Section II Membership Stock Exchange |
| Article 103 | A membership stock exchange is a non-profit association. Except as provided in this Act, a membership stock exchange shall be governed by the provisions of the Civil Code.
The members of a stock exchange referred to in the preceding paragraph shall be limited to securities dealers and securities brokers. |
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| Article 104 | The number of members of a membership stock exchange shall be no less than seven. |
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| Article 105 | The articles of association of a membership stock exchange shall contain the following particulars:
1. Objectives.
2. Name.
3. Location of the head office and the location of the centralized securities exchange market established by it.
4. Matters concerning eligibility for membership.
5. Matters concerning the number of memberships.
6. Matters concerning the discipline of members.
7. Matters concerning the membership contributions to the stock exchange.
8. Matters concerning applications for withdrawal from membership by members.
9. Matters concerning the directors and the supervisors.
10. Matters concerning meetings.
11. Matters concerning member deposits and the settlement and clearing fund.
12. Matters concerning the apportionment of membership expenses.
13. Matters concerning the execution of business.
14. Matters concerning the disposal of residual assets upon dissolution.
15. Matters concerning accounting.
16. Method of public announcement.
17. Any other matters as required by the Competent Authority. |
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| Article 106 | (deleted) |
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| Article 107 | A member may apply for withdrawal from membership in accordance with the articles of association or for any of the following reasons:
1. The member has lost its membership qualifications.
2. The corporate member dissolves or its company license is voided.
3. The member is expelled from the stock exchange. |
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| Article 108 | A member shall deposit with the stock exchange a contribution to the settlement and clearing fund and pay securities transaction charges in accordance with the provisions of the articles of association. |
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| Article 109 | A member shall provide membership contributions in accordance with the provisions of the articles of association. Except for sharing the membership expenses in accordance with the provisions of the articles of association, a member's liability to the stock exchange shall be limited to the amount of its membership contribution. |
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| Article 110 | If any of its members commit the following acts, the membership stock exchange shall impose upon the member a monetary penalty and may warn, suspend or restrict such member from trading securities on the centralized securities exchange market or may expel the member:
1. Violation of a law or regulation or administrative disposition made pursuant thereto.
2. Violation of the articles of association, business rules, brokerage contract regulations, or other rules of the stock exchange.
3. Violation of the principles of integrity and good faith in trading, sufficient to cause damage to another.
The provisions of the preceding paragraph shall be prescribed in the articles of association. |
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| Article 111 | If a membership stock exchange expels a member pursuant to the preceding Article, it shall report the expulsion to the Competent Authority for its approval. If the expulsion of the member is approved, the Competent Authority may withdraw the member's special permission for securities firm businesses. |
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| Article 112 | When any member withdraws from membership or is suspended from trading, the membership stock exchange shall, in accordance with the articles of association, require that member or designate another member to wind up and liquidate its trades on the centralized securities market. The member shall be deemed to have not yet withdrawn from membership or been suspended from trading within the scope of winding up and liquidating the trades.
When another member is designated to wind up and liquidate trades under the preceding paragraph, a mandate contract relationship is deemed to exist between the withdrawing member and the designated member within the scope of the purposes of winding up and liquidating the trades. |
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| Article 113 | A membership stock exchange shall have at least three directors and one supervisor elected from among its members in accordance with the provisions of the articles of association. However, at least one-third of the directors and at least one supervisor shall be elected from related experts who are non-members.
The term of office of both directors and supervisors shall be three years. Successive terms in office are permissible upon re-election.
The directors shall organize a board of directors and shall elect the chairman of the board from among the non-member directors with the approval of the majority of the directors.
The board chairman shall serve on a full-time basis. However, this restriction shall not apply if the stock exchange has assigned another managerial officer vested with full authority to take charge of operations.
Standards and regulations governing the election of non-member directors and supervisors, as referred to in paragraph 1, shall be prescribed by the Competent Authority. |
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| Article 114 | The provisions of Article 53 shall apply mutatis mutandis to directors, supervisors, or managerial officers of a membership stock exchange.
The violation of the provisions of the preceding paragraph by any director, supervisor, or managerial officer shall result in their automatic discharge. |
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| Article 115 | The directors, supervisors, or managerial officers of a membership stock exchange shall not serve concurrently as a director, supervisor, or managerial officer of another stock exchange. |
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| Article 116 | A member director's or supervisor's representative, a non-member director, or any other employee of a membership stock exchange is prohibited from trading securities on the stock exchange for themselves under any name, whether on their own or by appointing any other person.
The persons referred to in the preceding paragraph are prohibited from providing funds to, sharing profits or losses with, or being involved in any other business interests with members of that stock exchange. However, this restriction shall not apply to the representatives of member directors or supervisors who perform such acts on behalf of the members they represent. |
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| Article 117 | In the event that the Competent Authority finds that any director or supervisor of the stock exchange was improperly elected or any director, supervisor, or managerial officer has violated any law or regulation, the articles of association, or an administrative disposition issued pursuant to law or regulation, the Competent Authority may notify the stock exchange to discharge such persons. |
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| Article 118 | Unless otherwise provided in this Act, the provisions of the Company Act relating to directors, supervisors, or managerial officers shall apply mutatis mutandis to the directors, supervisors, or managerial officers of a membership stock exchange. |
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| Article 119 | Except as set out in the following subparagraphs, a membership stock exchange shall not utilize the settlement and clearing fund in any manner unless otherwise approved by the Competent Authority:
1. Purchase of government bonds.
2. Deposit in banks or saving deposits with the postal administration. |
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| Article 120 | The directors, supervisors, or employees of a membership stock exchange shall not disclose confidential information relating to securities trades. |
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| Article 121 | The provisions of this section relating to directors and supervisors shall apply mutatis mutandis to the representatives of member directors and supervisors. |
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| Article 122 | A membership stock exchange shall be dissolved upon the occurrence of any one of the following causes:
1. Occurrence of any cause of dissolution specified in the articles of association.
2. Resolution of the general meeting of members.
3. The number of members falls to less than seven.
4. Bankruptcy.
5. Voidance of the permission for the establishment of the stock exchange.
Dissolution under subparagraph 2 of the preceding paragraph shall not become effective without approval by the Competent Authority. |
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| Article 123 | The qualifications of, and the dismissal of associated persons employed by a membership stock exchange shall be governed mutatis mutandis by the provisions of Articles 54 and 56. |
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