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Regulations Governing Securities Firms  CH

Amended Date: 2020.10.29 (Articles 14-6, 21, 32-1, 35-2, 68-1 amended,English version coming soon)
Current English version amended on 2020.02.03 

Title: Regulations Governing Securities Firms(2006.01.20)
Article 3 In case of any of the following events, a securities firm shall report to the Commission for approval in advance:
1. Change of name of the firm;
2. Change of capital amount, working capital, or the fund for operating business;
3. Change of the business premises of the firm or its branch office;
4. Acquisition of the entire or major part of the business or assets of another person, or transfer of the entire or major part of the business or assets of the firm to another person;
5. Merger or dissolution;
6. Investment in foreign securities firms;
7. Any other matters which under the regulation of the Commission shall be reported to and approved by the Commission in advance.
Where a securities firm has entered into a contract for using the centralized securities market with the Stock Exchange, matters to be reported and approved as referred to in the preceding Paragraph shall be submitted to the Stock Exchange for transmittal to the Commission. Where a securities firm only entered into a contract for trading securities on the over-the-counter market with the GreTai Securities Market("the GreTai"), the said submission shall be made to the Commission through the GreTai. Where no contract has been entered into, the submission shall be made to the Commission through a securities dealers' association.
Article 14-2 Within the same fiscal year in which it receives a letter of approval or effectiveness from the Commission for a capital increase for cash or a corporate bond issue, a Listed or OTC securities firm may not file another filing (application) for a capital increase for cash or corporate bond issue.
A listed or OTC securities firm may be exempt from the restriction in the preceding paragraph where it has an actual need for a capital increase to achieve statutory capitalization or net worth or conform to regulations governing the regulatory capital adequacy ratio as required for merger or to take assignment of the business or assets of another person in whole or in part, establish a branch institution, increase its business or categories or items, or concurrently engage in futures business.
Article 36-1 Where a department of a securities firm that concurrently operates securities investment consulting services or futures advisory services (hereinafter, collectively, "consulting services department") produces research reports, or a department of a securities firm that concurrently operates a securities investment consulting enterprise handling discretionary investment services ("discretionary investment department") produces analysis reports or investment strategies for customers, personnel other than of those departments shall not participate in composing or reviewing the reports.
Within two hours from the time market trading hours begin after a research report provided by a consulting services department of a securities firm is publicly disclosed, other departments and personnel apart from that department may not engage in any trading of any security recommended in the research report, unless otherwise provided by this Commission.
"Market" in the preceding paragraph refers to the domestic Stock Exchange, GreTai Securities Market, and Futures Exchange.
The compensation or bonuses paid to personnel of a consulting services department or discretionary investment department of a securities firm shall not be directly linked to the performance of any other department.
Article 36-2 When an underwriting department of a securities firm underwrites securities, during the period from the time the securities firm enters into an advisory contract with a public issuer until the termination of the advisory relationship, or from the time the securities firm enters into an underwriting contract with a listed or OTC-listed company until the deadline for payment, its consulting services department shall not recommend any trading of that security or any derivative financial product thereof; a discretionary investment department may not purchase securities for a customer without first explicitly informing the customer of any related conflicts of interest and control measures and then obtaining the customer's written consent on an instance-by-instance basis, and specifically stating the quantity of the securities that may be purchased.
When an underwriting department of a securities firm obtains securities through a firm commitment underwriting, the provisions of the preceding paragraph shall apply mutatis mutandis to the handling of those securities by the consulting services department and discretionary investment department of the securities firm until such time as all the procedures of the firm commitment underwriting have been completed in accordance with regulations.
Article 46 Securities firms applying for merger shall meet the following conditions:
1. Exchange-listed or OTC-listed securities firms applying for merger shall comply respectively with Article 51 of the Operating Rules of the Taiwan Stock Exchange Corporation or Article 16 of the GreTai Securities Market Regulations Governing Securities Trading on Over-the-Counter Markets.
2. The regulatory capital adequacy ratio has reached 200% or more 6 months before the merger.
3. The pro forma consolidated regulatory capital adequacy ratio shall reach 200% one month before the application.
4. Have not been subject to a disposition under Subparagraphs 2 to 4 of Article 66 of the Act or under Subparagraphs 2 to 4 of Paragraph 1 of Article 100 of the Futures Trading Act or under Supbaragraphs 2 to 5 of Article 103 of the Securities Investment Trust and consulting Act within the last six months.
5. In the most recent year, the Stock Exchange and GreTai have found, according to their inspection of the condition of internal control operations of the applicant's head office and branches to be satisfactory and meeting the standards set by the Commission.
In the case that the securities firm applying for merger does not meet the criteria in the preceding paragraph, the Commission may approve the application as a special case based on the goals of facilitating the healthy expansion of the securities market and increasing the competitiveness of securities firms.
Article 48 Where the securities firm surviving after the merger is an exchange-listed or OTC-listed securities firm, the securities firm shall have the certified public accountant make a special auditing of its internal control system within six months after the merger, and after sending the report to the Stock Exchange or the GreTai, respectively, for inspection, shall file it with the Commission for recordation.