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Operating Rules of the Taiwan Stock Exchange Corporation(2010.03.30) |
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Article 76
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Upon discovering that a principal falls in any of the following categories, a securities broker shall refuse to open an account or, if an account has already been opened, refuse to accept orders for brokerage trading or subscription of securities:
1. Persons without legal capacity or with limited legal capacity, who do not have the agency or authorization of their legal guardian.
2. Personnel or employees of the Competent Authority in charge of securities matters
3. Personnel of the TWSE who fail to submit a letter of consent from the TWSE.
4. Persons declared bankrupt and whose rights have not been reinstated.
5. Persons declared by a court to be placed under guardianship or assistance where such declaration has not yet been voided.
6. Juristic persons opening accounts that cannot supply proof that there is authorization to open the account.
7. Securities dealers which have not been approved by the Competent Authority.
8. A principal who has engaged a director, supervisor, or employee of a securities firm to open an account with such securities firm as an agent or representative of the principal.
9. More than one discretionary investment account has been opened at the same business premises of the same securities broker by the same principal with respect to the same authorized discretionary trader; provided, this restriction shall not apply to a principal that is a government fund such as a civil servant pension fund, labor pension fund, labor insurance fund, or postal remittance and savings fund and that, when authorizing the same authorized discretionary trader for discretionary investment, may open, at the same business premises of the same securities broker, different discretionary investment accounts for different brokerage contracts.
10. An offshore foreign institutional investor or mainland China area institutional investor has opened more than one investment trading account at the same business premises of the same securities broker; provided, this restriction shall not apply if it is one that is permitted under the Directions for Registration Processing for Offshore Overseas Chinese and Foreign Investors and Mainland China Area Investors to Make Investments in ROC Securities or Engage in Domestic Futures Trading to open more than one investment trading account at the same securities broker (including branches).
Insiders of securities firms opening accounts for brokered securities trading shall comply with the Rules Governing Insiders of Securities Firms Opening Accounts at Their Securities Firms for Brokered Securities Trading prescribed by the TWSE.
Upon discovering that a principal falls in any of the following categories, a securities broker shall refuse to open an account or, if an account has already been opened, refuse to accept orders for brokerage trading or subscription of securities:
1. Any person that has breached a contract relating to securities trading, where the TWSE or the Over-the-Counter Securities Exchange have notified all securities brokers of this fact, where the case has not been closed and less than five years have elapsed.
2. Any person that, in connection with a violation of the Securities and Exchange Act or forging (or altering) listed or OTC securities, has been indicted in a public prosecution and the case is still pending, or has been adjudicated criminally guilty by a final and unappealable court judgment within the last five years.
3. Any person that has breached a futures contract where the case has not been closed and less than five years have elapsed, or that has violated future trading laws or regulations and has been adjudicated criminally guilty by a final and unappealable judgment of a judicial authority within the past five years.
Upon conclusion of a case of breach of a brokerage contract by a principal, the securities broker shall promptly report such conclusion to the TWSE; the TWSE will in turn inform all other securities brokers.
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Article 77
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When a securities broker processes account opening for overseas Chinese or foreign nationals for the purpose of brokered sale of securities, the securities broker shall obey relevant laws and regulations and comply with the following provisions:
1. If special-case approval is granted by the Investment Commission of the Ministry of Economic Affairs, Science-Based Industrial Park Administration, or the Export Processing Zone Administration, a photocopy of the approval to sell document and power of attorney for the filing and payment of income tax required by the tax authority must be retained(during the period when capital gains from securities transactions are exempt from taxation, submission of the aforesaid power of attorney may be omitted). That account may only accept sell orders, and only for the type and amount of securities as originally approved in the investment plan. If, prior to the 19 November 1997 amendments to the Act Governing Investment by Foreign Nationals and the Act Governing Investment in Taiwan by Overseas Chinese, special-case approval to hold unlisted stocks has not been granted by the Investment Commission of the Ministry of Economic Affairs, the Science-Based Industrial Park Administration, or the Export Processing Zone Administration, and such stocks are subsequently approved for listing, the original investment information (such as trading vouchers, wire transfer receipts, and tax payment receipts) shall be submitted , and a special application shall be made by letter to the TWSE for its approval for account opening, before brokerage orders to sell such stocks may be accepted.
2.Where the securities and the resulting rights for subscription of capitalization increase or stock divided are obtained due to gift, succession, pursuant to Article 167-1, paragraph 2; Article 167-2; Article 235; Article 240; or Article 267 of the Company Act or Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act, or prior to relinquishing one's original nationality or prior to the implementation of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals and Procedures for Remittance on 28 December 1990, a copy of the passport and the following documents shall be submitted to a securities firm for account opening. Furthermore, the trading shall be limited to the sale of the aforesaid securities.
(1) Where the securities and the said entitlements are obtained through gift, transfer procedure shall be completed and the paper of tax-payment or tax-exemption for gift issued per Article 41 of the Estate and Gift Taxes Act shall be submitted.
(2) Where the securities and the said entitlements are obtained through succession, transfer procedure shall be completed and the paper of tax-payment or tax-exemption for legacy issued per Article 41 of the Estate and Gift Taxes Act shall be submitted.
(3) Where the securities and the said entitlements are obtained pursuant to Article 167-1, paragraph 2; Article 167-2; Article 235; Article 240; or Article 267 of the Company Act or Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act, a certificate of employment valid at the time of subscription, issuance of bonus shares, or receiving assignment of shares and documents evidencing the subscription , issuance of bonus shares, or assignment of shares shall be submitted.
(4) Where the securities are obtained prior to relinquishing one's original nationality or prior to the implementation of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals and Procedures for Remittance on 28 December 1990, document proving the source of the securities or other relevant documents shall be submitted.
3. Securities obtained in compliance with the preceding subparagraph may be sold by mutatis mutandis application of Article 82-1.
4. Where foreign securities have been obtained before they are listed on the centralized securities exchange market of the TWSE on a primary listing basis, documentary proof of securities holdings issued by the shareholder services agent located in the Republic of China engaged by the issuer of those foreign securities, or the documentary proof that employees have subscribed to or been allotted shares in accordance with the laws and regulations of the country of registration, the power of attorney for the filing and payment of income tax required by the tax authority (during the period when capital gains from securities transactions are exempt from taxation, it may omit submission of that power of attorney), and the documentary proof of identity of the principal shall be submitted to the securities firm to conduct account opening for brokered sales, which shall be limited to the amount of holdings. If the holder of those securities, after opening the present account, subsequently opens an account with a securities firm for securities trading under Article 77-4, the present account for brokered sale of securities shall be canceled.
Foreign banks with branch offices in the Republic of China may use the name of the branch office to open the account in accordance with Article 75. Such account may only accept sales orders, and purchase orders shall not be accepted.
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Article 77-5
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When the overseas subsidiary or branch of an exchange-listed, OTC-listed, or emerging stock company issuing securities to its overseas foreign national employees pursuant to Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act or Articles 167-1, 167-2, 235, or 267 of the Company Act handles the transfer, subscription, and distribution of securities on behalf of its overseas foreign national employees, and carries out registration of a "Segregated Collective Investment Account for Overseas Foreign National Employees" with the TWSE, it shall, in addition to the same registration documents duly required for offshore foreign institutional investors, submit the documents in the following subparagraphs, and keep a copy of the documents on record at its domestic agent:
1. Original affidavit stating that the overseas subsidiary or branch of the exchange-listed, OTC-listed, or emerging stock company has actually been authorized by the overseas foreign national employees.
2. Photocopy of the evidentiary documents that the exchange-listed, OTC-listed, or emerging stock company has obtained the approval or effective registration from the competent authority to issue new shares or employee stock warrants or to buy back its shares.
3. Photocopy of the minutes of the exchange-listed, OTC-listed, or emerging stock company's board of directors meeting that approved the transfer of bought-back stocks to its employees pursuant to Article 167-1 of the Company Act or Article 28-2, paragraph 1, subparagraph 1 of the Securities and Exchange Act, the issuance of employee stock warrants pursuant to Article 167-2 of the Company Act, or Article 28-3 of the Securities and Exchange Act, or the issuance of new shares pursuant to Article 235, paragraph 2, Article 240, paragraph 4, and Article 267 of the Company Act.
When the domestic agent of the overseas subsidiary or branch of an exchange-listed, OTC-listed, or emerging stock company applies with a securities broker to open an account, it shall, in addition to the documents required for account opening as in the preceding Article, affix the documents in the subparagraphs of the preceding paragraph to apply for account opening. Such account may not be used for any securities trading other than the sale of stocks obtained by the employees through the exercise of employee stock warrants or through transfer or distribution.
When a primary exchange-listed, OTC-listed, or emerging stock foreign issuer carries out registration procedures for a "Segregated Collective Investment Account for Overseas Foreign National Employees" with the TWSE for securities obtained by its overseas foreign national employees in accordance with the laws and regulations of the place of registration, it shall, in addition to the same registration documents duly required for offshore foreign institutional investors, submit the documents in the following subparagraphs, and keep a copy of the documents on record at its domestic agent:
1. Original affidavit stating that the primary exchange-listed, OTC-listed, or emerging stock foreign issuer has actually been authorized by the overseas foreign national employees.
2. Photocopy of documentary proof that the primary exchange-listed, OTC-listed, or emerging stock foreign issuer has obtained effective registration from the competent authority to issue new shares or employee stock warrants.
3. Letter of approval from the TWSE for the primary exchange listing or from the GreTai Securities Market for the primary OTC listing or emerging stock registration.
When the domestic agent of the primary exchange-listed, OTC-listed, or emerging-stock foreign issuer applies with a securities broker to open an account, it shall, in addition to the documents required for account opening as in the preceding Article, affix the documents in the subparagraphs of the preceding paragraph to apply for account opening. Such account may not be used for any securities trading other than the sale of securities obtained by the employees in accordance with the laws and regulations of the country of registration and as approved or authorized by Taiwan.
Paragraphs 3, 4, and 5 of the preceding Article shall apply mutatis mutandis to the registration process under this Article.
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Article 77-7
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A mainland China area investor shall, after the investor's designated domestic agent or representative registers with the TWSE to obtain an ID number, submit to a securities broker a photocopy of the national ID card or alien resident certificate, or documentary proof of company registration (or amendment registration), of the domestic agent or representative to open an account to trade securities.
When the domestic agent of a qualified institutional investor approved by mainland China’s competent authority for securities opens an account at a securities broker, in addition to the documents for account opening of paragraph 1, it shall also submit documentary proof of mainland China’s competent securities authority's approval of the qualified institutional investor and documentation stating the overseas investment limit approved by mainland China’s competent authority for foreign exchange business and the letter of approval issued by the TWSE for the inward remittance amount to open an account to trade securities.
The provisions of Article 77-4, paragraph 3 shall apply mutatis mutandis to the term "domestic agent" as referred to in this Article.
If any of the circumstances of Article 8 of the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland China Area Investors exist at the time of registration by a mainland China area investor, the TWSE will deny registration; if the investor is already registered, the TWSE will cancel the registration and notify the securities broker that opened the account that it may not accept purchase orders. The securities broker, after liquidating the balance in that account, shall cancel the account and notify the TWSE regarding the conclusion of the case.
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Article 77-8
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If any stock (or certificate representing stock) issued by a foreign issuer becomes exchange-listed or OTC-listed in Taiwan, when the domestic agent or representative of a shareholder that is a mainland China national opens an account at a securities broker, in addition to the documents for account opening of paragraph 1 of the preceding Article, the domestic agent or representative shall also submit documentation issued by the foreign issuer's shareholder services agent evidencing that the mainland China national shareholder obtained the stock (or evidentiary certificate representing the stock) issued by that foreign issuer prior to its exchange-listing or OTC-listing in Taiwan, or the documentary proof that mainland China national employees have subscribed to or been allotted shares in accordance with the laws and regulations of the country of registration. Such accounts are permitted to handle only the sale of stock issued by such foreign issuer, and may not be used for other securities trading.
If a company whose stock is exchange-listed or OTC-listed, pursuant to Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act or Article 235 or Article 267 of the Company Act, awards securities to an employee or employees who are mainland China nationals, the company's overseas subsidiary or branch office will conduct registration for a Collective Investment Account for Mainland China Employees with the TWSE to obtain an ID number for purposes of handling the transfer, subscription, or distribution of securities to such employee or employees; when opening an account with a securities broker in such a case, in addition to the account opening documents required by paragraph 1, the following documents shall also be submitted:
1. An original copy of the undertaking stating that the overseas subsidiary or branch office of the company whose stocks are exchange-listed or OTC-listed is actually authorized by the employees that are mainland China nationals.
2. A photocopy of the documentation evidencing the Competent Authority's approval of, or effective registration for, the issuance of new shares or employee stock warrants, or the repurchasing of its own shares, by the company whose stock is exchange-listed or OTC-listed.
3. A photocopy of the meeting minutes at which the board of directors of the company whose stock is exchange-listed or OTC-listed approved the current instance of repurchase of its own shares for a share transfer to employees pursuant to Article 28-2, paragraph 1, subparagraph 1 of the Securities and Exchange Act, or issuance of employee stock warrants pursuant to Article 28-3 of the Securities and Exchange Act, or issuance of new shares pursuant to Article 235 and Article 267 of the Company Act.
When a primary exchange-listed or OTC-listed foreign issuer carries out registration procedures for a "Segregated Collective Investment Account for Mainland China National Employees" with the TWSE for securities obtained by its mainland China national employees in accordance with the laws and regulations of the place of registration, it shall, in addition to the account opening documents in paragraph 1 of the preceding article, submit the documents in the following subparagraphs, and keep a copy of the documents on record at its domestic agent:
1. Original affidavit stating that the primary exchange-listed or OTC-listed foreign issuer has actually been authorized by the mainland China national employees.
2. Photocopy of documentary proof that the primary exchange-listed or OTC-listed foreign issuer has obtained effective registration from the competent authority to issue new shares or employee stock warrants.
3. Letter of approval from the TWSE for the primary exchange listing or from the GreTai Securities Market for the primary OTC listing.
The accounts of the preceding two paragraphs may be used only to sell stocks which such employees have obtained by exercising securities subscription rights or through transfer or distribution, and may not be used for any other securities trading.
The provisions of paragraphs 3 and 4 of the preceding Article shall apply mutatis mutandis to the registration operations of this Article.
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Article 82-1
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Where a securities broker accepts an order to sell registered securities that have never been transferred and its principal is not the owner of the securities, it shall handle the settlement in accordance with the Guidelines for Reporting by Securities Brokers of Sale of Securities Not Owned by the Principal as stipulated by the TWSE. The "owner" in the preceding sentence, unless otherwise provided, may not be an overseas Chinese or foreign national or mainland China area investor.
The provisions of the preceding paragraph shall apply mutatis mutandis where a securities broker accepts an order to sell registered securities that have been transferred and for which transfer registration procedures have been carried out with the issuing company, and that meets any of the following conditions:
1. Securities of a defaulting investor after the case is closed and withdrawal has been effected.
2. Securities acquired through an inheritance or gift.
3. Securities acquired through underwriting before November 1997.
4. Collateral in the form of spot securities that a securities finance company or securities firm operating its own margin purchase and short sale operations has required an investor to deposit to offset a decline in the securities price to below the maintenance ratio.
5. Securities that a bank has required a customer to pledge in the form of spot securities.
6. Securities obtained through a final and unappealable court judgment.
7. Other conditions reported to and approved by the TWSE.
When accepting a brokerage order to sell securities pursuant to this article, the securities broker shall confirm that the quantity of securities in the order does not exceed the quantity of spot securities deposited by the principal.
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Article 83
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A securities broker shall keep complete and true records and vouchers when receiving or delivering securities or payments in connection with brokerage trading.
The vouchers referred to in the preceding paragraph shall include receipts for funds and securities collected in advance, vouchers on securities delivered, and trade reports. The format thereof and the particulars to be entered therein shall conform to the regulations prescribed by the Competent Authority.
Where a financial institution concurrently engages in the business of a securities broker and has opened specific accounts for depositing funds which can be verified, it need not use trade reports. A securities broker shall handle the receipt of securities or funds from its principals or delivery of securities or funds to its principals referred to in paragraph 1 of this Article by book-entry through the central securities depository accounts opened by its principals or through the accounts opened by its principals with financial institutions designated by the securities broker, except under any of the following circumstances:
1. Where a securities investment trust fund, insurance enterprise, offshore overseas Chinese or foreign national, or an overseas Chinese or foreign national or mainland China area investor who has converted foreign corporate bonds held by him into stock or has converted foreign depositary receipts held by him into the underlying securities maintains an account at the custodian institution (custodian bank), the receipt and payment of the purchase prices may be effected by account transfer (or remittance) through such account.
2. Fund collection or payment operations of centralized segregated trust asset accounts under the management of a trust enterprise that has the status of a central depository participant may be carried out by means of transfer (remittance).
3. Where a depositary institution of foreign depositary receipts has been engaged by its principal to redeem the foreign depositary receipts and sell the stock, it may receive the proceeds thereof by way of account transfer (or remittance) through the account maintained at the custodian bank.
4. Where a principal places engages a securities investment consulting enterprise or a securities investment trust enterprise to conduct discretionary securities trading, the principal may open and maintain an account at the custodian institution, and the receipt and payment of the purchase prices may be effected by account transfer (or remittance) through such account. When processing trade settlement, it is prohibited to transfer payment funds or securities between separate discretionary investment accounts of the same principal.
5. If a domestic bank or insurance company obtains a rating of twA- or higher from the Taiwan Ratings Corporation, or its rating by a credit rating institution approved or recognized by the Competent Authority meets or exceeds the qualification requirements of the Taiwan Ratings Corporation's twA- rating, its receipt and payment of purchase prices may be effected by account transfer (or remittance) during the period for which the aforementioned rating is valid.
Securities received by a securities broker in connection with the brokerage trades shall be handled in accordance with the Rules for Custody of Securities and the Rules for Management of Transitionally Deposited Securities as approved by the Competent Authority.
The Rules for Management of Transitionally Deposited Securities referred to in the preceding paragraph shall be separately drawn up by the TWSE and implemented after approval by the Competent Authority.
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