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Title:

Regulations Governing Responsible Persons and Associated Persons of Securities Firms  CH

Amended Date: 2021.05.06 

Title: Rules Governing Responsible Persons and Associated Persons of Securities Firms(2003.02.21)
Date:
Article 1  These Rules are prescribed in accordance with Paragraph 2 of Article 54 and Article 70 of the Securities and Exchange Law (hereinafter " the Law").
Article 2  The term "responsible person" as used in these Rules shall be defined in accordance with Article 8 of the Company Law.
 The term "associated persons" as used in these Rules means persons who engage in the following businesses for a securities firm:
 1.investment analysis of securities, internal auditing or accounting;
 2.the undertaking of the underwriting and trading of securities;
 3.the dealing, settlement, clearing of securities or agency for stock affairs;
 4.the account opening, credit search, solicitation, receiving consignment, filing, settlement, clearing of the trading of securities or the receipt, payment, and safekeeping of cash and stocks;
 5.providing margin purchases or short sales for securities transactions;
 6.risk management or operation of derivative financial products.
Article 3  The associated persons of securities firms are classified into the following two categories in accordance with the complexity and responsibility of their duties:
 1.Senior agent: the person who engages in the management of a department or is the responsible person of branch of a securities firm, or investment analysis or internal auditing as described in Paragraph 2 of Article 8.
 2.Agent: the person who engages in the underwriting, dealing or consigned trading of securities or engaged in internal auditing or accounting.
 
 Only the person who is trained and certified by the internal auditor training program held by the institution appointed by the Securities and Futures Commission under the Ministry of Finance (hereinafter "the Commission") can engage in the internal auditing as provided in Item 2 of the preceding Paragraph.
Article 4  The associated person of a securities firm shall be employed full time, provided that where otherwise provided by the Commission, the above shall not apply.
 The following associated persons of a securities firm shall not engage in the business beyond the scope of registration or ask other associated persons to perform on their behalf, unless otherwise prescribed in other laws or regulations:
 1.The person who engages in the consigned trading of securities;
 2.The person who engages in the dealing of securities;
 3.The person who engages in the internal auditing;
 The agent of a securities firm shall not engage in or concurrently engage in the business that shall be engaged by a senior agent.
Article 5  A senior agent of a securities firm shall have one of the following qualifications:
 1.university graduated or above and having been the agent of a securities institution for three years or more;
 2.qualified as a securities investment analyst as prescribed in the Regulations for the Securities Investment Consulting Enterprise;
 3.passed the securities firm's senior agent test held by the Securities and Futures Institute (hereinafter "SFI") at the request of the ROC Securities Dealers Association;
 4.once registered as a securities firm's senior agent in accordance with these Regulations; or obtained a certificate for securities firm's senior agent issued by the Commission;
 5.currently being an agent of a securities institution, and has served one year or more as an agent before the effectiveness of the June 18, 1991 amendment to these Rules, and further that after its effectiveness, the person shall have served as an agent, cumulatively, for five years.
Article 6  An agent of a securities firm shall have one of the following qualifications:
 1.qualified as a securities investment analyst as prescribed in the Regulations for the Securities Investment Consulting Enterprise;
 2.passed the securities firm's agent test held by SFI at the request of the ROC Securities Dealers Association;
 3.once registered as a securities firm agent in accordance with these Regulations; or obtained a certificate for securities firm's agent issued by the Commission;
Article 7  For those who have obtained the certificate for securities firm's associated person issued by the Commission, if there is any need to reissue a certificate, one shall file an application with SFI.
 The preceding Paragraph shall become effective on January 1, 1999.
Article 8  The directors or managers of a securities firm who assume the duties or directly engage in the business referred to in Article 3 shall have the qualifications as prescribed in Article 5 and Article 6.
Except for securities firms concurrently operated by a financial institution, in which the managers of the internal auditing departments and financial departments may also be subject to the regulations of the central authority governing the enterprise concerned, the managers of departments engaged in underwriting, trading on the firm's own accounts, consigned trading, clearing and settlement, internal auditing, securities affairs, and financial affairs, as well as the responsible persons of branch institutions serving as managers of consigned trading and clearing and settlement departments, shall possess the qualifications of a senior agent.
Managers of departments engaged in underwriting, trading on their own accounts, consigned trading, clearing and settlement, and internal auditing at a foreign securities firm's branch institution within the ROC shall possess the qualifications referred to in the preceding paragraph.

 Persons who have registered as managers of the departments referred to in the preceding paragraph prior to the amendment of these Regulations but do not meet the qualifications set forth in the preceding Paragraph shall obtain qualification as a senior agent before December 31, 2003.
Article 9 The general managers of securities firms, except for securities firms concurrently operated by a financial institution, in which the general managers may also be subject to the regulations of the central authority governing the enterprise concerned, shall possess at least one of the following qualifications:

1. Graduate of a local or foreign junior college recognized by the Ministry of Education, or an equivalent or higher degree, with five or more years of sales experience in securities, futures, finance, or insurance, and having held the position of assistant general manager or an equivalent position for one year or more at a securities or futures institution, or the position of manager or an equivalent position at a securities or futures institution for three years or more, with a good performance record.
2. Graduate of a local or foreign junior college recognized by the Ministry of Education or an equivalent or higher degree, with five or more years of administrative or management experience in securities, futures, finance, or insurance, and having held a level nine Ch'ien-jen civil service position or equivalent post for three or more years, with a good record of performance.
3. Six years or more of work experience at a securities institution, and having served in the position of assistant general manager or an equivalent position at a securities or futures institution for one year or more or in the position of manager or an equivalent position at a securities or futures institution for three years or more, with a good performance record.
4. Other academic or work qualifications demonstrating possession of professional knowledge of securities and operations and management experience that would enable sound and effective management of securities firm business.
When hiring a general manager, a securities firm shall first submit documents verifying that the planned candidate meets the qualifications of the preceding paragraph to the stock exchange, the ROC Securities Dealers Association, or the OTC exchange for their review and approval, after which they shall be forwarded to the Commission for recordation before the candidate may fill that position.
The responsible person of a foreign securities firm's branch institution within the ROC shall possess the qualifications set forth in paragraph 1, and documents verifying that the responsible person meets the qualifications of the preceding paragraph shall first be submitted to the stock exchange, the ROC Securities Dealers Association, or the OTC exchange for their review and approval, after which they shall be forwarded to the Commission for recordation, before the responsible person may serve in that capacity.
Article 10 Managers of departments or the assistant general managers, assistants, managers, and the responsible persons of securities firms' branch institutions as set forth in Article 8, paragraph 2 shall possess one of the following qualifications:
1. Graduate of a local or foreign junior college recognized by the Ministry of Education, or an equivalent or higher degree, with three or more years of sales experience in securities, futures, finance, or insurance, with a good performance record.
2. Graduate of a local or foreign junior college recognized by the Ministry of Education or an equivalent or higher degree, with three or more years of administrative or management experience in securities, futures, finance, or insurance, and having held a level seven Ch'ien-jen civil service position or equivalent post for three or more years, with a good record of performance.
3. Four years or more of work experience at a securities institution, with a good performance record.
4. Other academic or work qualifications demonstrating possession of professional knowledge of securities and operations and management experience that would enable sound and effective management of securities firm business.
For a branch institution of a foreign securities firm within the ROC, managers of departments that engage in underwriting, trading on its own accounts, consigned trading, clearing and settlement, and internal auditing shall possess the qualifications set forth in the preceding paragraph.
The provisions of paragraph 1 shall be applied mutatis mutandis for positions that are equivalent to assistant general manager, assistant, or manager under other laws or the articles of incorporation of a securities firm.
Article 11 For those who, prior to the amendment of these Rules, were already serving as the general manager of a securities firm or as department manager or responsible person of the branch institution of a securities firm as set forth under Article 8, paragraph 2, may continue to serve in their original position or for the duration of their original term, and will not be subject to the restrictions of the two preceding articles.
Where, following the amendment of these Rules, a person is promoted or assigned to one of the positions referred to in the preceding paragraph, they shall possess or be in conformance with the qualifications set forth in these Rules; those who do not meet those qualifications shall be dismissed.
Article 12  A securities firm shall register with the stock exchange, securities dealers association or over-the-counter stock exchange its responsible persons and associated persons before such persons may commence performing duties. No one shall perform his duties without registration.
 A securities firm which employs any person who is ordered by the Commission to be discharged from his post according to the Law for less than three years to engage in the business not described in Paragraph 2 of Article 2 shall report to the stock exchange for registration before the employment takes effect.
 The stock exchange, securities dealers association and over-the-counter stock exchange shall not approve the registration and shall cancel the registration of already made in the event of any of the followings:
 1.any responsible person of a securities firm having any of the events specified in Article 31 of the Company Law or Article 53 of the Law;
 2.any associated person of a securities firm having any of the events specified in Paragraph 1 of Article 54 of the Law or not qualified as prescribed in Articles 5 and 6.
 The stock exchange, securities dealers association or over-the-counter stock exchange shall report the registration condition with regard to the registration referred to in the preceding three Paragraphs for the previous month to the Commission for recordation before the fifteenth day of each month.
Article 13  In the occasion of any change of the responsible persons and associated persons, the securities firm shall follow the following rules and report to the stock exchange, securities dealers association or over-the-counter stock exchange for registration within five days after the change. The securities firm shall not be released from its liabilities with regard to the actions of such persons before completion of the registration for the change.
 1.To register for the change in the event of any job transfer or promotion of the responsible person or associated person of a securities firm.
 2.To cancel the registration in the event of any death, resignation, layoff, discharge, severance and retirement of the responsible person or associated person of a securities firm.
 3.To revoke the registration in the event that the responsible person or associated person is ordered to be discharged from his post by the Commission in accordance with the Law or the registration of said person has any of the events specified in Paragraph 3 of the preceding article.
 The stock exchange, securities dealers association or over-the counter stock exchange shall report the registration condition with regard to the registration referred to in the preceding Paragraph for the previous month to the Commission for recordation before the fifteenth day of each month.
 With regard to the change of internal auditing associated person of a securities firm described in Paragraph 1, the securities firm shall file with the stock exchange, securities dealers association or over-the-counter stock exchange for review and recordation before any change shall take effect.
Article 14  In the occasion of a leave, suspension of work or other causes of absence of the responsible person or associated person of a securities firm, the securities firm shall appoint a person with the equivalent qualification to act as a deputy.
 With regard to the deputing matter described in the preceding Paragraph, the securities firm shall record the reason, period, name of the acting deputy and his duty in a special-purpose book for reference.
Article 15  The associated person of a securities firm shall participate in the pre-job and on-job training held by the Commission or by an institution appointed by the Commission.
 The associated person of a securities firm which assumes the job for the first time, or has resumed the job after an absence of 3 years shall participate in the pre-job training within six months after the assumption of the job. Currently employed personnel shall participate in the on-job training every three years.
 The Commission may set out the contents and period for the training described in the preceding Paragraph depending on actual need.
Article 16  The Commission or training institution shall issue a training certificate to the associated persons who participate in and pass the pre-job or on-job training and shall submit the training performance to the employing institution for reference regarding the evaluation, promotion and assignment of work. The Commission or training institution may give reward to those who are outstanding in performance.
Article 17  The Commission or training institution shall, by notice, disqualify the associated persons who fail to participate in the pre-job or on-job training or who fail in the training and are retrained twice in three years but still fail in such retrainings.
Article 18  The responsible person and associated person shall conduct the business in accordance with the rules of honesty and good faith.
 Unless otherwise provided in other laws and regulations, the responsible person and associated person of a securities firm shall not engage in the following conducts:
 1.Engaging in the trading of listed or over-the-counter stocks with the information known on the job for the purpose of obtaining speculative interest;
 2.Being not in response to inquiries made in accordance with the law and disclosing the confidential information regarding the items consigned by the client or regarding other secrets learned as a result of the job;
 3.Accepting the consignment of the client with discretionary authority with regard to the type, quantity, price, sale or purchase of the trading of securities;
 4.Engaging in the trading of securities with guarantee of earning profits or with promise of sharing profits;
 5.Engaging in the trading of securities under the condition of reaching an agreement with the client to jointly undertake the losses or profits of the transaction;
 6.Concurrently engaging in the sale or purchase of securities for his own account while accepting the consignment from clients to buy or sell the same securities as the trading counter party;
 7.Applying to purchase or engaging in the trading of securities in the name of the client or by using the client's account;
 8.Applying to purchase or engaging in the trading of securities for the client in the names of other persons or relatives;
 9.Borrowing or lending of money or securities with the clients or engaging in the brokerage of such;
 10.Having the conducts of fraud or deception or other misleading behavior when engaging in the underwriting, trading for its own account or consigned trading of securities;
 11.Safekeeping securities, cash, chops or deposit book of clients or misappropriating such;
 12.Acting for the client to trade securities without any consignment contract;
 13.Engaging in the trading of securities without observing the instructions given by the client;
 14.Providing the client or unspecified persons with the information indicating that the price of certain securities will rise or fall in order to solicit the trading of securities;
 15.Recommending and soliciting unspecified persons to trade specific stocks except in the occasion of underwriting securities;
 16.Accepting the client to settle by setting off the purchase and sale of securities of the same class with the same or different account, provided that this shall not apply to settlement through offsetting loans and securities in margin trading according to law;
 17.Accepting the opening of account, subscription, trading, or settlement from the company's director, supervisor, or employee for others.
 18. Accepting the opening of account from a person who is not the principal. However, this rule does not apply if the Commission regulates otherwise.
 19.Accepting the application of purchase, trading or settlement from a person who is not the principal or not an agent with a power of attorney from the client;
 20.Accepting the consignment for trading under the condition of being aware that the client has used the undisclosed information of a public company which has material impact on the stock price or being aware that the client intends to manipulate the market;
 21.Entered into an agreement for acquiring unjust profit between the persons engaging in the underwriting of securities and the issuing company or its relevant personnel;
 22.Soliciting, acting as intermediary and promoting unapproved securities or their derivative products;
 23.Other conducts which are in violation of securities laws and regulations or conducts prohibited by the rules prescribed by the Commission.
 Persons as referred to in the preceding Paragraph shall also not engage in the conducts prohibited by the securities laws and regulations.
 Other employees of a securities firm shall be governed mutatis mutandis by the provisions of the two preceding paragraphs.
Article 19  The responsible person or associated persons shall, in the period set out by the Commission, report to the Commission for explanation or submit a report in writing in the event that such person is alleged to be in violation of the securities laws and regulations or that there is any inquiry with regard to the performance of duties.
Article 20  When engaging in the businesses described in Paragraph 2 of Article 2, the associated person of a securities firm shall be deemed to acting under the authorization of said securities firm.
Article 21  The Commission shall give reward or commendation to the responsible person or associated persons of a securities firm in the event of any of the following:
 1.For those who contribute one's intellect and efforts in order to establish the stock market mechanism and have prominent performance;
 2.His/her research or work is proved to be creative to the development of the stock market and the implementation of the securities business and has been adopted;
 3.For those who report any illegal matter which is proved to be true;
 4.For those who serve in the same securities firm over fifteen consecutive years and are devoted to one's job;
 5.For those who have concrete evidence showing that he is actively engaging in the public welfare affairs with a spirit of teamwork;
 6.For those who have the behavior which deserves rewarding.
Article 22  These Rules shall become effective on the date of promulgation.