securities Firms Trading on the TPEx.
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| Article 11 | In the case of a securities firm that conducts only equity crowdfunding business, the total amount of the securities firm's external liabilities may not exceed its net worth.
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| Article 12 | In the case of a securities firm that conducts only equity crowdfunding business, the securities firm's funds not required for business operation may not be loaned to other persons or used for other purposes.
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| Article 13 | In the case of a securities firm that conducts only equity crowdfunding business, the securities firm may not make any investment in any other enterprise, provided that this restriction does not apply to a securities firm participating in subscribing to stock of a company conducting equity crowdfunding on the securities firm's crowdfunding platform.
In the case of a securities firm that conducts only equity crowdfunding business, if the securities firm participates in subscribing to stock of a company conducting equity crowdfunding on the securities firm's crowdfunding platform pursuant to the preceding paragraph, it shall comply with the following:
- The total shares that it holds in any one company may not exceed 10 percent of the total shares of that company; furthermore the total cost of the shares that it holds in any company and that it holds in all companies respectively may not exceed 20 percent and 40 percent of the securities firm's net worth.
- The securities firm, with respect to its investment positions, shall adopt mechanisms for pre-investment decision making, post-investment management, and risk assessment.
In the case of a securities firm that conducts only equity crowdfunding business, if the securities firm participates in subscribing to stock of a company conducting equity crowdfunding on the securities firm's crowdfunding platform pursuant to the preceding two paragraphs, the counterparties to which the securities firm may subsequently transfer the stock shall be limited to investors who have previously participated in subscribing to stock of that crowdfunded company and institutional angels.
The term "institutional angel" in the preceding paragraph means an investor who meets any of the following conditions:
- A professional institutional investor, which means a domestic or foreign bank, insurance company, bills finance company, securities firm, fund management company, government investment institution, government fund, pension fund, mutual fund, unit trust, securities investment trust enterprise, securities investment consulting enterprise, trust enterprise, futures commission merchant, futures service enterprise, or other institution approved by the competent authority.
- A juristic person or fund that has shareholders equity exceeding NT$50 million according to its latest CPA-audited or reviewed financial report, and that has established a dedicated investment unit; however, the financial report of a juristic person outside of the Republic of China need not be CPA-audited or reviewed.
- A trust enterprise that has entered into a trust agreement with a settlor who meets the conditions set forth in the preceding two subparagraphs.
- A venture capital enterprise duly established in accordance with law.
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| Article 14 | A securities firm shall establish a single crowdfunding platform devoted exclusively to the operation of equity crowdfunding business.
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| Article 15 | A securities firm conducting equity crowdfunding business is prohibited from any of the following conduct:
- Accepting an equity crowdfunding application from a company that will use the funds for any controversial purpose such as purposes that violate laws or regulations or public order or good morals.
- Keeping custody of or using an investor's funds or securities.
- Any agreement between the securities firm or insiders thereof and the company or relevant personnel thereof for purposes of improper profit.
- The securities firm or insiders thereof serving as a director, supervisor, or managerial officer at the company operating equity crowdfunding on the securities firm's crowdfunding platform.
- Concealing or omitting important financial or business information of a company that conducts equity crowdfunding on its crowdfunding platform.
- Conducting equity crowdfunding for a company through a channel other than its crowdfunding platform.
- Providing a secondary market for trading of the stock of a company at the place of business of the securities firm.
- Any other matter injurious to the rights and interests of investors or in violation of any relevant law or regulation.
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| Article 15-1 | A securities firm conducting equity crowdfunding business may recommend only to institutional angels a company conducting equity crowdfunding on the securities firm's crowdfunding platform.
When making a recommendation to a specific customer of a subscription to the stock of a company under paragraph 1, the securities firm shall fully know and evaluate the customer's investment knowledge, investment experience, financial status, and degree of investment risk tolerance.
Before recommending a subscription to the stock of a company under paragraph 1, the securities firm shall first appoint an associated person to be responsible for explaining to the customer the potential risks of the recommended subscription to the stock of a company under paragraph 1.
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| Article 15-2 | A securities firm may not do any of the following when recommending to a customer a subscription to the stock of a company under Article 15-1, paragraph 1:
- Cite any information that contains any misrepresentation, falsehood,
concealment, or otherwise could cause mistaken confidence on the part of others.
- Guarantee specific outcomes on recommended stock.
- Fail to clearly inform or indicate that information provided is a forecast.
- Fail to base recommendations on research reports.
- Use results of past recommendations in promoting its recommendation business.
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| Article 15-3 | When a securities firm recommends to a customer a subscription to the stock of a company under Article 15-1, paragraph 1, it may issue under its own name research reports that it has prepared itself or outsourced, and shall disclose any relevant conflicts of interest of the securities firm or of the persons who wrote or reviewed the research report.
A research report referred to in the previous paragraph shall be written or reviewed by a qualified securities investment analyst of a securities investment consulting enterprise or by a qualified senior associated person registered with the TPEx.
The researchers of a securities firm, prior to the release of a research report, may not discuss the content of the report with anyone outside of the research department, except for necessary discussions with the reviewing department during the research report review procedures.
The securities firm's performance evaluation method for the researchers may not affect the independence of the researchers.
When a securities firm recommends to a customer a subscription to the stock of a company under Article 15-1, paragraph 1, it shall, after having the research report signed by the responsible person of the securities firm or the head of the authorized and responsible department, have the recommendations thereunder made by an associated person.
Before making any oral recommendation to a customer, securities firm personnel handling recommendation business shall have a full understanding of the relevant research reports.
When a securities firm distributes research reports in print or delivers them directly to the customer through a system or network under the name of the securities firm, it shall clearly indicate the author, the name of the securities firm, and the date of the information, and furthermore shall add the following notations: "This recommendation material is for reference only. Investors should carefully consider their own investment risks and take sole responsibility for the outcome of their investments." and "May not be reprinted without permission."
If the media requests consent from the securities firm to reprint or report content from the research report, the content for which the securities firm gives consent for reprinting or reportage may not involve any forecasts of information such as the company's value, finances, or business.
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| Article 15-4 | When a securities firm recommends to a customer a subscription to the stock of a company under Article 15-1, paragraph 1, it shall retain a record, and shall keep the record at its place of business.
A securities firm shall retain records referred to in the previous paragraph for no less than 2 years; provided, if there is any dispute, it shall retain them until the dispute is eliminated.
After a securities firm recommends to a customer a subscription to the stock of a company under Article 15-1, paragraph 1, the relevant research reports shall be retained for at least 5 years; provided, if there is any dispute, it shall retain them until the dispute is eliminated.
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| Article 15-5 | A securities firm may engage in advertising and business solicitation activities to promote subscription by investors to stock of companies conducting equity crowdfunding on the securities firm's crowdfunding platform. It furthermore shall comply with the relevant provisions of the Regulations Governing Advertising, Business Solicitation, and Business Promotional Activities by Financial Service Enterprises and the Taiwan Securities Associations Rules Governing Advertising, Business Solicitation, and Business Promotional Activities by Members. However, the content of advertising and business solicitation activities may not involve any forecasts of information such as the company's value, finances, or business.
"Public Seminars and other Business Activities" mentioned herein refers to the promotion or solicitation of business through workshops, seminars, presentations, or any other business activity, If a securities firm holds any public activity such as an on-site workshop, seminar, or presentation, or on-site exhibition, it further shall audio- and video-record the activity from beginning to end, and retain the recordings for no less than 5 years; provided, if there is any dispute, it shall retain them until the dispute is eliminated.
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| Article 15-6 | A securities firm may apply to concurrently operate a securities investment consulting enterprise to conduct securities investment consulting business pursuant to Article 10 of the Standards Governing the Establishment of Securities Investment Consulting Enterprises. The department heads and associated persons of the securities investment consulting enterprise shall furthermore satisfy the qualification requirements set out in the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises. However, the subject matter about which the securities investment consulting enterprise may consult shall be limited to the stocks of companies conducting equity crowdfunding on its crowdfunding platform.
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| Article 16 | A securities firm shall keep confidential all secrets with respect to a company's finances and business that it knows during the process of equity crowdfunding, provided that this rule does not apply in cases in which disclosure is required by law or regulation, or request of the competent authority, or consented to by the parties.
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| Article 17 | A securities firm's collection, use, or provision for use by the competent authority and the TPEx, of the personal information of investors participating in equity crowdfunding shall comply with the Personal Information Protection Act.
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