| Title： |
Regulations Governing Responsible Persons and Associated Persons of Securities Firms(2006.07.26) |
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Article 1
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These Regulations are prescribed in accordance with Paragraph 2 of Article 54 and Article 70 of the Securities and Exchange Law (hereinafter " the Law").
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Article 2
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The term "responsible person" as used in these Regulations shall be defined in accordance with Article 8 of the Company Law.
The term "associated persons" as used in these Regulations 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 registrar and transfer services;
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;
7. conducting other approved business.
The responsible person and associated persons of the overseas branch of a securities firm shall abide by the local laws and regulations governing securities in the country where they carry out their operations. With the exception of Article 12, Article 13, and Article 18, paragraph 1, these Regulations shall not apply.
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Article 3
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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 1 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 an institution accredited by the Financial Supervisory Commission under the Executive Yuan (hereinafter "the Commission") can engage in the internal auditing as provided in Item 2 of the preceding Paragraph.
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Article 4
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Associated persons 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;
An agent of a securities firm shall not engage in or concurrently engage in the business that shall be engaged by a senior agent.
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Article 5
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A senior agent of a securities firm shall have one of the following qualifications:
1.university graduated or above and having been an agent of a securities institution for three years or more;
2.qualified as a securities investment analyst as prescribed in the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises;
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 Regulations, and further that after its effectiveness, the person shall have served as an agent, cumulatively, for five years.
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Article 6
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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 Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises;
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;
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Article 7
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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.
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Article 8
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Except for securities firms concurrently operated by a financial institution, in which the managers of the internal auditing departments and financial departments may follow separate provisions set out by this Commission, the managers of departments engaged in underwriting, trading on the firm's own accounts, consigned trading, clearing and settlement, internal auditing, stock registrar and transfer services, and financial affairs, as well as the responsible persons of branch units serving as managers of consigned trading and clearing and settlement departments, shall possess the qualifications of a senior agent.
With the exception of the responsible person and the managers of the finance and stock registrar and transfer departments, 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 unit within the ROC shall possess the qualifications of a senior agent.
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Article 9
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The general managers of securities firms shall be of upstanding character and possess the ability to effectively lead and manage a securities firm; with the exception of general managers of securities firms concurrently operated by financial institutions, which may otherwise be subject to the provisions of other acts and regulations, general managers 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. 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.
3. 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 its review and approval, before the candidate may fill that position.
The provisions of the preceding two paragraphs shall apply mutatis mutandis to the responsible persons of foreign securities firms' branch units within the ROC.
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Article 10
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Managers of departments as set forth in Article 8, paragraph 1, and the assistant general managers, deputy assistant general managers, and managers of those departments, or who supervise those departments, and the responsible persons of securities firms' branch units 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 business work experience in securities, futures, finance, or insurance, with a good performance record.
2. Four years or more of work experience at a securities institution, with a good performance record.
3. 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 unit 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.
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Article 11
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For those who, prior to the amendment of these Regulations, were already serving as the general manager of a securities firm or as department manager or responsible person of the branch unit of a securities firm as set forth under Article 8, paragraph 1, 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 Regulations, 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 Regulations; those who do not meet those qualifications shall be dismissed.
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Article 11-1
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A responsible person of a securities firm may not serve as a responsible person of a bank, financial holding company, trust company, credit cooperative, credit department of a farmers' (fishermen's) association, bills finance company, futures enterprise, insurance enterprise, or another securities enterprise. However, this restriction shall not apply in the following circumstances:
1. Where it is for purposes of an investment relationship between the securities firm and such institutions, and there is no overlapping of the chairmen and/or officers thereof.
2. Where it is for purposes of conducting a merger or consolidation, and this Commission has granted approval, the responsible person may serve as the chairman of such a finance-related enterprise.
3. Where a securities firm is a subsidiary of a financial holding company, the responsible person of the securities firm may serve as the responsible person of such financial holding company or of another of its subsidiaries; provided, that there may not be overlapping of officers between the subsidiaries.
4. Where a securities firm is a juristic-person director or supervisor of a financial holding company, its responsible person, for purposes of serving as a responsible person of that holding company, may concurrently serve as a director or supervisor of a subsidiary of that holding company.
Where for purposes of an investment relationship between a securities firm and a non-financial institution, and there is no overlapping of the chairmen and/or officers thereof, a responsible person of the securities firm may concurrently serve as a director or supervisor of such an investee company.
Any concurrent holding of positions by a responsible person of a securities firm shall be limited to the scope necessary for ensuring the effective execution of the responsible person's duties as such and duties in the concurrently held position, and for maintaining the business operations of the securities firm; it may not involve any conflict of interest or violation of securities regulations or the internal control system, and the rights and interests of shareholders shall be protected.
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Article 11-2
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A responsible person of a securities firm, or a spouse thereof, who serves as a director, supervisor, or officer, or is a shareholder holding 5 percent or more of the total issued shares, of a public company, may not participate in any policy decision-making of the securities firm in the course of any operations relating to that public company.
The calculation of shares held by a person referred to in the preceding paragraph shall include shares held under the names of the person's spouse and minor children, and those held under the names of any other persons.
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Article 12
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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 void any registration already made, in the event of any of the following:
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.
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Article 13
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In the occasion of any change of the responsible persons and associated persons, the securities firm shall report to the stock exchange, securities dealers association, or over-the-counter stock exchange to carry out registration within five days after the change, as specified below. The securities firm shall not be released from its liabilities with regard to the actions of such persons before completion of registration of the change.
1.To carry out amendment registration in the event of any job transfer or promotion of the responsible person or associated person of a securities firm.
2.To carry out cancellation registration in the event of any death, resignation, layoff, discharge, severance, or retirement of the responsible person or associated person of a securities firm.
3.To carry out voidance 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.
In the case of registration of changes in the responsible person or associated person of the overseas branch of a securities firm, registration shall be performed within ten days after the change.
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 approval and recordation before any change shall take effect.
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Article 14
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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.
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Article 15
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Associated person of a securities firm shall participate in the pre-service and in-service 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-service training within six months after the assumption of the job. Currently employed personnel shall participate in the in-service 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.
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Article 16
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The Commission or training institution shall issue a training certificate to the associated persons who participate in and pass the pre-service or in-service 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.
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Article 17
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The Commission or training institution shall, by notice, disqualify the associated persons who fail to participate in the pre-service or in-service training or who fail in the training and are retrained twice in three years but still fail in such retrainings.
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Article 18
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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 settlement by the client by means of offsetting the purchase or sale of securities with the sale or purchase of securities of the same class through the same or a 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.
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Article 19
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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.
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Article 20
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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.
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Article 21
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The Commission will 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 for fifteen consecutive years or longer 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.
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Article 22
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These Regulations shall become effective on the date of promulgation.
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