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Amendments

Title：

Directions for the Conduct of Wealth Management Business by Securities Firms  CH

Amended Date： 2022.11.07 
Article Content Content Search Article No. Search Legal Basis Amended Article Legislative History Chinese

Title： Directions for the Conduct of Wealth Management Business by Securities Firms(2015.01.21)
Date：
5     A securities firm applying to conduct the business under point 2, paragraph 1, subparagraph 1 shall meet the following conditions and qualifications, and shall obtain approval from the FSC:
  1. Regulatory capital adequacy ratio: its regulatory capital adequacy ratio reported for the half-year prior to the application date exceeds 150 percent.
  2. Financial position meets any of the following conditions:
    1. Its CPA audited or reviewed financial report for the most recent period shows no accumulated deficit, and its financial position meets the provisions of Articles 13, 14, 16, 18, 18-1 and 19 of the Regulations Governing Securities Firms.
    2. The holding company that directly or indirectly holds 100 percent of the shares of the securities firm provides an unconditional and irrevocable guaranty securing the liabilities of the securities firm.
  3. Legal compliance
    1. Has not, within the past three months, been sanctioned under Article 66, subparagraph 1 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 1 of the Futures Trading Act.
    2. Has not, within the past six months, been sanctioned under Article 66, subparagraph 2 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 2 of the Futures Trading Act.
    3. Has not, within the past one year, had a sanction imposed by the FSC to suspend its business.
    4. Has not, within the past two years, had a sanction imposed by the FSC to void any part of its business permit.
    5. Has not, within the past one year, had a sanction of suspended or restricted trading imposed on it by the Taiwan Stock Exchange Corporation (TWSE), Taipei Exchange (TPEx), or Taiwan Futures Exchange (TAIFEX), under the operating rules or bylaws thereof.
  4. Has established a legal compliance unit and a person in charge thereof pursuant to the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets (hereinafter "Regulations Governing Internal Control").
    After a securities firm has been approved by the FSC to conduct the aforementioned business, if its regulatory capital adequacy ratio is non-compliant with the requirement of the preceding paragraph for two consecutive months, the securities firm shall suspend the aforementioned business. It may resume such business only after the regulatory capital adequacy ratio has met the requirement for three consecutive months and approval has been filed for and granted by the FSC.
    A securities firm that fails to meet the compliance requirements in subparagraph (3) of paragraph 1 may be exempted from restriction under that subparagraph if has already corrected the infraction and provide specific documentary proof thereof.
    An ROC branch of a foreign securities firm applying to conduct business under paragraph 1 shall comply with paragraph 1, subparagraphs 3 and 4, and the regulatory capital adequacy ratio, financial position, and the long-term credit rating of its head office shall comply respectively with subparagraphs 1 and 2 of paragraph 1, and Attachment 2.
6     A securities firm applying to conduct the business under point 2, paragraph 1, subparagraph 2 shall meet the below-listed conditions and qualifications, and obtain the approval of the FSC:
  1. Regulatory capital adequacy ratio: The regulatory capital adequacy ratio reported for the half-year prior to the application date exceeds 150 percent.
  2. The financial condition meets one of the following conditions:
    1. The CPA-audited and attested financial report for the most recent period states net worth of not less than NT$10 billion and not lower than the paid-in capital.
    2. The CPA-audited and attested financial report for the most recent period states total assets of not less than NT$20 billion, net worth of not less than NT$6 billion and not less than paid-in capital, and a profit in each of the past three years.
    3. A holding company that directly or indirectly holds 100 percent of the shares of the securities firm, or a financial holding company that has a controlling interest in the securities firm, meets the conditions in one of the two preceding subparagraphs, and issues an unconditional and irrevocable guaranty securing the liabilities of the securities firm.
  3. Legal Compliance
    1. Has not, within the past three months, been sanctioned under Article 66, subparagraph 1 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 1 of the Futures Trading Act.
    2. Has not, within the past six months, been sanctioned under Article 66, subparagraph 2 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 2 of the Futures Trading Act.
    3. Has not, within the past one year, had a sanction imposed by the FSC to suspend its business.
    4. Has not, within the past two years, had a sanction imposed by the FSC to void any part of its business permit.
    5. Has not, within the past one year, had a sanction of suspended or restricted trading imposed on it by the TWSE, TPEx, or TAIFEX, under the operating rules or corporate thereof.
    6. Has not, within the past 6 months, been given an official reprimand or ordered to take corrective action under Article 44 of the Trust Enterprise Act.
    7. Has not, within the past 2 years, been sanctioned under Article 44, subparagraph 1, 2, or 3 of the Trust Enterprise Act.
  4. Has established a legal compliance unit and a person in charge thereof pursuant to the Regulations Governing Internal Control.
    After a securities firm has been approved by the FSC to conduct the business under the preceding paragraph, if its regulatory capital adequacy ratio or net worth for two consecutive months fail to meet the requirements of the preceding paragraph, it shall suspend conducting the business under the preceding paragraph, and may resume it only after its regulatory capital adequacy ratio or net worth have met the requirements for three consecutive months, and it has reported to and received approval from the FSC.
    A securities firm failing to meet a condition in subparagraph 3 of paragraph 1 may be exempted from restriction under that subparagraph if has already corrected the infraction and provides specific documentary proof thereof.
    An ROC branch of a foreign securities firm applying to conduct business under paragraph 1 shall comply with paragraph 1, subparagraphs 3 and 4, and the regulatory capital adequacy ratio, financial condition, and long-term credit rating of its head office shall comply respectively with subparagraphs 1, and 2 of paragraph 1, and Attachment 3.
10     A securities firm conducting wealth management business by means of trusts shall set up a dedicated department for trust business in its head office. Such dedicated department for trust business may be merged into the dedicated department under paragraph 1 of the preceding point, provided that those in the merged dedicated department with power to decide the allocation of trust assets may not handle businesses from outside of the dedicated department
    The dedicated department for trust business under the preceding paragraph may handle the acceptance, management, allocation, and disposition of trust assets. Unless approval is obtained from the FSC, the trust business that a branch office may conduct is limited to accepting trust assets.
    When the type of business under Point 4, paragraph 1, subparagraphs 3 and 4 conducted by a securities firm involves discretionary investment business, the securities firm may establish within the dedicated department for trust business under paragraph 1 a dedicated unit for discretionary investment business to handle discretionary investment business, or follow the provisions set out in Article 31-1, paragraph 1 of the Regulations Governing the Conduct of Discretionary Investment Business.
    The personnel of the dedicated unit of the preceding paragraph may not handle business other than that of the dedicated unit, nor may business of the dedicated unit be handled by personnel other than those of the unit.
32     With the exception of the type of business under Point 4, paragraph 1, subparagraph 4, which shall be conducted pursuant to the Regulations Governing Collective Management and Utilization of Trust Funds, to conduct business set out in Point 2, paragraph 1, subparagraph 2 herein a securities firm shall submit the application, together with following documents, to the TWSE, which shall review them and forward a report to the FSC for its approval:
  1. Documentary proof that the securities firm meets the qualification requirements for conducting business set out in Point 2, paragraph 1, subparagraph 1 herein (not required if the securities firm is simultaneously applying for approval for that business).
  2. Articles of incorporation or equivalent documents.
  3. Documentary proof of the regulatory capital adequacy ratio.
  4. The CPA-audited and attested financial report for the most recent period.
  5. Documentary proof of the long-term credit rating.
  6. Documentary proof that the securities firm meets the qualification requirements for operating this line of business (proof that it has not been sanctioned by the FSC is not needed).
  7. Minutes of the meeting at which the board of directors passed the resolution to apply to operate this line of business.
  8. Business plan: The trust business activities, types of trust business, operational procedures, accounting system, and internal control system (including internal audit system) for operating this line of business.
  9. A list of personnel that operate and manage trust business, and documentary proof of their qualifications.
  10. A written statement of the non-existence of the circumstances listed in Article 2 of the Regulations Governing Expertise or Experience with respect to the responsible person.
  11. A template trust agreement.
  12. Other documents as required by FSC regulations.
    An ROC branch of a foreign securities firm intending to apply to conduct wealth management business shall file its application with the TWSE, which shall forward a report to the FSC, and shall furnish with the application a letter of consent from the board of directors of its head office, or a document signed by an entity or personnel authorized by the head office.