| Article 25 | When any of the circumstances below applies to a client, at market opening on the business day on which disposal is required, the securities firm shall, through the Money Lending Default Handling Account opened with another securities broker, dispose of the respective collateral and supplementary collateral on the TWSE centralized exchange market or through the TPEx Securities market trading system, with the exception of central book-entry bonds, municipal bonds, common corporate bonds and financial bonds, which may be subject to price negotiation and trading with the bond dealers at the place of business. If an order to dispose of the collateral is not executed, it shall continue to be quoted on the next business day, and the related processing fees and tax shall be borne by the client, unless the parties agree otherwise.
- Repayment has not been made at the expiration of the financing period.
- The loan has not been repaid pursuant to Article 19.
- A collateral shortfall has not been covered pursuant to Article 20.
- Replacement of securities or other commodities has not been made pursuant to Article 23.
Where a securities firm disposes of collateral pursuant to the preceding paragraph and the proceed from such disposal is insufficient to offset the debt, it shall notify the client to cover the shortfall on the next business day. If the client fails to do so, the securities firm may dispose of the collateral and supplementary collateral provided by that client up to the amount required to repay the debt. If any surplus remains, it shall be returned to the client; if any shortfall remains, the client shall be notified to repay it within a prescribed time period. However, the securities firm and the client may agree as otherwise.
Before a case of a default or violation under the preceding paragraph is closed, the customer may have the collateral and supplementary collateral it provided sold by the securities firm through the Money Lending Default Handling Account opened with another securities broker to repay the loan.
Where the registration of an overseas Chinese or a foreign national has been cancelled by the TWSE or the TAIFEX, the securities firm, after receiving notice of such cancellation, may not accept such customer's request for new loan transactions, and shall notify such customer to close out any loan transactions, and terminate the loan contract after the closeout.
The Money Lending Default Handling Account set forth in Paragraph 1 may be together used with the Money Lending Default Handling Account prescribed under Article 27, paragraph 1 of the Operating Rules for Securities Business Money Lending by Securities Firms.
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| Article 26 | If the client is in any of the following situations, the securities firm shall terminate the non-restricted purpose loan contract:
- Where a shortfall still exists after the securities firm has disposed of collateral pursuant to paragraph 2 of the preceding article, the securities firm shall notify the customer to make repayment within a time limit. Customer's failure to make repayment constitutes a violation, and the securities firm shall file a report with the TWSE or TPEx. The TWSE or TPEx shall promptly forward notice to all securities finance enterprises and securities firms
- There is other breach or violation to the other contract between the client and the securities firm.
When any of the circumstances in paragraph 1 of the preceding Article applies to a client, in addition to taking the measures set out in that paragraph, the securities firm may collect a default penalty equal to 10% of the stipulated financing interest rate from the day repayment is overdue until the date of repayment.
If a client's non-restricted purpose loan contract is terminated by the securities firm due to a violation specified in paragraph 1, the securities firm may not enter into any new financing contract with that client until the obligation has been settled in full.
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