Chapter I General Provisions
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| Article 1 | These criteria are prescribed pursuant to Paragraph 4 of Article 44 of the Securities and Exchange Law (hereinafter referred to as the "Law"). |
| Article 2 | Each type of securities business which may be operated by a securities firm shall be approved separately by the Securities and Futures Commission of the Ministry of Finance (hereinafter referred to as the "Commission") under the Law and these Criteria. The approved type of securities business shall be specified by the license of each securities company. The operation of securities business shall not he undertaken before it is approved and specified by the license. |
Chapter II The Establishment of Securities Firms
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| Article 3 | A securities firm shall be established as a company limited by shares.The minimum paid-in capital for a securities firm, according to the type of business which it operates, shall be:
1. a securities underwriter: four hundred million New Taiwan Dollars;
2. a securities dealer: four hundred million New Taiwan Dollars;
3. a securities broker: two hundred million New Taiwan Dollars.
The minimum paid-in capital required in the preceding paragraph shall be fully collected by the promoters at the time of incorporation. |
| Article 4 | The promoters of a securities company shall be disqualified should any of the following circumstances apply:
1. where the person is finally convicted of having committed an offense against the internal/external security of the state, or is at large for such offenses pending the closing of the case;
2. where the person has been sentenced to imprisonment for one year or more for having committed fraud, breach of trust, misappropriation, or for having violated applicable laws or regulations governing the regulation of business and industry, and two years have not elapsed since the completion of the term of such imprisonment;
3. where the person is convicted of having committed embezzlement during his/here years of service as a government employee and two years have not elapsed since the completion of the term of imprisonment;
4. where the person is adjudicated bankrupt and his/her civil rights have not been restored; or when acting as a director, supervisor or manager for a juristic person who has been adjudicated bankrupt, and that the termination of bankruptcy proceedings has not exceeded three years, or the reconciliation to resolve his/her bankruptcy ahs not been fulfilled;
5. where there is an event causing serious loss of good credit standing, and time has not been settled or two years have not elapsed since the settlement; or in the last three years any financial institution has refused to transact with the person or there is a record of loss of good credit standing.
6. where the person has limited legal capacity;
7. where the person has been punished more severely than a fine under the Law or Futures Trading Law, and that the execution, probation, or pardon of such a judgement has not exceeded three years; or
8. where three years have not elapsed since the person has been dismissed or replaced of his duties by this Commission;
9. where the person has, as supported by facts, engaged in or been involved in other bad faith or inappropriate activities, demonstrating unsuitability to work in the securities industry.
Where the promoter is a juristic person, the provisions of the preceding paragraph shall apply mutatis mutandis to any representative of or any designated individual executing business for the juristic person. |
| Article 5 | (deleted)
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| Article 6 | The business floor and the facilities of a securities firm shall be in accordance with the standards prescribed by the OTC securities exchange; for a securities firm which engages in brokerage or proprietary trading business in the stock exchange, they shall also be in accordance with the floor and facilities standards prescribed by the stock exchange. |
| Article 7 | In filing an application with the Commission for approval, the promoters ofa securities firm shall according to the type of business which it operates, deposit the amount prescribed below with the bank designated by the Commission:
1. a securities underwriter: forty million New Taiwan Dollars;
2. a securities dealer: ten million New Taiwan Dollars;
3. a securities broker: fifty million New Taiwan Dollars.
The deposit prescribed in the preceding Paragraph may be substituted by government bonds or financial bonds.
The fund deposited in compliance with the first Paragraph shall not be removed before the company deposits the operation bond and obtains the incorporation registration; for a company whose application for the permit is rejected or whose permit is revoked, the fund may be removed after the Commission informs the company. |
| Article 8 | Prior to filing an application with the Commission for approval to engage in brokerage or proprietary trading business in the stock exchange, the applicant shall receive the consent of computer linkage from the securities central depository enterprise and, according to the type of business which it operates, receive the consent of computer linkage from the stock exchange as required below:
1. a securities dealer: the linkage of the host computer or the terminal;
2. a securities broker: the linkage of the host computer or the terminal.
Prior to filing an application with the Commission for approval to engage in brokerage or proprietary trading business in the over-the-counter market by its head office and newly established branches, the applicant shall receive the consent of the computer linkage for its securities trading information from the OTC stock exchange. |
| Article 9 | In filing an application with the Commission for the permit to establish a securities firm, the promoters shall submit the following documentation:
1. the application form (Annex 1);
2. articles of incorporation;
3. a business plan which specifies: the principles of business operation; the division of internal organization; the employment of personnel; the description of facilities; and its financial projection for the next three years;
4. the minutes of the promoters' meeting;
5. the list of promoters (Annex 2);
6. a statement from the promoters declaring the inapplicability of Article 4 (Annex 3);
7. the certification of the deposit made under Article 7;
8. the documentation affirming the availability to the computer linkage as required under Article 8; and
9. other documents that the Commission may so require. |
| Article 10 | The incorporation registration of a securities firm shall be completed within six months from the date of the permit issued by the Commission and the following documentation shall be submitted to the Commission to apply for a securities business operation license:
1. the application form (Annex 4);
2. a photocopy of the company license;
3. articles of incorporation;
4. the system of internal control;
5. the balance sheet one month preceding the date of application;
6. the list of shareholders;
7. the list of directors and the minutes of the board of directors;
8. the list of supervisors;
9. the list of managerial and associated persons with certification of their qualifications;
10. a statement declaring the inapplicability of Article 53 of the Law in respect of directors, supervisors, and managers;
11. the documentation certifying the compliance with Article 6;
12. the documentation certifying the deposit of operation bond;
13. the contract affirming the availability to utilize the computer linkage facilities under Article 8; and
14. other documents that the Commission may so require.
The permit for the establishment of a securities firm shall be revoked if the said securities firm fails to apply for the license within the duration prescribed in the preceding Paragraph. The duration prescribed in the preceding Paragraph may be extended, however, should the said securities firm apply to the Commission, with just cause, prior to the expiration of the duration. Such an extension shall not be more than six months and may be applied only once. |
| Article 11 | Securities firms shall establish the system of internal control referred to in Item 4 of Paragraph 1 of the preceding Article according to the Rules Governing Establishment of Internal Control and Internal Audit System for a Service Enterprise in Securities and Futures Market set by this Commission and the regulations for systems of internal control for securities firms set by the Taiwan Stock Exchange Corporation and other related institutions. |
| Article 12 | In the event that a securities firm engages in two or more types of securities business, the calculation in compliance with the requirement stipulated in Article 3, 7, and 8 shall be that applicable to the total of the types of business that it operates. |
Chapter III The Application by a Financial Institution to Concurrently Operate Securities Business
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| Article 13 | A financial institution which, in accordance with the Banking Law or other laws and regulations, may engage in securities business shall file the application under the name of the said financial institution. |
| Article 14 | A financial institution shall be limited to operate only one item of securities business as prescribed below; however, the operation as a dealer in government bonds or, the concurrent operation of other securities business approved prior to the promulgation of these Criteria is not limited:
1. securities underwriting;
2. securities dealings;
3. securities brokerage;
4. securities underwriting and securities dealings;
5. securities dealings and securities brokerage in the over-the-counter market. |
| Article 15 | A financial institution which concurrently operates securities business shall allocate the operating capital in the amount same as that required under Article 3 hereof; if the paid-in capital of the said financial institution is insufficient to allocate the operating capital, a capital increase has to be made before the application.
A financial institution which concurrently operates securities business shall allocate operating capital through funds set aside especially for this purpose and unless governed by Article 102 of the Banking Law, may not use it for purposes other than securities business. |
| Article 16 | The provisions of Article 6, 7, 8, 11, and 12 shall be applied mutatis mutandis to a financial institution which applies to concurrently operate securities business. The provisions of Articles 11 shall be applied mutatis mutandis to a financial institution which only operates as a dealer in government bonds and the said financial institution shall assign at least one full time associated person to deal with such business. |
| Article 17 | In filing an application with the Commission for the permit to concurrently operate securities business, a financial institution shall submit the following documentation:
1. the application (Annex 6);
2. a photocopy of its business license;
3. articles of incorporation or equivalent documentation;
4. a business plan which specifies: the principles of business operation; the division of internal organization; the employment of personnel; the description of facilities; and its financial projection for the next three years;
5. the minutes of the Board of directors;
6. the list of directors and supervisors;
7. a statement declaring the inapplicability of Article 53 of the Law in respect of its directors and supervisors (Annex 5);
8. the certification of the deposit made under Article 7;
9. the documentation affirming the availability to the computer linkage as required under Article 8; and
10. other documents that the Commission may so require. |
| Article 18 | The application by a financial institution for a securities business operation license shall be filed within six months from the date of the permit issued by the Commission and the following documentation shall be submitted:
1. the application (Annex 7);
2. the system of internal control for the securities business;
3. the list of managerial and associated persons with certification of their qualifications;
4. a statement declaring the inapplicability of Article 53 of the Law in respect of its managers (Annex 5) ;
5. the documentation certifying the compliance with Article 6;
6. the documentation certifying the deposit of operation bond;
7. the contract affirming the availability to utilize the computer linkage facilities under Article 8; and
8. other documents that the Commission may so require.
The permit for the operation of securities business shall be revoked if the said financial institution fails to apply for the license within the duration prescribed in the preceding Paragraph. The duration prescribed in the preceding Paragraph may be extended, however, should the said financial institution apply to the Commission, with just cause, prior to the expiration of the duration. Such an extension shall not be more than six months and may be applied only once. |
| Article 18-1 | In the event that a financial institution only applies to operate as a dealer in government bonds, its application for the permit under Article 17 may exempt the documentation of Item 4, 6, 7 and 8; its application for the securities business operation license under Article 18 may exempt the documentation of Item 5. |
Chapter IV The Establishment of Branch offices
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Section I Domestic Securities Firms
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| Article 19 | A securities firm established under these Criteria may apply for the establishment of a branch office upon the completion of one year operation. |
| Article 20 | A securities firm applying for the establishment of branch offices shall meet the following requirements:
1. the applicant's most recent CPA audited financial report indicates that the net worth of each share exceeds its par value and its financial condition complies with the standards stipulated under Article 49 of the Law; however, the requirement regarding the net worth of each share exceeds par value shall not apply to a securities firm which increases branch offices owing to merger, or acquisition other securities firms;
2. the applicant has not been issued a warning by this Commission under Item 1 of Article 66 of the Law within the most recent three months;
3. the applicant has not been sanctioned by the Commission's order under Item 2 of Article 66 of the Law to dismiss its directors, supervisors or managers within the most recent six months or ordered under Item 2 of Paragraph 1 of Article 100 of the Futures Trading Law to replace its responsible person or other related personnel;
4. the applicant has not been suspended operation by the Commission within the most recent year;
5. the applicant's business licenses have not been revoked by the Commission within the most recent two years;
6. the applicant has not been restricted or suspended to trade under the by-laws of the stock exchange, OTC exchange, or futures exchange within the most recent one year; and
7. the Capital Sufficiency Ratio of the securities firm is not lower than 150%.
For securities firms that increase branch offices owing to merger or acquisition of the entire business, assets or facilities of other securities firms under the approval of the Commission, the requirements of Items 2, 3, and 7 in the preceding paragraph shall not apply. |
| Article 21 | For each branch office that a securities firm establishes, the paid-in capital of the firm shall increase by thirty million New Taiwan Dollars. |
| Article 22 | The standards of the business floor and facilities required under Article 6 shall apply mutatis mutandis to branch offices of securities firms.
Prior to filing an application with the Commission for approval to engage in brokerage business in the stock exchange by a branch office of a securities firm, the consent of computer linkage from the securities central depository enterprise and the stock exchange shall be received.
Prior to filing an application with the Commission for approval to engage in brokerage business in the over-the-counter market by a securities branch office of a securities firm, the consent of the computer linkage for its securities trading information from the OTC securities exchange shall be received. |
| Article 23 | In filing an application with the Commission for the permit to establish branch offices, a securities firm shall submit the following documentation:
1. the application for establishment of branch offices (Annex 8);
2. articles of incorporation or equivalent documentation;
3. a business plan which specifies: the principles of business operation by branch offices; the division of internal organization; the employment of personnel; the description of facilities; and its financial projection for the next three years;
4. the minutes of the Board of directors;
5. the system of internal control required under Article 11 (including that of the branch offices);
6. the documentation affirming the availability to the computer linkage as required under Paragraph 2 or 3 of Article 22; and
7. other documents that the Commission may so require. |
| Article 24 | The incorporation registration of a securities branch office shall be completed within six months from the date of the permit issued by the Commission and the following documentation shall be submitted to the Commission to apply for a securities business operation license of the said branch office:
1. the application for establishment of branch office (Annex 9);
2. a photocopy of the branch office establishment registration certificate;
3. the list of managerial and associated persons with certification of their qualifications;
4. the documentation certifying the compliance with Article 6;
5. the documentation certifying the deposit of operation bond;
6. the contract affirming the availability to utilize the computer linkage facilities under Paragraph 2 or 3 of Article 22; and
7. other documents that the Commission may so require.
The permit for the establishment of a branch office shall be revoked if the applicant fails to apply for the license within the duration prescribed in the preceding Paragraph. The duration prescribed in the preceding Paragraph may be extended, however, should the said securities firm apply to the Commission, with just cause, prior to the expiration of the duration. Such an extension shall not be more than six months and may be applied only once. |
| Article 25 | The provisions of Article 19 through 24 shall apply mutatis mutandis to those applications by financial institutions which concurrently operate securities business for establishment of offices to concurrently operate securities business. The provisions of Articles 20, Items 1, 2, 4, 5, 6 and 7 of Article 23, and Items 1, 2, 3, 5, 6 and 7 of Paragraph 1, and Paragraph 2 of Article 24 of these Criteria shall be applied mutatis mutandis to a financial institution which only applies to conduct proprietary trade in government bonds at its branch offices. The said financial institution shall assign a full time associated person to deal with such business. |
| Article 26 | A securities firm applying for the permit to establish branch offices or representative offices overseas or a financial institution with approval to concurrently operate securities business applying for the permit to concurrently operate securities business by its overseas branch offices shall submit the following documentation to the Commission:
1. articles of incorporation or equivalent documentation;
2. a business plan: for the establishment of branch offices, the plan shall specify the principles of business operation by its overseas branch offices, the division of internal organization, the employment of personnel, the description of facilities, and its financial projection for the next three years; for the establishment of representative offices, the plan shall specify the organization of and affairs to be dealt with by its representative offices.
3. the minutes of the Board of directors;
4. the system of internal control required under Article 11 (including that of the overseas branch offices or representative offices);
5. other documents that the Commission may so require. |
| Article 26-1 | A securities firm approved by a foreign nation to establish branch offices or representative offices overseas or a financial institution with approval to concurrently operate securities business that has been approved by a foreign nation to operate securities business by its overseas branch offices shall submit the following documentation to the Commission within one month from the date of completion of such establishment:
1. a photocopy of the document issued by the said foreign nation to approve the establishment; and
2. the list of managersand associated persons or representatives. |
Section II Foreign Securities Firms
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| Article 27 | (deleted)
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| Article 28 | A foreign securities firm which intends to establish branch offices within the territory of the Republic of China, shall meet the following qualifications:
1. the applicant possesses sufficient international securities business experience and financial health in the business type being applied for;
2. the applicant has not been sanctioned administratively by its home country's securities regulatory authorities within the most recent two years;
The sufficient international securities business experience referred to in Item 1 of the preceding paragraph requires more than three years in the securities business and one of the following criteria:
1. verification of sufficient international securities business experience through the governing institution or other organization of the firm's mother nation, or through any other institution recognized by the Commission.
2. obtaining from a country other than the firm's mother nation a membership or trading qualification of the stock exchange.
3. a place of business operation located outside of the firm's mother nation or business operations in overseas markets, such that it has received income from the same type of operations applied for.
The financial health referred to in Item 1 of Paragraph 1 requires the most recent CPA audited financial report to indicate that the net value of per share is not below its par value. |
| Article 29 | A foreign securities firm applying for the establishment of a branch office within the territory of the Republic of China should deposit operating capital which shall not be less than the total amount of the paid-in capital needed to be increased for establishment of a branch office prescribed by Article 21, and the business bond and the settlement/clearance fund needed to be deposited in accordance with Articles 9 and 10 of the Regulations Governing Securities Firms, Article 6 of the Rules for Dealing with Margin Loans and Stock Loans by Securities Firms and the requirements stipulated by other rules and regulations. However, if applying for the establishment of a branch office thereafter, the firm shall deposit the business bond and the settlement/clearance fund according to Articles 9 and 10 of the Regulations Governing Securities Firms regarding the procedure for establishing branch offices.
A foreign securities firm applying for the establishment of a branch office shall maintain in the Republic of China assets which shall not be less than the amount of the reserve for trading losses, the reserve for breach of contract losses and the special capital reserve accumulated in accordance with Articles 11, 12, and 14 of the Regulations Governing Securities Firms, and the amount of the liabilities on the balance sheet of the said branch office. |
| Article 30 | The provisions of Articles 6 and 8 shall apply mutatis mutandis to the establishment of branch offices within the territory of the Republic of China by foreign securities firms. |
| Article 31 | In filing an application with the Commission for the permit to establish branch offices, a foreign securities firm shall submit the following documentation:
1. the application for establishment of branch offices (Annex 10);
2. a certified copy of its articles of incorporation or equivalent documentation;
3. a business plan which specifies: the principles of business operation; the division of internal organization; the employment of personnel; the description of facilities; and its financial projection for the next three years;
4. the system of internal control required by Article 11;
5. the securities business license issued by the securities regulatory agency or an equivalent agency of its home country and the documentation certifying the compliance with the requirements stipulated under Article 28;
6. the list of directors, managers, and shareholders who possess more than five percent of its outstanding shares;
7. a certified copy of the minutes of the board of directors meeting at which the resolution to establish branch offices in the Republic of China was made;
8. the names, nationalities and domiciles of directors and other responsible persons;
9. the names, nationalities and domiciles or residence and the power of attorney of designated agents for litigious and non-litigious matters in the Republic of China;
10. balance sheets and income statements audited by certified public accountants for the most recent three years;
11. the power of attorney designating agents for the purpose of applying to the Commission for establishment of branch offices;
12. the documentation of identification for the agent for litigious and non-litigious matters in the Republic of China;
13. the documentation affirming the availability to the computer linkage as required under Article 8; and
14. other documents that the Commission may so require.
All the aforesaid documentation in foreign language shall be accompanied by a Chinese translation. |
| Article 32 | The establishment registration of a foreign securities firm's branch office shall be completed within six months from the date of the permit issued by the Commission and the following documentation shall be submitted to the Commission to apply for a securities business operation license of the said branch office:
1. the application (Annex 11);
2. a photocopy of the branch office establishment registration certificate;
3. the list of managers and associated persons with certification of their qualifications;
4. the documentation certifying the compliance with Article 6;
5. the documentation certifying the deposit of business bond;
6. the contract affirming the availability to utilize the computer linkage facilities under Article 8; and
7. other documents that the Commission may so require.
The permit for the establishment of a foreign securities firm's branch office shall be revoked if the applicant fails to apply for the license within the duration prescribed in the preceding Paragraph. The duration prescribed in the preceding Paragraph may be extended, however, should the said foreign securities firm apply to the Commission, with just cause, prior to the expiration of the duration. Such an extension shall not be more than six months and may be applied only once. |
| Article 33 | A foreign financial institution, with approval from its home government, may apply to the Commission for the establishment of branch offices for the operation of securities business.
The provisions of Articles 6, 8, 11 through 15, 19, 20, 29, 31, and 32 shall apply mutatis mutandis to foreign financial institutions which apply for their branch offices established within the territory of the Republic of China to concurrently operate securities business. |
| Article 33-1 | A foreign securities firm intending to establish a representative office in the Republic of China shall meet the following qualifications:
1. the applicant possesses sufficient experience in international securities business;
2. the applicant has not been sanctioned suspension of business or more severe penalty administratively by its home country's securities regulatory authorities within the most recent year.
The sufficient experience in international securities business referred to in Item 1 of the preceding paragraph has the same requirements set in Item 2 of Article 28. |
| Article 33-2 | In filing an application with the Commission for the approval to establish a representative office within the territory of the Republic of China, a foreign securities firm shall submit the following documentation:
1. application for the establishment of representative offices;
2. the securities business license issued by the securities regulatory agency or its equivalent agency of the home country and documents certifying compliance with the qualification requirements stipulated under Article 33-1;
3. a certified copy of its articles of incorporation or equivalent documentation;
4. a certified copy of the minutes of the board of directors meeting at which the resolution to establish a representative office in the Republic of China was made;
5. balance sheets audited by certified public accountant for the most recent three years;
6. a certified copy of the power of attorney designating the representative;
7. a resume of the authorized representative;
8. a certified copy of the power of attorney designating the agent for the purpose of applying to this Commission for establishment of representative office;
9. other documents that this Commission may so require.
All the aforesaid documentation in foreign language shall be accompanied by a Chinese translation. |
| Article 33-3 | For a foreign securities firm approved to establish a representative office within the territory of the Republic of China, its representative office is prohibited from engaging in the securities business stipulated under Article 15 of the Securities and Exchange Law. |
Chapter V The Investment in Securities Firms by Overseas Chinese and Foreign Nationals
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| Article 34 | The investment in securities firms by overseas Chinese and foreign nationals shall be approved by the Commission in advance. |
| Article 35 | (deleted)
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| Article 36 | (deleted)
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| Article 37 | (deleted)
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Chapter VI The Increase of the Type of Business
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| Article 38 | A securities firm or a financial institution concurrently operating securities business applying for the increase of the type of business shall meet the following requirements:
1. the applicant has not been issued a warning by this Commission under Item 1 of Article 66 of the Law within the most recent three months;
2. the applicant has not been sanctioned by the Commission's order under Item 2 of Article 66 of the Law to dismiss its directors, supervisors or managers within the most recent six months or order under Item 2 of Paragraph 1 of Article 100 of the Futures Trading Law to replace its responsible person or other related personnel;
3. the applicant has not been suspended operation by the Commission under Item 3 of Article 66 of the Law within the most recent one year;
4. any portion of the applicant's business licenses has not been revoked by the Commission under the Law within the most recent two years;
5. the applicant has not been restricted or suspended to trade under the by-laws of the stock exchange, OTC exchange, or futures exchange within the most recent one year; and
6. the Capital Sufficiency ratio of the securities firm is not lower than 150%. |
| Article 39 | In filing an application for the permit to increase the type of business by a securities firm or a financial institution concurrently operating securities business, the following documentation shall be submitted to the Commission:
1. articles of incorporation or equivalent documentation;
2. a business plan which specifies: the principles of the operation for the increased type business; the division of internal organization; the employment of personnel; the description of facilities; and its financial projection for the next three years;
3. the minutes of the Board of directors;
4. the system of internal control required under Article 11 (including that for the increased business type);
5. the documentation affirming the availability to the computer linkage as required under Article 8; and
6. other documents that the Commission may so require. |
| Article 40 | The amendment registration for the increase of the type of business of a securities company or a financial institution concurrently operating securities business shall be completed within six months from the date of the permit issued by the Commission and the following documentation shall be submitted to the Commission to apply for a securities business operation license:
1. a photocopy of the company license with the increased type of business;
2. the list of managers and associated persons with certification of their qualifications;
3. the documentation certifying the compliance with Article 6;
4. the documentation certifying the deposit of business bond;
5. the contract affirming the availability to utilize the computer linkage facilities under Article 8; and
6. other documents that the Commission may so require.
The permit for the increase of the type of business shall be revoked if the applicant fails to apply for the license within the duration prescribed in the preceding Paragraph. The duration prescribed in the preceding Paragraph may be extended, however, should the applicant apply to the Commission, with just cause, prior to the expiration of the duration. Such an extension shall not be more than six months and may be applied only once. |
| Article 40-1 | In the event that a securities firm or a financial institution concurrently operating securities business only applies to increase the business of proprietary trading in government bonds, its application for the permit under Article 39 may exempt the documentation required under Item 2; its application for the securities business operation license under Article 40 may exempt the documentation required under Item 3. |
| Article 41 | The provisions of Article 3, 6, 8, 11, 14 and 15 shall be applied mutatis mutandis to the application for the increase of the type of business by a securities firm or a financial institution concurrently operating securities business.The provisions of Article 3, 11, 14 and 15 shall be applied mutatis mutandis to the application to increase the business of proprietary trading in government bonds and the said securities firm or financial institution shall assign at least one full time associated person to deal with such business. |
| Article 41-1 | Articles 38 to 40 are applicable to securities firms or financial institutions concurrently operating securities business applying for increasing the types of business operations. |
Chapter VII Supplemental Provisions |
| Article 42 | (deleted)
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| Article 43 | These Criteria shall come into force as of the date of promulgation except as to Item 7 of Article 20 and Item 6 of Article 38 which shall come into force as of January 1, 1999. |