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Chapter Content

Title:

Operating Rules for Securities Firms Handling Non-Restricted Purpose Loan  CH

Amended Date: 2021.04.01 
Categories: Securities Exchange Market > Borrowing of Money
   Chapter II Execution and Termination of Contract
Article 10    After receiving a client's application, a securities firm conducting non-restricted purpose loans may conduct such loan only after examining the client's credit and executing non-restricted purpose loan contract with the client.
    Securities firm's entering into non-restricted purpose loan contract with its client under the preceding paragraph shall be conducted according to the following rules:
  1. If the client is domestic natural person, he/she shall, in person, present his/her original ID card and related document proving his/her income and assets.
  2. If the client is domestic juristic person, the authorized person shall submit power of attorney, the original ID cards of the authorized person and the representative of such juristic person, the original copy of the corporate registration (or change of registration) card, and its original certification of incorporation.
  3. When onshore overseas Chinese and foreign natural person entering into non-restricted purpose loan contracts, he/she shall obtain an identity number and submit an application along with related document proving his/her income and assets to securities firm according to the following rules:
    1. Onshore overseas Chinese and foreign natural person: Passport and Overseas Compatriot Identity Certificate (or Alien Resident Certificate).
    2. Foreign Institute Investor: Company registration certificate filed with the domestic competent authority and ID (or Alien Resident Certificate or passport) of the responsible person.
  4. A client who is not an Insider under Article 6, paragraph 3 shall submit a statement.
    The copies of the identity verification documents, juristic person registration (change of registration) card, and the original copy of the Power of Attorney referred to in the preceding paragraph shall be retained by the securities firm, the copies shall be stamped with the wording "It has been reviewed and confirmed that this person or the authorized person did apply for the loan in person, and this is a true and faithful copy of the original".
    When accepting application of applicant who meets the conditions in paragraph 2 for entering into non-restricted purpose loan contract, a securities firm may handle by correspondence or electronic means that the securities firm can sufficiently identify the client as the applicant him/her/itself and confirm his/her/its expression of intent.
    The template of non-restricted purpose loan contract will be drafted by Taiwan Securities Association and submitted to the competent authority for record.
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Article 11    A securities firm shall decide the credit limit that may be extended to its client according to the credit investigation result under Article 3. If a client already has a line of credit approved by the securities firm for other credit extension business before signing the non-restricted purpose loan contract, the credit limit and the already approved line of credit shall be calculated in the aggregate and the proof of assets provided by the client shall reach at least 30% of the amount of the total aggregate credit line. After entering into the non-restricted purpose loan contract, any line of credit that the client applies for under any other credit extension business at the securities firm 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 means proof of income and various assets provided by the client for the past one year.
    The proof of assets of the first paragraph shall consist of only the following papers and documents of the client or the client's spouse, parents, or adult children.
  1. Photocopy of certificate of ownership, transcript of the registration, or tax return for real property. The securities firm shall calculate the value of the real property after checking whether there are encumbrances on the real property.
  2. Documentary evidence of deposits at a financial institution (such as a certificate of deposit balance, bankbook, or certificate of deposit). The basis of calculation will be the average balance for the past month.
  3. Documentary evidence of securities holdings.
  4. Documentary evidence of deposit balance in a gold account issued by a financial institution (such as a gold account passbook, or a certificate of balance for gold passbook or gold account).
  5. Documentary evidence of trust assets in a money trust, a securities trust, or a real estate trust issued by a trust enterprise (such as a reconciliation statement, list of trust assets, or certificate of trust assets). Both the trustor and the beneficiary of the trust must be the client, and trust assets may only consist of real estate, deposits at financial institutions, securities, and the balance in a gold account at financial institutions.
    If the client provides proof of financial assets not owned by the client, the actual owner of the assets must be a joint and several guarantor of the client.
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Article 12    A securities firm that conducts non-restricted purpose loan business shall set up a separate account ledger for each client and record the matters listed below on a transaction-by-transaction basis:
  1. Matters regarding the loan, including financing purpose, financed amount, etc.
  2. Type of financing collateral.
  3. Collateral calls and disposal of collateral.
    A securities firm shall prepare and deliver to the client a monthly reconciliation statement based on the account ledger records of the preceding paragraph, provided that this requirement shall not apply where there is no record of any transaction in that month, and the client has not submitted a written request for such statement.
Article 13    A client shall notify the securities firm if there is a change to the name or ID number, VAT number, juristic person uniform number of the client itself, its agent, or representative, or to the mailing address, recorded on its non-restricted purpose loan contract in writing or by correspondence or electronic means that is sufficient to identify the client as the principal itself and confirm its indication of intent agreed by both parties, which shall be clearly stated in the non-restricted purpose loan contract.
Article 14    Notice of matters by a securities firm as required under these Operating Rules shall be effected by mail or personal signature confirming of the receipt by the client, or subject to the consent of the client, be effective by correspondence or electronic means and such notification methods shall be clearly stated in the non-restricted purpose loan contract.
    Where a securities firm's notice sent by mail cannot be delivered on time because the client fails to make notice under the preceding article, or due to other reason attributable to the client, such notice shall be deemed effective on the date of the post office's first delivery attempt.
    Where the client signs in person to acknowledge receipt of a securities firm's notice, the client's signature or seal shall match the signature on the original non-restricted purpose loan contract or the original seal/signature-of-record and shall be accompanied by the date.
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Article 15    To terminate a non-restricted purpose loan account, a client shall fill out an "application for termination of the non-restricted purpose loan account". After checking and confirming that all the collaterals and loans have been settled, the securities firm shall agree to carry out account cancellation procedures.