Chapter I General Provisions
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| Article 1 | This Act is enacted for the purpose of promoting the national economic development and the protection of investors. |
| Article 2 | The regulation and supervision of public offering, issuing, and trading of securities shall be governed by this Act; such matters not provided for in this Act shall be governed by the provision of the Company Act and other relevant acts. |
| Article 3 | The term "Competent Authority" as used in this Act means the Securities and Futures Commission under the Ministry of Finance. |
| Article 4 | The term "company" as used in this Act means a company limited by shares organized under the Company Act. |
| Article 5 | The term "issuer" as used in this Act means either a company which publicly offers and issues securities, or promoters who publicly offers securities. |
| Article 6 | The term "securities" as used in this Act shall mean government bonds,corporate stocks,corporate bonds, and any other securities approved by the Ministry of Finance.
Any stock warrant certificate, certificate of entitlement to new shares, and certificate of payment or document of title to any of the securities referred to in the preceding paragraph shall be deemed as securities.
Any securities referred to in the preceding two paragraphs, even without the physical certificate representing title being printed, shall still be deemed as securities. |
| Article 7 | The term "public offer" as used in this Act means the act of offering securities to the general public by the promoters prior to the incorporation of the company, or by the issuing company prior to the issuance of said securities.
The term "private placement" as used in this Act means the act of offering securities to specific persons pursuant to Paragraphs 1 and 2 of Article 43-6 by a public company. |
| Article 8 | The term "issuance" as used in this Act means the act of producing and physical delivery or book-entry transfer of securities by an issuer following its public offer.
Securities delivered by book-entry transfer referred to in the preceding paragraph may be issued without printing physical securities. |
| Article 9 | (deleted) |
| Article 10 | The term "underwriting" as used in this Act means the act of underwriting securities issued by an issuer on a firm commitment or a best efforts basis in accordance with the agreement between the parties. |
| Article 11 | The term "stock exchange" as used in this Act means a juridical person which in accordance with the provisions of this Act establishes premises and facilities for the purpose of providing a centralized securities exchange market. |
| Article 12 | The term "centralized securities exchange market" as used in this Act means a marketplace maintained by a stock exchange for the purchase and sale of securities through a competitive bidding process. |
| Article 13 | The term "prospectus" as used in this Act means an explanatory written statement rendered to the general public in compliance with this Act for the purpose of offering or selling securities. |
| Article 14 | The term "financial reports" as used in this Act means the financial reports prepared by issuers, securities firms, and stock exchanges in compliance with Acts and regulations that are to be filed periodically with the Competent Authority.
The format and standards for the financial reports referred to in the preceding Paragraph shall be prescribed by the Competent Authority. |
| Article 14-1 | Public companies, securities exchanges, securities firms, and enterprises set forth in Article 18 shall establish financial and operational internal control systems.
The Competent Authority may prescribe rules governing internal control systems of companies or enterprises under the preceding paragraph.
A company or enterprise under Paragraph 1 shall file an Internal Control Declaration with the Competent Authority within four months of the close of each accounting year, unless approval otherwise has been granted by the Competent Authority. |
| Article 15 | The securities businesses that may be operated in accordance with this Act are:
1.securities underwriting and other relevant businesses approved by the Competent Authority.
2.Securities dealing and other relevant businesses approved by the Competent Authority.
3.Securities commission agency, brokerage, agency, and other relevant businesses approved by the Competent Authority. |
| Article 16 | Anyone which operates any of the securities businesses specified in the preceding Article shall be a securities firm; securities firms may be categorized into:
1.a "securities underwriter" operates the business specified in Item 1 of the preceding Article.
2.a "securities dealer" operates the business specified in Item 2 of the preceding Article.
3.a "securities broker" operates the business specified in Item 3 of the preceding Article. |
| Article 17 | Approval from or effective registration with the Competent Authority is required for a company to publicly offer and issue securities in accordance with this Act.
Upon the determination by the Ministry of Finance, the public offer provisions of this Act and that of the Company Act shall not be applicable to those companies whose incorporation requires stockholders with special qualifications, or that the scope or the nature of its business is not suitable for investment by the general public. |
| Article 18 | Approval from the Competent Authority is required for the operation of any securities investment trust enterprise, securities finance enterprise, securities investment consulting enterprise, securities depository enterprise, or any other enterprise which operates securities related services.
Rules governing the regulation and supervision of securities enterprises referred to in the preceding Paragraph shall be prescribed by the Executive Yuan. |
| Article 18-1 | The provisions of Article 38, Article 39, and Article 66 of this Act shall apply mutatis mutandis to enterprises referred to in the preceding Article.
The provisions of Article 53, Article 54, and Article 56 of this Act shall apply mutatis mutandis to employees of enterprises referred to in the preceding Article. |
| Article 18-2 | The securities investment trust fund offered by a securities investment trust enterprise, the private property of the said enterprise and the private property of the custodian institution shall be independently maintained. Creditors shall not make any claim or exercise other rights against the assets of the fund to satisfy liabilities incurred by the securities investment trust enterprise or the custodian institution of the fund with respect to its own private properties.
The regulation governing the administration of securities investment trust funds shall be prescribed by the Ministry of Finance. |
| Article 18-3 | The fund for investment with full discretionary authorization received from customers by a securities investment consulting enterprise or securities investment trust enterprise and the private property of the said enterprise shall be independently maintained. Creditors shall not make any claim or exercise other rights against the fund entrusted by customers or the assets purchased with such fund to satisfy liabilities incurred by the securities investment consulting enterprise or securities investment trust enterprise and the custodian institution of the fund with respect to its own private properties.
The regulations governing the administration of the operation of investment business with discretionary authorization from customers by securities investment consulting enterprise or securities investment trust enterprise and the operation bond related thereto shall be prescribed by the Ministry of Finance. |
| Article 19 | All contracts entered into pursuant to this Act shall be in writing. |
| Article 20 | During the public offering, issuing, private placement, or trading of securities, there shall be no misrepresentations, frauds, or any other acts which are sufficient to mislead other persons.
The financial reports or any other relevant business documents filed or publicly disclosed by an issuer shall contain no misrepresentations or omissions.
Anyone who violates the provisions of the preceding two Paragraphs shall be held liable for damages sustained by bona fide purchasers or sellers of the said securities.
The principal who commissions a securities broker to purchase or sell securities as a commission agent shall be deemed as a "purchaser" or "seller" for the purpose of the preceding Paragraph. |
| Article 21 | The rights to claim damages prescribed in this Act shall be extinguished if not exercised within two years from the time the claimant learns of the cause which entitles him the right to claim the said damages, or within five years since the date of the offering, the issuance, or the trading. |
Chapter II The Offering, Issuing, Private Placement, and Trading of Securities
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Section I The Offering, Issuing, and Trading of Securities
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| Article 22 | With the exception of government bonds or other securities exempted by the Ministry of Finance, the public offering or issuing of securities without the approval from or an effective registration with the Competent Authority shall be prohibited. Rules regulating the approval and the registration procedures shall be prescribed by the Competent Authority.
An issuer under this Act shall be required to comply with the preceding Paragraph when it issues new shares pursuant to the provisions of the Company Act, except where the issuance is handled under Article 43-6, Paragraphs 1 and 2.
The provisions of Paragraph 1 shall apply mutatis mutandis to a holder of corporate stocks, corporate bonds, certificates of payment for, or documents of title to stocks or bonds, stock warrant certificates, or certificates of entitlement to new shares, who publicly offers to resell his/her securities to the general public. |
| Article 22-1 | In the issuance of new shares to increase the capital by an issuer under this Act, the Competent Authority may prescribe the shareholding dispersal standards.
The guidelines governing the processing of securities matters by an issuer shall be prescribed by the Competent Authority. |
| Article 22-2 | The transfer of stocks by the directors, supervisors, managers, or shareholders holding more than ten percent of the total shares of an issuer under this Act shall be effected in accordance with any of the following methods:
1.an offering to the public following approval from or an effective registration with the Competent Authority.
2.to transfer, at least three days following registration with the Competent Authority, on a centralized exchange market or an over-the-counter market, shares that have satisfied the holding period requirement and within the daily transfer allowance ratio prescribed by the Competent Authority. However, this requirement shall not apply to transfers totaling less than 10,000 shares per exchange day.
3. to transfer, within three days following registration with the Competent Authority, by means of private placement to designated persons satisfying the qualifications prescribed by the Competent Authority.
The resale of securities within one year of their initial acquisition by persons which acquired the said shares by means of a private placement under Item 3 of the preceding Paragraph shall be effected only in compliance with the methods specified in the preceding Paragraph.
The calculation of shares held by shareholders referred to in Paragraph 1 shall include those shares held under the names of their spouses, minor children, and those held under the name of other parties. |
| Article 23 | The transfer of stock warrant certificates shall be effected during the time period the option of the original warrant holder remains effective. |
| Article 24 | Where an issuer issues new shares in accordance with this Act, any of its previous shares not issued in accordance with this Act shall be deemed as having been issued in accordance with this Act. |
| Article 25 | Upon registering the public issuance of its shares, a company shall file with the Competent Authority and announce to the public the class and numbers of the shares held by its directors, supervisors, managers, and shareholders holding more than ten percent of the total shares of the company.
The stockholders referred to in the preceding Paragraph shall file, by the fifth day of each month, a report with the issuer of the changes in the number of shares they held during the preceding month. The issuer shall compile and file such report of changes with the Competent Authority by the fifteenth day of each month. The Competent Authority may order an issuer to make public announcement of such information should it deem the measure necessary.
The provisions of Paragraph 3 of Article 22-2 shall apply mutatis mutandis to the calculation of shareholding referred to in the preceding two Paragraphs of this Article.
When the shares referred to in the first Paragraph hereof are pledged, the pledgor shall make immediate notification to the issuer; the issuer shall inform the Competent Authority of such pledges within five days of their formation, and publicly announce such pledge. |
| Article 25-1 | The use of proxies for the attendance of a shareholders meeting of an issuer shall be restricted, enjoined, and regulated; the rules governing such matters shall be prescribed by the Competent Authority.
The use of proxies in violation of rules referred to in the preceding Paragraph shall result in the exclusion of the votes that such proxies represent. |
| Article 26 | The total shares of nominal stocks held by the entire body of either directors or supervisors of an issuer shall not be less than a specified percentage of its total issued shares.
The rules regulating the minimum percentage to be held by the directors and supervisors referred to in the preceding Paragraph, and the examination of such holding shall be prescribed by an order from the Competent Authority. |
| Article 26-1 | In convening a shareholders meeting, an issuer under this Act shall specify, with explanation of the material contents, in the notice of shareholders meeting where there are proposals relating to Paragraph 1 of Article 209, Paragraph 1 of Article 240, and Paragraph 1 of Article 241 of the Company Act. Extraordinary motions regarding such proposals shall be prohibited. |
| Article 26-2 | The notice of the shareholders meeting to be given by an issuer to shareholders who own less than 1,000 shares of nominal stocks may be given in the form of a public announcement; for a regular shareholders meeting, such public announcements shall be served with thirty days prior notice, and for a special shareholders meeting with fifteen days prior notice. |
| Article 27 | The minimum or the maximum values for each share of publicly issued stocks shall be determined by the Competent Authority. The value of stocks issued prior to such a determination shall be its original value; the value of stocks newly issued for capital increases shall be determined in like manner.
A company shall report any modification of its share issue price to the Competent Authority. |
| Article 28 | In the event that public investment is desirable for the business engaged in by a company, the Ministry of Finance may issue an order requiring that a certain percentage of its equity securities shall be reserved for the subscription by promoters, and the remaining shares of the issue shall be offered to the public; in case the publicly offered shares are insufficiently subscribed, they shall be subscribed by the promoters. Further, the Competent authority may require that the small-volume subscribers shall have the rights to preferential subscription.
With the exception of the equity capital increases through reinvestment of the legal reserve or other reserve funds, the preceding Paragraph shall apply mutatis mutandis to the issuance of new shares by an incorporated company. |
| Article 28-1 | For public companies whose stocks are neither listed on a stock exchange nor traded on the over-the-counter market, and whose ownership dispersal failed to meet the standards prescribed by the Competent Authority pursuant to Paragraph 1 of Article 22-1, the Competent Authority may require a certain percentage of its new issues to be publicly offered, unless such a public offering is deemed to be unnecessary or inappropriate by the Competent Authority; the provisions of Paragraph 3 of Article 267 of the Company Act which allows the original shareholders the rights to priority subscription to new issues shall not be applicable.
In cash offering of new shares by a public issued company whose stocks are either listed on a stock exchange or traded on the over-the-counter market, the Competent Authority may require a certain percentage of its new issues to be offered at the market value to the public; in such circumstance, the provisions of Paragraph 3 of Article 267 of the Company Act which allows the original shareholders the rights to priority subscription to new issues shall not be applicable.
The percentage referred to in the preceding two paragraphs shall be ten percent of the total shares newly issued. The ten percent requirement shall be precluded in case a higher percentage has been so determined by a resolution of the shareholders meeting.
The value of the shares publicly offered in compliance with Paragraphs 1 and 2 and the value of the shares in the same issue reserved for subscription by the employees and original shareholders shall be identical. |
| Article 28-2 | In any of the following situations, a company whose stocks are either listed on a stock exchange or traded on the over-the-counter market may, upon the approval of a majority of the directors present at a directors meeting attended by two-thirds or more of directors, buy back its shares from the centralized securities exchange market or over-the-counter market or in accordance with Paragraph 2 of Article 43-1, without being subject to the provisions of Paragraph 1 of Article 167 of the Company Act:
1. Where the buyback is for transferring shares to its employees;
2. Where the buyback is for equity conversion in coordination with the issuance of corporate bonds with subscription right, special shares with subscription right, convertible corporate bonds, convertible special shares or stock/subscription warrants; or
3. Where the buyback is required to maintain the company's credit and shareholders' equity and the shares so purchased are cancelled.
The number of shares bought back under the preceding paragraphs shall not be more than ten percent of the total number of issued and outstanding shares of the company. The total amount of the shares bought back shall not be more than the amount of retained earnings plus premium on capital stock plus realized capital reserve.
The procedure, price, quantity, method, conversion method, and public announcement to be reported in connection with buyback of shares by a company in accordance with Paragraph 1 above shall be prescribed by an order of the Competent Authority
The shares bought back by a company in accordance with Paragraph 1, except for the portion referred to in Item 3 for which amendment registration shall be effected within six months from the date of buyback, shall be transferred within three years from the date of buyback. The shares not transferred within the said time limit shall be deemed as not issued by the company, and amendment registration shall be processed.
The shares bought back by a company in accordance with Paragraph 1 shall not be pledged. Before transfer, the shareholder's rights shall not be enjoyed.
In the event that a company buys back shares from the centralized securities exchange market or over-the-counter market, the shares held by its affiliated enterprises defined under Article 369-1 of the Company Act, its directors, supervisors, managers, their spouses, minor children, or shares held in the name of other persons shall not be sold during the buyback period.
The resolution referred to in Paragraph 1 and the implementation thereof shall be reported in the most recent shareholders meeting. This provision shall also apply if the shares are not bought back for any reason. |
| Article 28-3 | The public issued companies which offer or issue stock warrants, special shares with subscription right or corporate bonds with subscription right shall, upon subscribers exercising subscription right in accordance with the subscription rules prescribed by the companies, be obligated to issue shares to them; the provisions of Paragraph 6 of Article 156 of the Company Act which provides for identical price and Paragraphs 1, 2, and 3 of Article 267 of the same act which allow the employees and original shareholders the rights to priority subscription to new issues shall not be applicable.
The articles of incorporation shall state the number of shares to be subscribed for under the subscription rules prescribed by the companies referred to in the preceding paragraph and shall not be subject to the restrictions under Paragraphs 1 and 2 of Article 278 of the Company Act. |
| Article 28-4 | The total issue amount of the secured corporate bonds, convertible corporate bonds or corporate bonds with subscription right offered and issued by a company which has issued stocks in accordance with this Act shall not be more than 200% of its total assets less total liabilities, unless the Competent Authority has obtained the approval of the central authority with jurisdiction over the business of the company, and is not subject to the restrictions under Article 247 of the Company Act. |
| Article 29 | An issue of corporate bonds with a guaranty provided by financial institutions shall be deemed as a secured issue. |
| Article 30 | In its application for approval to publicly offer and issue securities, an issuer is required to submit a prospectus, in addition to those items already required by the Company Act.
The information required to be supplied in the prospectus referred to in the proceeding Paragraph shall be prescribed by the Competent Authority.
The provisions of Paragraph 1 shall apply mutatis mutandis where a company applies for listing on a stock exchange or trading over-the-counter trading of its securities; the rules governing the information required to be included in the prospectus shall be prescribed by the stock exchange and over-the-counter securities exchange, respectively, and submitted for approval by the Competent Authority. |
| Article 31 | A prospectus shall be delivered to the subscriber of securities prior to its public offer.
Any person which violates the preceding Paragraph shall be held liable for the compensation of damages sustained by any bona fide counterpart. |
| Article 32 | In the event the prospectus referred to in the preceding Article contains false information or omissions in its material contents, the following persons, within the scope of their responsibilities, shall be held jointly liable with the issuer to any bona fide counterpart for damages resulted therefrom:
1.the issuer and its responsible persons.
2.any employees of the issuer who has signed and affixed his/her seal on the prospectus to certify its accuracy in whole or in part.
3.any underwriter with respect to such securities.
4.any certified public accountant, lawyer, engineer, or any professional or technical person who has signed and affixed his/her seal to certify in whole or in part, or to present his/her opinion, on the correctness of the prospectus.
With the exception of the issuer, the persons referred to in Items 1 through 3 of the preceding Paragraph shall not be held liable if he/she can prove that he/she has exercised reasonable care, and that he/she has just cause to believe that with respect to portions of materials not certified by a person referred to in Item 4, the material contents have no false information nor omissions, or that he/she has just causes to believe that the portion he/she certified was accurate; the persons referred to in Item 4 of the preceding Paragraph also shall not be held liable if he/she can prove that reasonable investigation has been exercised and that he/she has just causes to believe that the certification or the opinions rendered thereto were accurate. |
| Article 33 | The stock or bond subscriber shall deliver the payment due for the subscription of stocks or bonds, together with the subscription forms for stocks or bonds, to the collecting agent. Upon receipt of the payment, the collecting agent shall deliver to the subscriber a stock or bond certificate of payment signed and sealed by the issuer.
Both the certificate of payment referred to in the preceding Paragraph and its counterpart shall be signed and sealed by the collecting agent, and the counterpart certificate shall be returned to the issuer.
In the issuance of new shares by an issuer under this Act, where the publicly announced period for payment of subscription pursuant to Article 273 is longer than one month, the failure of a subscriber to effect payment within the said period shall result in the forfeiture of his/her rights of subscription. The provisions of Paragraph 3 of Article 266 of the Company Act applying mutatis mutandis the provisions of Article 142 of the Company Act shall not be applicable. |
| Article 34 | An issuer shall deliver the share certificates or bond certificates to the subscribers against the aforesaid certificates of payment as referred to in the preceding Article within thirty days from the date such stocks or bonds may be issued pursuant to the Company Act; public announcement shall be made prior to the delivery of such certificates.
The transfer of stock or bond certificates of payment beyond the period specified in the preceding Paragraph shall be prohibited. |
| Article 35 | Stock certificates or bond certificates issued by a company shall be duly certified.The regulations governing such certification shall be prescribed by the Competent Authority. |
| Article 36 | Within four months following the close of each fiscal year, an issuer under this Act shall announce to the public and register with the Competent Authority financial reports which have been duly audited and certified by a certified public accountant, approved by the board of directors, and recognized by the supervisors. Unless otherwise approved by the Competent Authority, an issuer shall also comply with the following requirements:
1.within two months after the close of each semi-annual fiscal year, publicly announce and register with the Competent Authority financial reports duly audited and certified by a certified public accountant, approved by the board of directors, and recognized by the supervisors.
2.within one month after the end of the first and third quarters of each fiscal year publicly announce and register with the Competent Authority financial reports duly reviewed by a certified public accountant.
3.within the first ten days of each calendar month publicly announce and register with the Competent Authority the operating status for the preceding month.
Within two days from the date of occurrence of any of the following events, any company referred to in the preceding Paragraph of this Article shall publicly announce and register with the Competent Authority:
1.the annual financial reports approved by the regular meeting of shareholders if such reports are inconsistent with the annual financial reports which have been announced to the public and filed with the Competent Authority.
2.any events which has had a significant impact on shareholders rights or the prices for the securities.
The companies referred to in Paragraph 1 shall prepare an annual report and distribute it to all shareholders prior to or at the regular meeting of shareholders. Particulars to be covered in the annual report shall be prescribed by the Competent Authority.
Copies of the reports publicly announced and registered with the Competent Authority referred to in Paragraphs 1 and 2, and the annual report referred to in the preceding Paragraph shall, in case such securities are listed on the stock exchange, be sent to the stock exchange and the securities dealers association, or in the case of securities traded over-the-counter, sent to the securities dealers association for review by the public.
The regular meeting of shareholders referred to in Item 1 of Paragraph 2, and Paragraph 3 shall be convened within six months after the close of each fiscal year.
During the reorganization procedure of an issuer, matters to be ratified by the board of directors and the supervisors under Paragraph 1 shall be ratified by the reorganizers or the reorganization supervisors of the issuer. |
| Article 36-1 | The Competent Authority shall prescribe rules governing the applicable scope, work procedures, required public announcements, required filings, and other matters for compliance for major financial or operational actions of public companies such as acquisition or disposal of assets, engaging in derivatives trading, extension of monetary loans to others, endorsements or guarantees for others, and disclosure of financial projections. |
| Article 37 | Permission from the Competent Authority is required for a certified public accountant to audit and certify the financial reports referred to in Article 36; the criteria governing the said approval procedures shall be prescribed by the Competent Authority.
Except as otherwise provided by the Certified Public Accountant Act or other acts, a certified public accountant conducting audit and certification under the preceding paragraph shall do so in compliance with the audit and certification rules promulgated by the Competent Authority.
Depending upon the seriousness of mistake or omission committed by a certified public accountant in the certification of the financial reports referred to in Paragraph 1, the Competent Authority may impose any of the following sanctions:
1.warning.
2.suspension from practicing any certification under this Act for a period of two years.
3.revocation of his/her certification permission.
The financial reports referred to in Paragraph 1 of Article 36 shall be placed at the company's office and branch offices for the inspection or copying by the shareholders and creditors. |
| Article 38 | In order to protect public interests and the interests of investors, the Competent Authority may, prior to the approval of a public offer or issuance, either require the issuer, securities underwriters, and other interested parties to submit reference materials or reports, or make a direct examination of relevant documents and accounts.
The Competent Authority may, at any time after the issuance of securities, order the issuer to submit financial and business reports or makes a direct examination of the financial and business conditions of the issuer. |
| Article 38-1 | When the Competent Authority deems necessary, it may from time to time appoint a certified public accountant, lawyer, engineer, or any other professionals or technicians to examine the financial and business conditions and related documents and books of account of the issuer, securities underwriter, or other related parties and to submit reports or opinions to the Competent Authority, at the expense of the examinee. |
| Article 39 | During its examination of the disclosed financial reports and other reference materials or reports of the issuer, or by its direct investigation of the financial and business conditions of the issuer, the Competent Authority may issue a corrective order, or it may additionally impose penalties pursuant to this Act if it finds that the issuer has failed to comply with an act or regulation. |
| Article 40 | Approval of a public offering shall not be used as reference in the promotion as if that the application materials have been verified or that the value of the securities thereof has been guaranteed. |
| Article 41 | Where the Competent Authority deems necessary, it may order an issuer under this Act to set aside, in addition to the allocation for legal reserve required by law, a certain proportion of its earnings as special reserve.
Where an issuer under this Act files an application for permission to capitalize its legal reserve or capital reserve, it shall first make up its deficit. In the event that the capitalization is to be realized from capital reserve, a cap of certain percentage shall be provided. |
| Article 42 | An issuer shall file an application with the Competent Authority for commencement of the examination and approval procedures prescribed in this Act where it intends to have its stock that were not issued pursuant to this Act listed on a stock exchange or traded on the over-the-counter markets.
The trading, public tender offer, or brokerage of stocks not registered under the public issuance examination and approval procedures referred to in the preceding Paragraph shall be prohibited. |
| Article 43 | The payment or settlement of securities listed on the stock exchange or traded on over-the-counter markets shall be effected on a cash payment and actual delivery basis. The settlement period and the margin deposit to be paid in advance shall be prescribed by an order of the Competent Authority.
Settlement for transactions in securities held in the custody of a securities depository may be effected through book-entry transfer; the guidelines for operation of such transfer shall be prescribed by the Competent Authority.
In the event that securities held in the custody of a securities depository are the subject of a pledge, the delivery of the pledge created may be effected through book-entry transfer; Article 908 of the Civil Code shall not be applicable.
The securities held in the custody of a securities depository on a commingled basis shall be co-owned by the owners in accordance with the types and quantities of securities deposited by them. Upon withdrawal, the securities with the same type and the same quantity may be returned.
To handle custody business, a securities depository may enter the stocks and corporate bonds held in its custody into the issuer's shareholders register or corporate bond counterfoils in its own name. Before the stock or corporate bond issuer calls a shareholders meeting or corporate bondholders meeting, decides to distribute dividends and bonus or other benefits, or pays principal or interest, the notification by a securities depository to the issuer of the true name or title, domicile or residence of the owner of stocks or corporate bonds held in its custody, and the amount held by such owner shall have the effect that such information has been entered into the issuer s shareholders register or corporate bond counterfoils or that the stocks or corporate bonds have been delivered to the issuer; the provisions of Paragraph 1 of Article 165, Article 176, Article 260, and Paragraph 3 of Article 263 of the Company Act shall not be applicable.
The provisions in the preceding two paragraphs shall apply mutatis mutandis to government bonds and other securities. |
Section II Purchase of Securities
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| Article 43-1 | Any person who acquires, either individually or jointly with other persons, more than ten percent of the total issued shares of a public company shall file a statement with the Competent Authority within ten days after such acquisition, stating the purpose and the sources of funds for the purchase of shares and any other matters required to be disclosed by the Competent Authority; such persons shall file timely amendment when there are changes in the matters reported.
Any public tender offer to purchase the securities of a public company bypassing the centralized securities exchange market or the over-the-counter market may be conducted only after it has been reported to the Competent Authority and publicly announced, except under the following circumstances:
1. The number of securities proposed for public tender offer by the offeror plus the total number of securities of the public company already obtained by the offeror and its affiliates do not exceed five percent of the total number of voting shares issued by the public company.
2. The securities purchased by the offeror through the public tender offer are securities of a company of which the offeror holds more than 50 percent of the issued voting shares.
3. Other circumstances in conformity with the regulations prescribed by the Competent Authority.
Where any person independently or jointly with another person(s) proposes to acquire a certain percentage of the total issued shares of a public company shall make the acquisition by means of a public tender offer, unless certain conditions are satisfied.
The scope, conditions, period, affiliates, and particulars for filing and public announcement in connection with purchases of securities pursuant to Paragraph 2, and the "certain percentage" and "conditions" in the preceding paragraph shall be prescribed by the Competent Authority. |
| Article 43-2 | A public tender offeror shall adopt uniform purchase conditions in the public tender offer, and may not make any of the following modifications to the purchase conditions:
1. Lower the public tender offer price.
2. Lower the proposed number of securities to be purchased through the public tender offer.
3. Shorten the public tender offer period.
4. Other particulars as prescribed by the Competent Authority.
A public tender offeror that violates the requirement of uniform purchase conditions set forth in the preceding paragraph shall be liable for damages to the offeree up to the amount of the difference between the highest price paid under the public tender offer and the price paid to the offeree, multiplied by the number of shares subscribed. |
| Article 43-3 | From the date of filing and public announcement until the date of lapse of the public tender offer period, the public tender offeror and its affiliates shall not purchase securities of the same type of the public company through the centralized securities exchange, over-the-counter markets, or any other markets, or by any other means.
A public tender offeror that violates the preceding paragraph shall be liable to the offeree for damages up to the amount of the difference between the price paid for the securities purchased through other means and the price under the public tender offer, multiplied by the number of shares subscribed. |
| Article 43-4 | The public tender offeror, unless buying back shares pursuant to Article 28-2, shall deliver the public tender offer prospectus to the Offeree upon the Offeree's request or upon the offeree's deposit of the securities with the appointed institution.
The particulars to be published in the public tender offer prospectus referred to in the preceding paragraph shall be prescribed by the Competent Authority.
The provisions of Article 31, Paragraph 2 and of Article 32 shall apply mutatis mutandis to Paragraph 1 hereinabove. |
| Article 43-5 | After a public tender offeror has initiated a public tender offer, it may not suspend the public tender offer except in any of the following circumstances, where the Competent Authority has granted approval:
1. The public company whose securities are being purchased encounters major changes in its financial or business condition and the offeror has presented evidence of the changes.
2. The Offeror becomes bankrupt, dies, is judicially interdicted, or is required by a court ruling to undergo reorganization.
3. Other circumstances specified by the Competent Authority.
Where content reported or publicly announced by an offeror violates an act or regulation, the Competent Authority may, as necessary to protect the public interest, order the offeror to amend the particulars of the public tender offer report and carry out reporting and public announcement procedures anew.
If the offeror fails to acquire the proposed number of shares within the tender offer period or suspension of the public tender offer is approved by the Competent Authority, the offeror may not, within one year therefrom, carry out a public tender offer on the same company, unless it has legitimate reasons and has obtained approval from the competent authority.
If, after the public tender offer, the total number of issued shares of the acquired company held by the offeror and its affiliates exceeds 50 percent of the total number of shares issued by the company, the offeror may, by a proposal in writing, with reasons stated therein, request the board of directors to convene a special meeting of shareholders; the restrictions set forth in Article 173, Paragraph 1 of the Company Act shall not apply. |
Section III Private Placement and Trading of Securities
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| Article 43-6 | A public company may carry out private placement of securities with the following persons upon adoption of a resolution by at least two-thirds of the votes of the shareholders present at a meeting of shareholders who represent a majority of the total number of issued shares; the restrictions of Article 28-1 and Article 139, Paragraph 2 hereof and Article 267, Paragraphs 1 to 3 shall not apply in such case:
1. Banks, bills finance enterprises, trust enterprises, insurance enterprises, securities enterprises, or other juristic persons or institutions approved by the Competent Authority.
2. Natural persons, juristic persons, or funds meeting the conditions prescribed by the Competent Authority.
3. Directors, supervisors, and managerial officers of the company or its affiliated enterprises.
The total number of offerees under Subparagraphs 2 and 3 of the preceding paragraph shall not exceed 35 persons.
A private placement of ordinary corporate bonds shall have a total issue amount not exceeding 400 percent of its total assets less total liabilities, unless the Competent Authority has obtained the approval of the central authority with jurisdiction over the business of the company; such a private placement is not subject to the restrictions under Article 247 of the Company Act, and may be carried out in installments within one year of the date of the resolution of the board of directors.
Upon the reasonable request by a person(s) under Paragraph 1, Subparagraph 2 prior to consummation of the private placement, the company shall bear the obligation to provide information on company finances, business, or other information relevant to the current private placement of securities.
Within 15 days of the date the share payments or payments of the price of the corporate bonds or other securities have been made in full, the company shall submit the relevant documentation in a report to the Competent Authority for recordation.
For private placements of securities conducted pursuant to Paragraph 1, the following particulars shall be enumerated and explained in the notice to convene the shareholders' meeting, and shall not be raised as extemporary motions:
1. The basis and rationale for the setting of the price.
2. The means of selecting the specified persons. Where the offerees have already been arranged, the relationship between the offerees and the company shall also be described.
3. The reasons necessitating the private placement.
For private placements of securities conducted pursuant to Paragraph 1, where the relevant particulars of the private placement by installments have been enumerated and explained in the proposal to the shareholders' meeting as provided in the subparagraphs of the preceding paragraph, the private placement may be carried out by installments within one year of the date of the resolution of the shareholders' meeting. |
| Article 43-7 | Private placement and resale of securities may not be the subject of general advertisements or public inducements.
Any violation of the preceding paragraph shall be considered an act of public offering to the general public. |
| Article 43-8 | Offerees and purchasers of privately placed securities may not resell the securities except under the following circumstances:
1. where the privately placed securities are held by persons specified in Article 43-6, Paragraph 1, Subparagraph 1 and no securities of the same type as said privately placed securities are traded on the centralized securities exchange market or over-the-counter markets, and the securities are transferred to persons of the same qualifications;
2. where the privately placed securities are transferred to persons conforming to Article 43-6, Paragraphs 1 and 2, at least one full year after the delivery date of the privately placed securities and within three years of said delivery date, subject to the restrictions prescribed by the Competent Authority concerning holding period and trading volume;
3. where three full years have elapsed since the delivery date;
4. where a transfer occurs by operation of act or regulation;
5. where it is a direct private transfer of securities not in excess of one trading unit, and the interval between any two such transfers is not less than three months.
6. where otherwise approved by the Competent Authority.
The restrictions on transfers of privately placed securities set forth in the preceding paragraph shall be conspicuously annotated on a company's share certificates, and shall be stated on the relevant written documentation delivered to the offeree or purchaser. |
Chapter III Securities Firms
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Section I General Provisions
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| Article 44 | The approval and certificate of license from the Competent Authority are required for the operation of securities business by a securities firm; the operation of securities business by persons other than securities firms shall be prohibited.
Approval from the Competent Authority shall be required for the establishment of branch offices by a securities firm.
The establishment of branch offices by a foreign securities firm within the territory of the Republic of China shall be prohibited without the approval and a certificate of license from the Competent Authority.
Rules governing the establishment criteria and the regulation of securities firms shall be prescribed by the Competent Authority. |
| Article 45 | A securities firm shall operate within the business categories as authorized under Article 16, and may not operate securities business beyond the authorized scope. However, with the approval of the Competent Authority, a securities firm may concurrently operate other securities business or other related businesses.
A securities firm shall not be operated concurrently by other businesses; however, a financial institution with approval from the Competent Authority shall be allowed to concurrently operate securities business.
A securities firm shall not invest in the interests of other securities firms; however, financial institutions with approval from the Ministry of Finance shall be exempted from such a restriction.
Investment in a securities firm by overseas Chinese or foreign nationals shall be approved by the Competent Authority. |
| Article 46 | A securities firm concurrently operating the business of a securities dealer and a securities broker pursuant to the proviso of Paragraph 1 of the preceding Article shall indicate on written documents for every transaction whether such transaction is made for its own account or for its customers. |
| Article 47 | A securities dealer shall be a company duly organized under the law; however, a financial institution which is concurrently engaged in securities business in accordance with the proviso of Paragraph 2 of Article 45 shall be exempted from this restriction. |
| Article 48 | The minimum capital requirement of securities firms shall be prescribed by the Competent Authority in consideration of the business the securities firm is permitted to operate.
The capital referred to in the preceding Paragraph shall mean the total monetary amount of outstanding shares. |
| Article 49 | The aggregate liabilities of a securities firm shall not exceed a prescribed multiple of its capital net worth; the aggregate current liabilities shall not exceed a prescribed percentage of its aggregate current assets.
The foregoing multiple and percentage shall be prescribed by the Competent Authority. |
| Article 50 | The name of a securities firm shall indicate clearly the word "securities." A financial institution which operates securities business under the proviso of Paragraph 2 of Article 45 shall be exempted from this requirement.
No persons other than securities firms may use names similar to "securities." |
| Article 51 | Directors, supervisors or managers of a securities firm shall not invest in other securities firms nor serve concurrently as the directors, supervisors or managers of other securities firms or of a public company; however, the director, supervisor, or manager of a financial institution, due to its investment relationship, may serve concurrently as the director, supervisor or manager of other securities firms or a public company. |
| Article 52 | (deleted) |
| Article 53 | No person who falls within any of the following categories shall serve as the director, supervisor, or manager of a securities firm; those appointed and currently serving in any of these capacities shall be discharged; the Competent Authority shall also make written request to the Ministry of Economic Affairs to rescind the registration as the director, supervisor, or manager of such persons:
1.any person specified in any Item of Article 30 of the Company Act;
2.any person who served as the director, supervisor, manager or other equivalent position in a juristic person at the time when it was adjudged bankrupt, and that three years have not elapsed since the finalization of the bankruptcy, or that the reconciliation has not yet been fulfilled.
3.any person with whom in the last three years a financial institution has refused to transact, or who has a bad credit record.
4.any person who has been sentenced under this Act to a penalty more severe than the imposition of a fine, and three years have not elapsed since the completion of sentence execution, the expiration of suspension of sentence, or the pardon of such punishment.
5.Any person who has violated the provision of Article 51 hereof.
6.Any person who was discharged from his position under Article 56 or Item 2 of Article 66 hereof within the last three years. |
| Article 54 | Associated persons employed by securities firms whose duties relate to the securities business shall be twenty years of age or over and possess the qualifications required by relevant acts and regulations. Further, they shall not fall within one of the following categories:
1.having been adjudged bankrupt and not reinstated.
2.concurrently holding a position with another securities firm.
3.(deleted)
4.having been sentenced to a penalty more severe than a term of imprisonment for fraud, breach of trust, or violation of laws governing business and industry, and three years have not elapsed since the date of completion of the sentence execution, the expiration of suspension of sentence, or the pardon of such punishment.
5.falling under any of the situations specified in Items 2 through 4 and Item 6 of the preceding Article.
6.having violated orders issued by the competent Authority in accordance with this Act.
The job title of the associated persons referred to in the preceding paragraph shall be prescribed by the Competent Authority. |
| Article 55 | Following the incorporation and registration process, a securities firm shall, in accordance with the regulation prescribed by the Competent Authority, deposit an operation bond.
Creditors whose claims arise from the specially approved business of a securities firm shall have preferential right of payment from the deposited operation bond referred to in the preceding Paragraph. |
| Article 56 | If any director, supervisor, or employee of a securities firm is found to have committed any act which violates this Act or another related act or regulation, and if such violation may affect the normal operation of the said securities firm, the Competent Authority, in addition to ordering the said securities firm to suspend business operation of such person for not more than one year or discharge such person at any time, may also impose sanctions in accordance with Article 66 depending on the severity of the violation. |
| Article 57 | The approval to operate the securities business, or the approval to establish branch offices by a securities firm may be revoked should the said securities firm be found by the Competent Authority to have violated an act or regulation or supplied false information. |
| Article 58 | A securities dealer shall register the commencement or suspension of its business or that of its branch offices with the Competent Authority for reference. |
| Article 59 | The approval to operate the securities business or the approval to establish branch offices may be revoked should the Competent Authority finds that the securities firm has failed to commence business within three months following the approval was granted to operate the securities business; or that the operation of securities business has been commenced but was subsequently voluntarily suspended for a period of more than three consecutive months.
Where there are just reasons, the securities firm may apply to the Competent Authority for extending the term referred to in the preceding Paragraph. |
| Article 60 | Securities firm shall be prohibited from taking deposits, making loans, borrowing and lending securities, or acting as an agent or broker for the borrowing or lending of money or securities. Provided, however, the following transactions may be undertaken upon the approval of the Competent Authority:
1.providing margin purchases or short sales for securities transactions.
2.acting as an agent in margin purchases or short sales for securities transactions.
The regulations governing margin purchases and short sales for securities transactions provided by securities firms shall be drafted by the Ministry of Finance and approved by the Executive Yuan. |
| Article 61 | The permissible amount, terms, financing ratio, and the margin percentage required for margin purchases and short sales for securities transactions shall be prescribed by the Competent Authority after consultation with and consent from the Central Bank of China. The eligibility criteria of securities for margin purchases and short sales shall be prescribed by the Competent Authority. |
| Article 62 | Without the approval from the Competent Authority, the trading of securities by securities brokers or dealers in an over-the-counter market, on the account of its customers, or on its own account, shall be prohibited.
The rules governing the transaction in the over-the-counter market referred to in the preceding Paragraph shall be prescribed by the Competent Authority.
The provisions of Article 156 and 157 shall apply mutatis mutandis to the transaction referred to in Paragraph 1 hereof. |
| Article 63 | The provisions of Article 36 regarding the preparation, submission and publication of financial reports shall apply mutatis mutandis to securities firms. |
| Article 64 | At any time whenever it is required for protecting the public interests or the interest of investors, the Competent Authority may order a securities firm to provide financial or business reports and information, or examine the business operations, assets, books and records, documents or other relevant objects. The Competent Authority may seal or take possession of relevant documents should it find that there is substantial likelihood of violation of an act or regulation. |
| Article 65 | Upon its examination of the business or financial conditions of a securities firm, should the Competent Authority find that there are matters not in conformity with the related regulations, the Competent Authority may at any time order that the non-conformity be corrected. |
| Article 66 | Where a securities firm has violated this Act or any order issued thereunder, in addition to being subject to the punishment provided under this Act, the Competent Authority may, depending on the severity of the offense, impose any of the following sanctions:
1.warning.
2.ordering the securities firm to remove its directors, supervisors, or managers from their office.
3.suspending the business, in whole or in part, of the company or its branch for a period of not more than six months.
4.revoking the business license of the company or its branch. |
| Article 67 | A securities firm whose license has been revoked, or whose business has been suspended shall settle any transactions in securities or any other matters that have been entrusted to it before the revocation of its license or the suspension of its business. |
| Article 68 | A securities firm whose business license has been revoked shall be deemed as a securities firm to the extent and within the scope of winding up and settling the transactions or any other matters entrusted to it in the preceding Paragraph; a securities firm ordered to suspend operation shall be deemed to be in operation to the extent and within the scope of winding up and settling the transactions or any other matters entrusted prior to the suspension of securities business. |
| Article 69 | Where a securities firm dissolves or partially ceases a part of its business, its board of directors shall file a registration statement with the Competent Authority explaining the reasons.
The provisions of Article 67 and 68 shall apply mutatis mutandis to matters referred to in the preceding Paragraph. |
| Article 70 | The rules governing matters regarding the responsible persons and associated persons of securities firms shall be prescribed by the Competent Authority. |
Section II Securities Underwriting
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| Article 71 | A securities underwriter which underwrites securities on a firm commitment basis shall, at the end of the period of underwriting specified in the underwriting agreement, subscribe the unsold portion of securities for its own account.
The securities underwriter which underwrites securities on a firm commitment basis may subscribe to such securities before placing them for sale or it may specify in the underwriting agreement that a portion of the securities covered in the agreement shall be reserved for subscription by the underwriter for his own account.
The qualifications required for an underwriter to undertake firm commitment underwriting shall be prescribed by the Competent Authority. |
| Article 72 | A securities underwriter which underwrites securities on a best efforts basis may, at the end of the underwriting period specified in the underwriting agreement, return the unsold portion of securities to the issuer. |
| Article 73 | The underwriting period referred to in Article 71 and 72 shall not be shorter than ten days and longer than thirty days. |
| Article 74 | Unless acting pursuant to Article 71, an underwriter shall not during the underwriting period acquire for its own account securities which it has underwritten either on a firm commitment or a best efforts basis. |
| Article 75 | The regulations for sale of securities acquired by a securities underwriter in accordance with Article 71 shall be prescribed by the Competent Authority. |
| Article 76 | An underwriting agreement of the securities underwriter shall contain the following particulars:
1.the names and addresses of the parties to the agreement and their responsible persons.
2.the name, volume, monetary amount, and issuing price of the securities to be underwritten on a firm commitment or a best efforts basis.
3.the date of offering and issuance approved by the Competent Authority, or the date of effective registration with the Competent Authority.
4.the beginning and the ending dates of the underwriting period.
5.the date of payment and the method of payment for the underwriting.
6. the calculation of the compensation for firm commitment underwriting or the commission for the best efforts underwriting, and the date of payment.
7. the method of firm commitment underwriting, and the method of subscribing remaining securities if underwritten on a firm commitment basis, or of returning the unsold portion if underwritten on a best efforts basis.
8.other matters required by the Competent Authority.
A managing underwriter shall be designated in a syndicated underwriting. The contents of a syndicated underwriting agreement shall specify, in addition to the particulars specified in the preceding Paragraph, the allotment to and the responsibilities shared by the managing underwriter and other participating underwriters. |
| Article 77 | The underwriter shall register a copy of underwriting agreement with the Competent Authority for its reference prior to the commencement of the sale of securities specified in the agreement. |
| Article 78 | Upon expiration of the underwriting period, an underwriter shall file a registration statement and a detailed report stating the sale results and the number of its own subscription with the Competent Authority for its recordation.
The provisions of the preceding Paragraph shall apply mutatis mutandis in case the distribution is completed prior to expiration of the underwriting period. |
| Article 79 | An underwriter shall be required to deliver on the behalf of the issuer a prospectus in compliance with Paragraph 1 of Article 31 when distributing the said securities. |
| Article 80 | (Deleted) |
| Article 81 | An underwriter's total amount of a firm commitment underwriting shall not exceed a certain multiple of the balance of its current assets less its current liabilities; standards for such multiple shall be prescribed by the Competent Authority.
The preceding Paragraph shall apply to the calculation of the amount of firm commitment underwriting by each participating underwriter in the underwriting syndicate. |
| Article 82 | The standards governing the maximum compensation for firm commitment underwriting or the maximum commission for best efforts underwriting shall be prescribed by the Competent Authority. |
Section III Securities Dealers
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| Article 83 | A securities dealer shall be allowed to subscribe to stocks and corporate bonds. |
| Article 84 | A securities dealer which concurrently conducts the business of an underwriter shall be governed by the restrictions specified in Article 74. |
Section 4 Securities Brokers
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| Article 85 | The standards on the commission to be charged to a principal by a securities broker consigned to buy or to sell securities on a centralized securities exchange market shall be registered by the stock exchange to the Competent Authority for its approval.
The standards on the commission to be charged to principals by a securities broker consigned to buy or to sell securities on markets other than a centralized securities exchange market shall be registered by the securities dealers association to the Competent Authority for its approval. |
| Article 86 | A securities broker consigned by its principal to trade securities shall, in addition to making a trading report to its principal after completion of the transaction, also send a reconciliation statement to each of its principals at the end of each month.
The particulars to be included in the trading report and the reconciliation statement referred to in the preceding Paragraph shall be prescribed by the Competent Authority. |
| Article 87 | Securities brokers shall provide a blank letter of consignment to their principals for the purpose of buying and selling securities.
The particulars to be included in the letter of consignment referred to in the preceding Paragraph shall be prescribed by the Competent Authority. |
| Article 88 | The documents referred to in Paragraph 1 of Article 86, and Paragraph 1 of Article 87 shall be kept at the business offices of the securities broker. |
Chapter IV Securities Dealers Association
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| Article 89 | A securities firm shall not commence to operate its business unless it is a member of a securities dealers association. |
| Article 90 | The material contents of the articles of association of a securities dealers association and matters regarding the direction and supervision of its business shall be prescribed by the Competent Authority. |
| Article 91 | In order to ensure fairness in securities transaction, or the protection of investor, where necessary, the Competent Authority may order a securities dealers association to amend its articles of association, bylaws, or resolutions, and also to provide reference materials and reports, or to perform any other acts. |
| Article 92 | Where any directors or supervisors of a securities dealers association is found to have violated an act or regulation, was negligent in implementing the articles of association or bylaws, misused his/her authority, or acted against the principles of integrity and fair dealing, the Competent Authority may take corrective actions or order the securities dealers association to discharge such directors or supervisors. |
Chapter V Stock Exchange
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Section 1General Provisions
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| Article 93 | A special approval or permit or shall be obtained from the Competent Authority before the establishment of a stock exchange.The application procedures and other necessary matters shall be prescribed by the Competent Authority. |
| Article 94 | A stock exchange may be organized in the form of either membership or company. |
| Article 95 | The standards for the establishment of stock exchanges shall be drafted by the Competent Authority and filed with the Ministry of Finance for its approval.
Each stock exchange shall be limited to operating one centralized securities exchange market. |
| Article 96 | Unless acting pursuant to this Act, no person shall engage in the operation of business similar to that of providing a centralized securities exchange market; this provision shall also apply to anyone which provides business premises or facilities for such proposes. |
| Article 97 | The name of a stock exchange shall explicitly bear the words "stock exchange." No person other than a stock exchange shall use names similar to that of a stock exchange. |
| Article 98 | The business of a stock exchange shall be to provide a centralized securities exchange market. A stock exchange shall not engage in nor invest in any other businesses without the approval of the Competent Authority. |
| Article 99 | A stock exchange shall deposit an operation bond with the National Treasury, the amount of which shall be prescribed by the Competent Authority. |
| Article 100 | The Competent Authority may revoke the special approval or permit of an established stock exchange if the stock exchange had made any false statement in its application or any document attached thereto, or has otherwise violated an act or regulation. |
| Article 101 | (deleted) |
| Article 102 | Matters relating to the direction and supervision of the business operation of a stock exchange and the regulation of the responsible persons and associated persons shall be prescribed by the Competent Authority. |
Section 2 Membership Stock Exchange
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| Article 103 | A membership stock exchange is a juridical association formed for the non-profit purposes; in addition to the provisions of this Act, a membership stock exchange shall also be governed by the provisions of the Civil Code.
The membership of a stock exchange referred to in the preceding Paragraph shall be limited to securities dealers and securities brokers. |
| Article 104 | The number of memberships of a membership stock exchange shall be no less than seven. |
| 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.
4.matters concerning the 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 the withdrawal from membership by a member.
9.matters concerning the directors and the supervisors.
10.matters concerning the meetings.
11.matters concerning the settlement and clearing fund to be deposited by members.
12.matters concerning the membership dues to meet operating expenses.
13.matters concerning the performance of business operation.
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. |
| Article 106 | (Deleted) |
| 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.if the member has lost its membership qualifications.
2.if the corporate member dissolves or its company license is revoked.
3.if the member is expelled from the stock exchange. |
| 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. |
| Article 109 | A member shall provide membership contribution 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, its liability to the stock exchange shall be limited to the amount of its membership contribution. |
| Article 110 | Where of any of its members commits the following acts, the membership stock exchange shall fine the member for breach of contract, and may warn, suspend or restrict such member from trading securities on its centralized securities exchange market, or may expel the member:
1.violated an act or regulation, or administrative disposition made pursuant thereto.
2.violation of the articles of association, business bylaws, standards for executing commission contracts, or other bylaws of the stock exchange.
3.violation of the principles of integrity and fair dealing in transactions, and the violation is sufficient to cause damage to others.
The provisions of the preceding Paragraph shall be prescribed in the articles of association. |
| Article 111 | Where a membership stock exchange expels any member pursuant to the preceding Article, such expulsion shall be reported to the Competent Authority for its approval; where the expulsions of the member is approved, the Competent Authority may revoke its special permit for securities businesses. |
| Article 112 | Where any member withdraws from membership or is suspended from trading, the membership stock exchange shall, in accordance with the articles of association, require the said member or designate other members to wind up and settle its transactions effected on the centralized securities market; the member shall be deemed to have not withdrawn from membership or not suspended from trading to the extent and within the scope of winding up and settling the transactions.
Where another member is designated to wind up the transactions in accordance with the preceding Paragraph, a trust relationship is deemed to exist between the withdrawing member and the designated member to the extent and within the scope of winding up and settling the transactions. |
| 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; re-election shall be permissible.
The board of directors shall be formed by directors; the chairman of the board, who shall be a non-member director, shall be elected by a majority vote of the directors.
The board chairman shall be a full-time executive officer; however, this restriction shall not apply if the stock exchange has assigned a manager 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. |
| Article 114 | The provisions of Article 53 shall apply mutatis mutandis to directors, supervisors, or managers of a membership stock exchange.
The violation of the provisions of the preceding Paragraph by any directors, supervisors or managers shall result in their automatic discharge. |
| Article 115 | The directors, supervisors, or managers of a membership stock exchange shall not serve concurrently as the director, supervisor, or manager of another stock exchange. |
| Article 116 | Representatives of member directors or supervisors, non-member directors, or any other employees of a membership stock exchange shall not, either for his own account or by commissioning others, purchase or sell securities in a centralized securities exchange market.
The persons referred to in the preceding Paragraph shall be prohibited from providing funds to, sharing profits or losses with, or have any other business dealings or interests with members of the said stock exchange; however, this restriction shall not apply to persons who perform such acts on the behalf of the members they represent. |
| Article 117 | In the event that the Competent Authority finds that the election of any director or supervisor of the stock exchange has irregularities, or if any director, supervisor or manager has violated an act or regulation, the articles of association, or an administrative disposition issued pursuant to an act or regulation, the Competent Authority may notify the stock exchange to discharge such persons. |
| Article 118 | Unless otherwise provided in this Act, the provisions of the Company Act relating to directors, supervisors or managers shall apply mutatis mutandis to the directors, supervisors, or managers of a membership stock exchange. |
| Article 119 | With the exception of the following dispositions, a membership stock exchange shall not utilize the settlement and clearing fund in any manner unless otherwise approved by the Competent Authority:
1.the purchase of government bonds.
2.the deposit in banks, or saving deposits with the postal administration. |
| Article 120 | The directors, supervisors, or employees of a membership stock exchange shall not disclose any confidential information relating to securities transactions. |
| Article 121 | The provisions of this section relating to the directors and the supervisors of a membership stock exchange shall apply mutatis mutandis to the legal representatives of directors and supervisors of the members. |
| Article 122 | A membership stock exchange may be dissolved upon the occurrence of any one of the following events:
1.occurrence of the events of dissolution specified in the articles of association.
2.resolution of a meeting of members.
3.the number of memberships falls to less than seven.
4.bankruptcy.
5.revocation of approval for the establishment of the stock exchange.
The resolution referred to in Item 2 of the preceding Paragraph shall not become effective without approval by the Competent Authority. |
| 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. |
Section 3 Company Type Stock Exchange
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| Article 124 | The organization of a company type stock exchange shall be limited to a company limited by shares. |
| Article 125 | The articles of association of a company type stock exchange shall contain, in addition to those required under the Company Act, the following particulars:
1.the total number of seats in the centralized securities exchange market for brokers and dealers and their necessary qualifications.
2.duration of existence.
The duration of existence referred to in Item 2 of the preceding Paragraph shall not exceed a period of ten years; in the event the development of the local securities transactions warrants it, an application for extension may be filed with the Competent Authority during the period three months prior to the expiration of the duration of existence. |
| Article 126 | Directors, supervisors, shareholders, or employees of a securities firm shall not serve concurrently as managers of a company type stock exchange.
At least one-third of the directors and supervisors of a company type stock exchange shall be appointed by the Competent Authority from among relevant experts who are not shareholders; the provisions of Paragraph 1 of Article 192 and Paragraph 1 of Article 216 of the Company Act shall not be applicable.
Standards and regulations governing the election of non-shareholder directors and supervisors as referred to in the preceding paragraph shall be prescribed by the Competent Authority. |
| Article 127 | The stocks of a company type stock exchange shall not be listed on its own centralized securities exchange market nor on a stock exchange owned by any other person. |
| Article 128 | A company type stock exchange shall not issue bearer stocks. Transferees of its shares shall be limited to the securities firms incorporated under this Act.
The shareholding percentage of each securities firm in the stock exchange shall be prescribed by the Competent Authority. |
| Article 129 | Securities brokers and dealers that engage in transactions on a company type stock exchange shall enter into a contract with the stock exchange for the usage of the centralized securities exchange market; the contract, together with other relevant materials shall be registered with the Competent Authority for its recordation. |
| Article 130 | In addition to grounds for termination specified in the contract referred to in the preceding Article, such contract shall also be terminated upon the dissolution of either party, or the revocation of the approval or the suspension of business operation of a securities broker or dealer which is a party to the contract. |
| Article 131 | (Deleted) |
| Article 132 | The contract prepared by a company type stock exchange for the usage of its centralized securities exchange market shall contain provisions regarding the deposit of the settlement and clearing fund and the securities transaction charges to be paid by the securities broker or dealer.
The standards governing the amount of settlement and clearing fund shall be prescribed by the Competent Authority.
The standards for calculating the securities transaction charges referred to in the first Paragraph of this Article shall be jointly drafted by the stock exchange and the securities dealers association and filed with the Competent Authority for its approval. |
| Article 133 | A company type stock exchange shall specify in the contract that the violation of Article 110 by a securities broker or a securities dealer which trades on its centralized securities exchange market shall result in a fine for breach of contract, or the imposition of suspension or restriction of its trading rights, or the termination of the contract. |
| Article 134 | The provisions of Article 111 shall apply mutatis mutandis in the event a company type stock exchange terminates its contract with a securities broker or dealer in accordance with the preceding Article. |
| Article 135 | A company type stock exchange shall consult with the provisions of Article 112 of this Act and include in the contract for the usage of its centralized securities exchange market provisions requiring that a securities broker or dealer designated to wind up or settle the transactions of other securities brokers or dealers shall have the obligation to fulfill that duty. |
| Article 136 | A securities broker or dealer whose contract has been terminated or whose trading right was suspended pursuant to Article 133 shall have the obligation of winding up and settling its transactions in a centralized securities exchange market. |
| Article 137 | The provisions of Articles 41 and 48, Items 1 through 4 and Item 6 of Article 53, Articles 58, 59, 115, 117, 119 through 121, and 123 shall apply mutatis mutandis to a company type stock exchange. |
Section 4 Listing and Trading of Securities
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| Article 138 | A stock exchange shall, in addition to setting various rules, specify in detail in either its business bylaws or operational rules the following particulars:
1.public listing of securities.
2.use of the centralized securities exchange market.
3.trading consignment to securities dealers or brokers.
4.opening and closing of the market trading.
5.types of transaction.
6.procedures on the trading of securities and the manner of forming trading contracts by securities brokers or dealers.
7.trading units.
8.pricing units and the limits on the rise or fall in price.
9.date and manner of clearing and settlement.
10.real-time disclosure of transaction information such as quantity of consignment, price, matched transaction, etc. in connection with securities trading.
11.other matters related to trading.
The determination of matters prescribed in the preceding paragraph shall not violate any act or regulation. In matters affecting the interests of securities firms, prior opinion shall be solicited from the securities dealers association. |
| Article 139 | An issuer of securities publicly issued under this Act may file an application with a stock exchange for its listing.
In a new issuance of stocks by a listed company, such new shares shall be traded on a stock exchange upon its delivery to the shareholders. The Competent Authority may, however, impose restriction on its trading on a stock exchange in case any of the items provided in Paragraph 1 of Article 156 is applicable.
Any company that lists new shares as referred to in the preceding Paragraph shall forward the relevant documents to the stock exchange within ten days after the listing of new shares. |
| Article 140 | A stock exchange shall adopt rules relating to the examination of application for public listing and the contract for public listing and file such rules with the Competent Authority for its approval. |
| Article 141 | A stock exchange shall enter into a contact for public listing of securities with the company listing the securities. The contents of the contract shall not contradict the provisions of the rules on contract for public listing, and such contracts shall be filed with the Competent Authority for its approval. |
| Article 142 | Securities issued by an issuer shall not be traded on the centralized securities exchange market of a stock exchange without first obtaining the approval of the contract for public listing pursuant to the preceding Article. |
| Article 143 | The charges and fee for the listing of securities shall be specified in the contract for public listing. A stock exchange shall file a report on the determination of rate for charges and fee with the Competent Authority for its approval. |
| Article 144 | Upon the approval of the Competent Authority, a stock exchange may, pursuant to acts and regulations, or the provisions of the contact for public listing, terminate the public listing of securities. |
| Article 145 | An issuer of securities publicly listed on a stock exchange may, pursuant to the provisions of the contact for public listing, file an application with the stock exchange to terminate its listing.
The stock exchange shall obtain the approval of the Competent Authority in its disposition of the application referred to in the preceding Paragraph. |
| Article 146 | The Competent Authority, in approving the matter referred to in the preceding Paragraph, shall specify the effective date of its approval, which shall also be deemed as the date of termination for the contract for public listing. |
| Article 147 | A stock exchange shall file a report with the Competent Authority for its approval in the event it suspends or reinstates the trading of listed securities pursuant to acts and regulations, the provisions of the contract for public listing, or for the protection of public interest. |
| Article 148 | In the event an issuer of listed securities on a stock exchange is found to be in violation of this Act or rules and regulations promulgated hereunder, the Competent Authority may, for the purpose of protecting the public interest and the interest of investors, order the stock exchange to suspend the trading or terminate the listing of said securities. |
| Article 149 | The listing of government bonds shall be effected by an order of the Competent Authority, and the listing requirements of this Act shall not be applicable. |
| Article 150 | The trading of listed securities shall be conducted on a centralized securities exchange market operated by a stock exchange except in the following situations:
1.transactions in government bonds.
2.due to the operation of an act or regulation, the transacting parties are unable to acquire or dispose the ownership of the securities through trading on the centralized securities market.
3. direct private transfer of securities not in excess of one trading unit, and the interval between any two such transfers is not less than three months.
4.other transactions in conformity with the regulations prescribed by the Competent Authority. |
| Article 151 | Persons allowed to engage in transactions in a centralized securities exchange market shall be confined, in the case of a membership stock exchange, to members, and in the case of a company type stock exchange, to securities brokers and dealers that have entered into a contract for usage of the centralized securities exchange market. |
| Article 152 | A stock exchange shall be required to file a report with the Competent Authority in the event the centralized securities exchange market is to be suspended due to events of force majeure; this provision shall also be applicable in the reopening of the market. |
| Article 153 | In securities transactions undertaken by members of a stock exchange, or securities brokers or dealers in a stock exchange, if any one transacting party fails to fulfill its delivery obligation, the stock exchange shall designate other members or other securities brokers or dealers to deliver the securities in substitution. The resultant price differences and the expenses incurred therefrom shall be indemnified by the settlement and clearing fund; in case the fund is insufficient, the stock exchange shall advance the payment and thereafter claim such compensation from the breaching party. |
| Article 154 | A stock exchange may set aside a compensation reserve out of the fees charged from securities transaction to cover the payments specified in the preceding Article; the method of assessing the reserve, the rate of assessment, the conditions for suspension of the lodgment, and the method of custody and management of the reserve shall be prescribed by the Competent Authority. Claimants in cases arising from transactions on the centralized securities exchange market shall have preferential right to the securities clearing and settlement fund as specified in Article 108 and Article 132 in the following order of priority:
1.the stock exchange.
2.the principal in consigned transactions.
3.securities brokers or dealers.
In the event the securities clearing and settlement fund is insufficient to meet such claims, the unsatisfied portion of the claims may be compensated in accordance with the provisions of Paragraph 2 of Article 55. |
| Article 155 | The following actions with regard to securities publicly listed on a stock exchange shall be prohibited:
1.To offer a quote on a centralized securities exchange market and failing to deliver or failing to settle the transaction after such quotation has been accepted, and such inaction is sufficient to affect the market order.
2.(Deleted)
3.To conspire with other parties in a scheme such that the first party buys or sells designated securities at an agreed price, while the second party sells or buys from the first party in same transaction, with the intent to inflate or deflate the trading prices of said securities on the centralized securities exchange market.
4.To continuously buy at high prices or sell at low prices designated securities for his own account or under the names of other parties with the intent to inflate or deflate the trading prices on said securities traded on the centralized securities exchange market.
5.To spread rumors or false information with the intent to influence the trading prices of designated securities traded on the centralized securities exchange market.
6.To perform directly or indirectly any other manipulative acts to influence the trading prices or designated securities traded on the centralized securities exchange market.
The provisions of the preceding paragraph shall apply mutatis mutandis to transactions conducted on the over-the-counter markets.
Persons who violate the preceding two paragraphs shall be held liable to compensate the damages suffered by the bona fide buyers or sellers of the said securities.
The provisions of Paragraph 4 of Article 20 of this Act shall apply mutatis mutandis to the preceding paragraph. |
| Article 156 | The Competent Authority may issue an order suspending the trading of designated securities completely or partially, or restricting the trade by brokers and dealers in such securities in the occurrence of any of the following events:
1. the company issuing the securities becomes involved in litigation or other non-litigious matters which is sufficient to result in its dissolution, or changes in its corporate organization, capital, business plan, financial condition, or suspension of production, and that such results have the danger of affecting the market order or impairing the public interest.
2. the company issuing the securities becomes involved in major disasters, signed major agreements, confronted with special circumstances, initiated major changes in its business plan, or had its checks dishonored, and the result of which is sufficient to result in major changes in the financial condition of the company, and that such results have the danger of affecting the market order or impairing the public interest.
3. the company issuing the securities engages in deceptive, dishonest, or illegal practices, and the result of which is sufficient to affect the prices of its securities, and that such results have the danger of affecting the market order or impairing the public interest.
4.the market price of the securities has undergone continuous, major rises or declines, and it results in the abnormal fluctuations in the prices of other securities and that such results have the danger of affecting the market order or impairing the public interest.
In the event the securities of a listed company encounter any events other than those specified above, and that such events have the danger of affecting the market order or impairing the public interest, the Competent Authority may, with the approval of the Ministry of Finance, take actions in accordance with the provisions of the preceding Paragraph. |
| Article 157 | In the event that any director, supervisor, manager, or shareholder holding more than ten percent of the shares of a company sells the listed securities within six months after its acquisition, or repurchase the securities within six months after its sale, the company shall claim for the recovery of any profit realized from the sale and purchase.
If the board of directors or the supervisors of the company fails to claim for the recovery referred to in the preceding paragraph, its shareholders may request the board of directors or the supervisors to exercise the right of claim within thirty days; upon the expiration of such period, if no action has been taken, such requesting shareholders shall have the right to claim for such recovery on behalf of the company.
The directors and supervisors shall be jointly and severally liable for damages suffered by the company as a result of their failure to exercise the claim provided under Paragraph 1 of this Article.
The right of claim specified in Paragraph 1 of this Article shall be extinguished if not exercised within two years after the date on which the profit is realized.
The provisions of Paragraph 3 of Article 22-2 hereof shall apply mutatis mtandis to Paragraph 1 of this Article.
This Article shall apply mutatis mutandis to other securities with the nature of equity shares issued by a company. |
| Article 157-1 | Upon learning any information that will have a material impact on the price of the securities of the issuing company, and prior to the public disclosure of such information, the following persons shall not purchase or sell shares of the company that are listed or are traded on the over-the-counter market, or any other equity security of the company:
1.the directors, supervisors and managers of the company.
2.shareholders holding more than ten percent of the shares of the company.
3.any person who has learned the information by reason of occupational or controlling relationship.
4.any person who has learned the information from any of the persons named in the preceding three Items.
Persons in violation of the provisions of the preceding Paragraph shall be held liable to bona fide trading counterparts for damages in the amount of the difference between the buying and selling prices prior to the date of public disclosure and the average closing price for ten business days after the date of public disclosure; the court may also, upon the request of the bona fide trading counterpart, treble the liability limits of the said violators should the violation be of a severe nature.
The persons referred to in Item 4 of Paragraph 1 shall be held jointly and severally liable with the persons referred to in Items 1 through 3 of Paragraph 1 who provided the information for the damages referred to in the preceding Paragraph. However, where the persons referred to in Items 1 through 3 of Paragraph 1 who provided the information has reasonable cause to believe the information has been publicly disclosed, they shall not be liable for damages.
The information that will have a material impact on the price of the securities referred to in Paragraph 1 shall mean information relating to the finances or businesses of the company, or the supply and demand of such securities on the market, or tender offer of such securities, that will have a material impact on its price, or any other information that would have a material impact on the investment decision of a reasonably prudent investor.
The provisions of Paragraph 3 of Article 22-2 shall apply mutatis mutandis to Items 1 and 2 of Paragraph 1 of this Article; the provisions of Paragraph 4 of Article 20 shall apply mutatis mutandis to the trading counterpart referred to in Paragraph 2 of this Article. |
Section 5 Consigned Securities Transaction
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| Article 158 | Brokerage contracts between a securities broker and its customers for transactions to be effected on a centralized securities exchange market shall be prepared in accordance with the form of the standard brokerage contract prescribed by the stock exchange.
The material aspects of the standard brokerage contract referred to in the above Paragraph shall be prescribed by the Competent Authority. |
| Article 159 | A securities broker shall not accept any full authorization that allows him/her to determine the type, the number, or the price of securities to be bought or sold on the behalf of the principal. |
| Article 160 | A securities broker shall not accept consignment for the purchase or sale of securities in premises other than its principal place of business and its branch offices. |
Section 6 Supervision
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| Article 161 | In order to protect the public interest and the interest of investors, the Competent Authority may order a stock exchange to amend its articles of association/incorporation, business rules, bylaws, rules regarding consignment contracts, and any other rules; the Competent Authority may also suspend, enjoin, amend, or repeal the resolutions or dispositions issued by the stock exchange. |
| Article 162 | The provisions of Article 64 shall apply mutatis mutandis to the inspection of the stock exchange and orders to furnish information issued by the Competent Authority. |
| Article 163 | Where a stock exchange takes any action in violation of an act or regulation or an administrative disposition issued pursuant to an act or regulation, or takes any other action detrimental to the public interest or disturbs the social order, the Competent Authority may impose any of the following dispositions:
1.the dissolution of the stock exchange.
2.the suspension or the termination of the complete or partial business of a stock exchange; provided, however, that such suspension does not exceed three months.
3.the issuance of orders to the stock exchange to discharge its directors, supervisors, or managers.
4.the issuance of corrective orders.
In the event that the Competent Authority is to impose any dispositions specified in Items 1 or 2, advance approval of such disposition from the Executive Yuan shall be required. |
| Article 164 | The Competent Authority may station supervisory personnel at each of the stock exchanges; regulations governing such supervision shall be prescribed by the Competent Authority. |
| Article 165 | The stock exchange, its members, and securities brokers and dealers which have contracted for the usage of the centralized securities exchange market of the stock exchange shall comply with the directions given by the supervisory personnel pursuant to acts or regulations. |
Chapter VI Arbitration
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| Article 166 | Parties to any dispute arising under securities transactions executed pursuant to this Act may, pursuant to their agreement, resolve their disputes by arbitration. Any disputes arising between the stock exchange and securities firms, or between securities firms shall be resolved by arbitration regardless whether there is an agreement to arbitration between the parties.
Unless otherwise provided under this Act, the arbitration referred to in the proceeding two Paragraphs shall be governed by the Commercial Arbitration Act. |
| Article 167 | In the event a party to a dispute files any legal action in violation of the provisions of the preceding Paragraph, the other party may petition the court to dismiss such actions. |
| Article 168 | In the event the arbitrators appointed by the parties to a dispute fail to select another arbitrator as provided by their agreement, the Competent Authority may appoint the arbitrator upon request of the parties or on its own authority. |
| Article 169 | Except where an action is commenced to set aside an arbitral award pursuant to Article 23 of the Commercial Arbitration Act, the Competent Authority may order the suspension of the business of a securities firm if the said securities firm fails to comply or delays in complying with the arbitral award or the settlement reached in accordance with Article 28 of the Commercial Arbitration Act. |
| Article 170 | The securities dealers association and the stock exchange shall specify in its articles of association/incorporation or its bylaws provisions relating to arbitration. Such provisions shall not be in conflict with this Act and the Commercial Arbitration Act. |
Chapter VII Penal Provisions
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| Article 171 | A person who has committed any of the following offenses shall be punished with imprisonment for not less than 3 years and not more than 10 years, and in addition thereto, a fine of not less than NT$10 million and not more than NT$200 million may be imposed:
1. A person who has violated the provisions of Paragraph 1 of Article 20, Paragraph 1 and/or Paragraph 2 of Article 155, or Paragraph 1 of Article 157-1.
2. A director, supervisor, manager or employee of an issuer under this Act who, directly or indirectly, causes the company to conduct transactions to its disadvantage and not in the normal course of operation, thus causing substantial damage to the company.
3. A director, supervisor, or manager of an issuer under this Act who, with intent to procure a benefit for himself/herself or for a third person, acts contrary to his/her duties or misappropriates company assets.
Where the amount gained by the commission of an offense under the preceding paragraph is NT$100 million or more, a sentence of imprisonment for not less than seven years shall be imposed, and in addition thereto a fine of not less than NT$25 million and not more than NT$500 million may be imposed.
A person who commits an offense under Paragraph 1 or 2 and subsequently voluntarily surrenders himself/herself, if there is criminal gain and he/she voluntarily hands over the gained assets in full, shall have his/her punishment reduced or remitted. Where an accomplice is captured as a result, the punishment shall be remitted.
A person who commits an offense under Paragraph 1 or 2 and confesses during the prosecutorial investigation, if there is criminal gain and he/she voluntarily hands over the gained assets in full, shall have his/her punishment reduced. Where an accomplice is captured as a result, the punishment shall be reduced by one-half.
Where the criminal benefit gained by a person through commission of an offense under Paragraph 1 or 2 exceeds the maximum amount of the criminal fine, the fine may be increased within the scope of the benefit gained; if the stability of the securities market is harmed, the punishment shall be increased by one-half.
Any property or property interest obtained from the commission of a crime by an offender committing an offense under Paragraph 1 or Paragraph 2, other than that which shall be returned to a victim or a third party or from which damages shall be borne, shall be confiscated within the extent that it belongs to the offender. If the whole or a part of such property or property interest cannot be confiscated, the value thereof shall be indemnified either by demanding a payment from the offender or by offsetting such value with the property of the offender. |
| Article 172 | Any director, controller, supervisor, or employee of a stock exchange or a securities investment trust enterprise who demands, agrees to accept or accepts any improper benefit in connection with the performance of his/her duties shall be punished with imprisonment for not more than five years, detention, and/or a fine of not more than NT$2.4 million.
Any person referred to in the preceding Paragraph who demands, agrees to accept or accepts any improper benefits for actions in breach of his/her duties shall be punished with imprisonment for not more than seven years and in addition thereto a fine of not more than NT$3 million may be imposed.
Any benefits received by persons who committed the offenses specified in the preceding two paragraphs shall be confiscated. If the whole or part of such benefits cannot be confiscated, the value thereof shall be collected from the offender. |
| Article 173 | Any person who promises to offer, agrees to offer, or delivers any improper benefits to any person who acts contrary to his/her duty as specified in the preceding Article shall be punished with imprisonment for not more than three years, detention, and/or a fine of not more than NT$1.8 million.
The punishment of the offense specified in the preceding paragraph may be pardoned if the offender voluntarily surrenders himself/herself to law enforcement authorities. |
| Article 174 | Any person who commits any of the following offenses shall be punished with imprisonment for not less than one year and not more than seven years and in addition thereto a fine of not more than NT$20 million may be imposed:
1. the making of false statements on the application materials required under Article 30, Paragraphs 1 through 3 of Article 44, or Article 93 of this Act.
2. the making and dissemination to the public of false information with regard to the market value of securities, or with regard to the material aspects of the approved public offering.
3. the violation of Paragraph 1 of Article 32 by an issuer, its responsible persons or employees, and the provision of Paragraph 2 of the same Article does not apply.
4. the making of false statements on the account books, forms/statements, documents, or other reference or report materials produced by any issuer or public tender offeror or related persons thereof, securities firm or its principals, securities dealers association, stock exchange, or any other enterprises referred to in Article 18 pursuant to an order of the Competent to produce such materials.
5. the making of false statements on the account books, forms/statements, vouchers, financial reports or any other business documents by any issuer, public tender offeror, securities firm, securities dealers association, stock exchange, or any other enterprises referred to in Article 18, as required to be produced in compliance with acts or regulations, or orders prescribed by the Competent Authority pursuant thereto.
6. the making of false statements in the content of a financial report under the preceding paragraph by a manager or chief accountant who signs or chops the financial report; provided, the punishment may be reduced or remitted if the person has submitted a corrective opinion and provided evidence in a report to the Competent Authority before the Competent Authority or a judicial agency has commenced an investigation [ex officio or] upon a complaint filed by another person.
7. the making of any investment advice relating to an issuer or designated securities transactions which was based on false information and disseminating the said advice on any newspapers and magazines, written materials, broadcasts, films or by other means.
8. the loaning of company funds to another person, using company assets to provide security or a guarantee for another person, or endorsing of a negotiable instrument by a director, manager, or employee of an issuer in violation of an act or regulation, or the articles of incorporation, or beyond the scope authorized by the board of directors, causing substantial damage to the company.
9. counterfeiting, altering, destroying, concealing, or obscuring working papers or relevant records or documents with intent to impede inspection by the competent authority or investigation by a judicial agency.
A person who commits any of the following offenses shall be punished with imprisonment for not more than five years, or a fine of not more than NT$15 million may be imposed [in lieu thereof] or in addition thereto.
1. issuance of a false or untrue opinion by a lawyer regarding any contract, report, or document of the company related to securities offering, issuance, or trading.
2. failure by a certified public account to faithfully fulfill his or her audit duties and issue a report or opinion with respect to any material falsehood or error in a financial report, document, or information reported or published by a company; or failure by a certified public accountant to expressly state a material falsehood or error in a company financial report due to failure to audit in accordance with applicable laws and regulations and generally accepted audit principles.
Where the commission of an offense under the preceding paragraph materially affects shareholders equity or harms the stability of the securities market, the punishment may be increased by one-half.
Where a personnel member or employee of an issuer commits an offense in Article 1, Paragraph 6 and the offense is slight, the punishment may be reduced.
The Competent Authority shall render a disposition suspending certification work by a certified public accountant who violates Subparagraph 2 of Paragraph 2. |
| Article 175 | Any person who violates the provisions of Paragraph 1 of Article 18, Article 22, Paragraph 1 of Article 28-2, Paragraph 1 of Article 43, Paragraphs 2 and 3 of Article 43-1, Paragraphs 2 and 3 of Article 43-5, Paragraph 1 of Article 43-6, Paragraphs 1 through 3 of Article 44, Paragraph 1 of Article 60, Paragraph 1 of Article 62, Article 93, Articles 96 through 98, Article 116, Article 120, or Article 160 shall be punished with imprisonment for not more than two years, detention, and/or a fine of not more than NT$1.8 million. |
| Article 176 | (deleted) |
| Article 177 | Any person who commits any of the following offenses shall be punished with imprisonment for not more than one year, detention, and/or a fine of not more than NT$1.2 million:
1. violation of the provisions of Paragraph 1 of Article 31, Article 34, Article 40, Paragraph 1 of Article 43-4, Paragraph 1 of Article 43-8, Article 45, Article 46, Paragraph 2 of Article 50, Article 119, Article 128, Article 150 or Article 165.
2. violation of regulations prescribed by the Competent Authority pursuant to Article 61. |
| Article 177-1 | Any person who violates the provisions of Article 74 or Article 84 shall be fined an amount not greater than the purchase price of the acquired securities. However, the fine imposed shall not be less than NT$120,000. |
| Article 178 | Any person who commits any of the following offenses shall be punished with a fine of not less than NT$120,000 and not more than NT$2.4 million:
1.Violation of the provisions of Paragraph 1 or Paragraph 3 of Article 14-1, Paragraph 1 or Paragraph 2 of Article 22-2, Paragraph 1, Paragraph 2 or Paragraph 4 of Article 25, Article 26-1, Paragraph 4 of Article 36, Article 41, Paragraph 1 of Article 43-1, Paragraphs 5 to 7 of Article 43-6, Article 58, Paragraph 1 of Article 69, Article 73, Article 77, Article 79, Article 141, Article 144, Paragraph 2 of Article 145, Article 147, Article 152 or Article 159.
2.If any issuer or public tender offeror or related persons thereof, securities firm or its principals, securities dealers association, stock exchange, or any other enterprise referred to in Article 18 fails to submit account books, forms/statements, documents, or other reference or report materials within the time period specified in an order issued by the Competent Authority, or refuses or impedes the inspection initiated by the Competent Authority pursuant to the laws.
3.If any issuer, public tender offeror, securities firm, securities dealers association, stock exchange, or any other enterprise referred to in Article 18 fails to comply with relevant rules in the preparation, submission, public announcement, maintenance, or storage of the account books, forms/statements, vouchers, financial reports or other relevant business documents as required by the laws, or as required by orders issued by the Competent Authority pursuant to the laws.
4.If any person violates the shareholding percentage requirements of directors and supervisors of publicly issued companies prescribed by the Competent Authority in accordance with Paragraph 2 of Article 26, and the enforcement rules for auditing the shareholdings thereto.
5.Violation of the provisions of Paragraph 2, Paragraph 4 through 7 of Article 28-2, and the matters prescribed by the Competent Authority in accordance with Paragraph 3 of Article 28-2.
6. Violation of the provisions of Paragraph 1 of Article 43-2, Paragraph 1 of Article 43-3, Paragraph 1 of Article 43-5, or matters prescribed by the Competent Authority in accordance with Paragraph 4 of Article 43-1.
Where any person who has committed the offenses referred to in Items 2 through 4 of the preceding Paragraph has been fined and ordered to comply within the time period prescribed by the Competent Authority but fails to comply within the specified period, the Competent Authority may order a new period for compliance and impose additional fines of not less than NT$240,000 and not more than NT$4.8 million for each successive failure to comply until corrective action has been taken. |
| Article 179 | If a juridical person violates the provisions of this Act, the individual person responsible for the act will be punished in accordance with this Act. |
| Article 180 | If any person refuses to pay the fine specified in this Act, the matter shall be referred to the court for compulsory execution. |
| Article 180-1 | Where a fine assessed for an offense under this Chapter is NT$50 million or more and the offender lacks the ability to pay it in full, it shall be commuted to labor for a period of not more than two years, to be calculated by the ratio of the total amount of the fine to the number of days in two years; where the fine assessed is NT$100 million or more and the offender lacks the ability to pay it in full, it shall be commuted to labor for a period of not more than three years, to be calculated by the ratio of the total amount of the fine to the number of days in three years. |
Chapter VIII Supplementary Provisions |
| Article 181 | Corporate shares or corporate bonds publicly issued under the Administrative Rules of Securities Firms prior to the effective date of this Act shall be deemed as having been publicly issued under this Act. |
| Article 182 | (deleted) |
| Article 182-1 | The Enforcement Rules of this Act shall be prescribed by the Ministry of Finance. |
| Article 183 | This Act shall become effective on the date of promulgation.
The effective date of the amended Article 54, Article 95, and Article 128 of this Act shall be prescribed by the Executive Yuan. |