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Article 1
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These Rules are prescribed in accordance with Paragraph 2 of Article 18 of the Securities and Exchange Law (the "Law").
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Article 2
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The term "credit rating enterprise" as used in these Rules shall mean a company which, in an independent, objective, and impartial spirit, ratesing of the degree of credit risk of the subject of the rating, and the performance thereof.
The term "internationally renowned credit rating company" as used in these Rules shall mean a credit rating company that has been in business for no less than five years and has performed credit rating for no fewer than five international bond issues in which the aggregate value of subject of the rating was greater than US$500 million.
The term "associated persons" as used in these Rules shall mean persons who are directly involved in credit rating work.
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Article 3
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An enterprise engaging in the credit rating business shall be approved by the Securities and Futures Commission (the SFC) of the Ministry of Finance, and issued a business license as evidence thereof before it may commence business operations. The above provisions shall apply to the establishment of a branch office.
A credit rating enterprise establishing a branch office abroad shall be approved by the SFC, and shall file a report accompanied with the following documents to the SFC for recordation within one month after completion of establishment:
1. one photocopy of approval letter for establishment issued by the local government authority in charge; and
2. name list of managers and associated persons.
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Article 4
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A credit rating enterprise shall be organized in the form of a company limited by shares, unless otherwise provided in these Rules.
The paid-in capital of a credit rating enterprise shall not be less than NT$50 million, and shall be fully subscribed by the promoters upon issuance.
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Article 5
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An internationally renowned credit rating company applying to establish a branch office in the R.O.C. shall submit relevant certified documents and certificate of working capital in the amount of NT$50 million appropriated especially for business purposes to the SFC for approval.
The branch office so established shall not be subject to the restrictions prescribed in the provisions of Paragraph 1 of the preceding Article.
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Article 6
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No person to whom any of the following items apply shall serve as a promoter, director, supervisor, or manager of a credit rating enterprise; those appointed and currently serving in any of these capacities shall be discharged by the SFC pursuant to the provisions of Article 18-1, Paragraph 2 of the Law, whereby the provisions of Article 53 of the Law shall apply mutatis mutandis; the SFC shall also make written request to the Ministry of Economic Affairs to rescind the registration of such persons as director, supervisor, or manager:
1. any of the situations listed in Article 30 of the Company Law;
2. served as the director, supervisor, manager or any other equivalent positions of a juristic person when such juristic person was adjudicated bankrupt where a period of three years has not elapsed since the bankruptcy was concluded or where a settlement has not been fulfilled;
3. account with a financial institution has been dishonored or has had a record of bad credit standing during the preceding three years;
4. was discharged from functional duties pursuant to the provisions of Article 56 or Paragraph 2 of Article 66 of this Law, and a period of three (3) years has not elapsed since the discharge;
5. has been discharged from functional duties pursuant to the provisions of Paragraph 1 of Article 101 of the Futures Trading Law, where a period of five (5) years has not yet elapsed since the discharge; or has been sentenced to a penalty not less severe than a fine for violation of the Futures Trading Law, where a period of five (5) years has not elapsed since completion of the sentence, expiration of the suspension of sentence, or pardon of the crime;
6. has been sentenced to a penalty not less severe than a fine for violation of the Law, the Company Law, the Banking Law, the Statute for Regulation of Foreign Exchange, the Insurance Law, or the Credit Cooperative Law, where a period of three (3) years has not elapsed since completion of sentence, expiration of the suspension of sentence, or pardon of the crime; or
7. has been provably engaged or involved in other dishonest or improper acts that are sufficient to show such person unqualified for the rating business.
If the promoter, director, or supervisor is a juristic person, the above provisions shall apply mutatis mutandis to the responsible person or authorized representative of that juristic person.
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Article 7
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A credit rating enterprise may engage in the following businesses:
1. to rate degree of credit risk, and to rate performance;;
2. to provide consulting service related to credit rating;
3. to publish publications relating to credit rating; and
4. other businesses approved by the SFC.
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Article 8
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The subjects rated by credit rating enterprises shall include the following:
1. companies, securities firms, futures commission merchants, other businesses related to securities and futures, and other financial institutions;
2. negotiable securities and other financial products; and
3. other subjects approved by the SFC.
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Article 9
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At least one of the promoters applying for approval of establishment of a credit rating enterprise pursuant to the provisions of Article 4 shall be an internationally renowned credit rating company, and it shall subscribe not less than twenty (20) percent of the total shares under first issue, and the promoters shall submit the application with the following documents together with related documentary proofs to the SFC for approval:
1. Articles of Incorporation;
2. business plan;
3. list of promoters, specifying the name or company name, address, and capital contribution, and a statement declaring the inapplicability of Paragraph 1 of Article 6 of these Rules;
4. the minutes from the meeting of promoters;
5. a commitment letter and implementation plans for five consecutive years for technical assistance arrangement with an internationally renowned credit rating company; and
6. other documents that the SFC may require.
Where an internationally renowned credit rating company intends to establish a branch office in the Republic of China pursuant to the provisions of Article 5, it shall apply to the SFC for approval, submitting an application form and the following documents together with related documentary proofs:
1. Articles of Incorporation, or a document equivalent to Articles of Incorporation;
2. business plan;
3. a document proving that the company meets the qualifications of an internationally renowned credit rating company, as set forth in Paragraph 2 of Article 2;
4. the minutes of the board of directors meeting at which the resolution to establish branch offices in the Republic of China was made;
5. the names, nationalities, and domiciles of directors and other responsible persons;
6. the names, nationalities, domiciles or residences, documentation of identity, and the power of attorney of designated agents for litigious and non-litigious matters in the Republic of China;
7. the power of attorney designating agents for the purpose of applying for establishment of branch offices; and
8. other documents that the SFC may require The business plan referred to in Subparagraph 2 of Paragraph 1 and in Subparagraph 2 of the preceding paragraph shall specify the following:
1. the principles of business operation, the divisions of internal organization, planning for internal control;
2. recruitment and training of personnel, and summary of business floor and the facilities;
3. financial projection for the next year; and
4. other items relevant to business operation.
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Article 10
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The incorporation registration of a credit rating enterprise incorporated pursuant to the provisions of Article 4 shall be completed within six months following approval by the SFC; the applicant shall thereafter file an application and the following documents, together with related documentary proofs, to the SFC for issuance of a business license:
1. a photocopy of the letter approving incorporation registration;
2. the corporate bylaws;
3. a shareholders list and the minutes of shareholders meeting;
4. a list of directors and supervisor(s) and a written statement declaring the inapplicability of Paragraph 1 of Article 6 of these Rules;
5. minutes of the board of directors meeting;
6. a list of managers and a statement declaring the inapplicability of Paragraph 1 of Article 6 of these Rules and a certification of compliance with Paragraph 1 of Article 16 of these Rules;
7. a list of associated persons and a statement declaring the inapplicability of Paragraph 1 of Article 54 of these Rules; and
8. other documents that the SFC may require.
Where an internationally renowned credit rating company intends to establish a branch office in the Republic of China pursuant to the provisions of Article 5, it shall duly complete incorporation registration of the branch office within six months following approval by the SFC, and shall thereafter apply to the SFC for issuance of a business license, submitting an application form and the following documents together with related documentary proofs:
1. a photocopy of the letter approving the branch office's incorporation registration;
2. documentary proof that the branch office possesses the amount of working capital required under the provisions of Paragraph 1 of Article 5;
3. the corporate bylaws;
4. a list of directors and supervisors, and a written statement that none of the items listed under Paragraph 1 of Article 6 apply to any of the said persons;
5. a list of managers, a written statement that none of the items listed under Paragraph 1 of Article 6 apply to any of the managers, and documentary proof that all of the managers possess each of the qualifications listed under Paragraph 1 of Article 16;
6. a list of associated persons, and a written statement that none of the items listed under Paragraph 1 of Article 54 of the Law apply to any of the associated persons; and
7. other documents that the SFC may require.
In the event a credit rating enterprise fails to apply for a business license within six (6) months after incorporation registration of a company or branch office, the SFC may void its approval. The period prescribed above may be extended, however, should the said credit rating enterprise apply to the SFC, with just cause, prior to the expiry of the period. Such an extension shall not be for more than six (6) months and may be granted only once.
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Article 11
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The corporate bylaws referred to in Subparagraph 2 of Paragraph 1 of the preceding Article shall include the following:
1. the organization and the responsibilities of each department;
2. the internal management control system;
3. the internal accounting control system;
4. the deployment, management and training of personnel;
5. the principles and policy for business operation;
6. the rating procedures, rating levels, standards and division of responsibilities;
7. the organization and operations of the credit rating commission;
8. the announcement of ratings and relevant confidentiality measures; and
9. other items that the SFC may require.
The scope of the major contents of the above bylaws shall be formulated by the SFC.
A credit rating enterprise shall operate business in accordance with the laws, Articles of Incorporation, and the corporate bylaws referred to in Paragraph 1.
The formulation of or amendment to the corporate bylaws referred to in Paragraph 1 shall be reported to the SFC for recordation. If any order for amendment to the bylaws is made by the SFC, the amendment shall be made accordingly within the prescribed time period.
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Article 12
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A credit rating enterprise engaging in any of the following acts shall report to the SFC for prior approval:
1. amendment of Articles of Incorporation;
2. merger;
3. suspension or resumption of its business operations;
4. dissolution;
5. assignment of the whole, or a substantial portion of its business; or
6. other items which require approval as prescribed by the SFC.
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Article 13
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If any of the following events occurs to a credit rating enterprise, it shall report to the SFC for recordation within ten (10) days after occurrence:
1. resolution made by the shareholders meeting or the board of directors meeting;
2. change in shareholding of any shareholders holding more than ten (10) percent of the total outstanding shares;
3. change of directors, supervisor(s), managers, or associated persons;
4. change of its principal business place;
5. reorganization, liquidation, bankruptcy, or a major lawsuit; or
6. other items for which the SFC requires reporting .
Where an internationally renowned credit rating company receives approval to establish a branch office in the Republic of China pursuant to the provisions of Article 5, it may be exempted from Subparagraphs 1 and 2 of the preceding paragraph, and from the provisions of Subparagraph 3 that require reporting a change of directors or supervisor(s). Where any of the following events occur with respect to a branch office's parent company, the branch office shall, of its own accord, inform the SFC of that fact within ten (10) days, presenting a description of the facts and other related information:
1. the company is dissolved or suspends its business activities;
2. reorganization, liquidation, or bankruptcy occurs;
3. a major criminal case occurs, or the competent authority in the parent company's country revokes its business license;
4. a merger takes place, the company transfers all or a significant portion of its assets or business, or receives the transfer of such items;
5. a major lawsuit occurs;
6. a major change in operating policy occurs;
7. the governing laws and regulations in the parent company's home country change significantly; or
8. other major events occur that may affect the company's ability to continue business operations.
Where any of the personnel changes listed in Subparagraph 3 of Paragraph 1 occurs, the company employing such personnel cannot be exempted from responsibility for their actions until it has properly carried out procedures for change of personnel.
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Article 14
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A credit rating enterprise shall, within four (4) months after the end of each business year, report to the SFC financial statements certified by a certified public accountant, passed by the board of directors, and recognized by the supervisor(s). The enterprise shall also report rating results publicly announced during the preceding fiscal period.
In the event the aforesaid financial statements shall be different from the financial statements recognized by the shareholders meeting, it shall report to the SFC within two (2) days after occurrence.
Where an internationally renowned credit rating company receives approval to establish branch offices in the Republic of China pursuant to the provisions of Article 5, the financial statements of its branch office(s) shall be prepared in accordance with the provisions of Paragraph 1. However, said branch office(s) may be exempted from the requirement that the financial statements be passed by the board of directors and recognized by the supervisor(s).
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Article 15
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A credit rating enterprise shall formulate organization bylaws to define the internal organization, number of personnel and titles, and report the same to the SFC for recordation.
When a credit rating enterprise undertakes a rating, it shall establish a rating commission, which shall be responsible for making the final review of the rating results.
The provisions of Paragraph 1 of Article 6 and Paragraph 1 of Article 16 shall apply mutatis mutandis to the qualifications of the commissioner of the rating commission, provided, however, that if the commissioner has any of the following conditions, he shall excuse himself:
1. the commissioner or his spouse is currently employed by the enterprise under appraisal or is employed to engage in regular work and to receive fixed salaries by the issuing company whose issuing object is under appraisal;
2. the commissioner or his spouse is currently employed by the enterprise which is a counterpart to the enterprise under appraisal or the issuing company whose issuing object is under appraisal;
3. the commissioner was previously employed by the enterprise under appraisal or the issuing company whose issuing object is under appraisal, and a period of two years has not elapsed since the end of employment;
4. the commissioner is a spouse or a relative within the second degree of the responsible person or the manager of the enterprise under appraisal or the issuing company whose issuing object is under appraisal;
5. the commissioner or his spouse makes investment in or shares profits of the enterprise under appraisal or the issuing company whose issuing object is under his appraisal; or
6. the commissioner is the certified public accountant for the enterprise under appraisal or the issuing company of which its issuing object is under appraisal.
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Article 16
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The manager of a credit rating enterprise shall, apart from not having any of the conditions referred to in Paragraph 1 of Article 6, possess at least one of the following qualifications:
1. a master degree or above, and having been employed by a securities, financial, futures or relevant institutions or employed as a managerial officer by a private or government-run enterprise for one year or more, or having been employed as a lecturer or above position by a domestic or foreign college or higher institution or having work experience in rating related business for a year or more with good performance record;
2. a college graduate or above, and having been employed by a securities, financial, futures or relevant institutions or employed as a managerial officer by a private or government-run enterprise for three(3) years or more, or having three-year or more working experience in rating related business with good performance record;
3. having been employed by a securities, financial, futures or relevant institutions or employed as a managerial officer by a private or government-run enterprise for five(5) years or more; and
4. possessing the professional knowledge or credit rating experience proven by other substantial facts, and being able to operate credit rating business well and efficiently.
The managers referred to in the preceding Paragraph shall mean president, vice president, assistant vice presidents and managers and business assistant managers of the business units.
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Article 17
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A credit rating enterprise shall not act as a guarantor, endorser of a negotiable instrument or provide its property to others for encumbrance.
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Article 18
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The directors, supervisor(s), manager(s), consignees or employees of a credit rating enterprise shall not concurrently work in any way or take any honorary position for the enterprise under appraisal or the issuing company whose issuing object is under appraisal provided, however, that due to investment relationship, the directors, supervisor(s) or managers of the enterprise under appraisal or issuing company whose issuing object under appraisal may take the director or supervisor position of the credit rating company if the matter is reported to and approved by the SFC.
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Article 19
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The directors, supervisor(s) or managers of a credit rating enterprise shall not make investments in or serve concurrently as the directors, supervisor(s) or managers of another credit rating enterprise, provided, however, that the above provisions do not apply to the situation where an internationally renowned credit rating company which makes investments for establishment of a credit rating enterprise in accordance with the provisions of Article 9 of these Rules, and serves as its directors, supervisor(s) or managers, and that a prior approval has been obtained from the SFC.
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Article 20
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The managers and associated persons of a credit rating enterprise shall be full-time employees, and they shall not perform business without first reporting to the SFC for approval.
None of the items referred to in Paragraph 1 of Article 54 of the Law shall apply to any of the associated persons referred to in the preceding paragraph.
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Article 21
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The directors, supervisor(s), managers, consignees or employees of a credit rating enterprise shall not do any of the following acts:
1. utilize information obtained in the course of official duties to engage directly or indirectly in the trading of securities or other financial products referred to in Subparagraph 2 or Subparagraph 3 of Article 8 of these Rules;
2. utilize information obtained in the course of official duties to buy and/or sell negotiable securities (whether publicly listed or traded at the place of business of a securities firm) with the aim of procuring speculative profit;
3. disclose trade secrets obtained in the course of official duties in response to an inquiry made not in accordance with law;
4. issue statements or information that are not supported by analysis or logic, and that could affect market order or harm the public interest; or
5. other acts in violation of law.
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Article 22
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A credit rating enterprise or its directors, supervisor(s), managers, consignees or employees violating these Rules shall be punished in accordance with the Law and other relevant laws and regulations.
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Article 23
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The format and content of documentation required by these Rules shall be prescribed separately by the SFC.
If the documentation to be submitted in accordance with these Rules is in a foreign languages, the material contents thereof shall be included in an excerpted Chinese translation.
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Article 24
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These Rules shall become effective as from the date of promulgation.
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Article 25
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If the documentation to be submitted in accordance with these Rules are in foreign languages, the material contents thereof shall be accompanied by a Chinese transcript.
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Article 26
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These Rules shall become effective as from the date of promulgation.
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