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Article 18
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(Approval for Operation)
Approval from the Competent Authority is required for the operation of any securities finance enterprise, securities central depository enterprise, or any other securities-related service enterprise.
Regulations governing the conditions for establishment, application and approval procedures, finances, operations, management, and other matters for compliance with respect to the securities enterprises referred to in the preceding paragraph shall be prescribed by the Competent Authority.
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Article 28-2
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(Share Buyback)
In any of the following situations, a company whose stocks are either listed on a stock exchange or traded on the over-the-counter market may, upon the approval of a majority of the directors present at a directors meeting attended by two-thirds or more of directors, buy back its shares from the centralized securities exchange market or over-the-counter market or in accordance with paragraph 2 of Article 43-1, without being subject to the provisions of paragraph 1 of Article 167 of the Company Act:
- Where the buyback is for transferring shares to its employees;
- Where the buyback is for equity conversion in coordination with the issuance of corporate bonds with warrants, preferred shares with warrants, convertible corporate bonds, convertible preferred shares, or share subscription warrants; or
- Where the buyback is required to maintain the company's credit and shareholders' rights and interests, and the shares so purchased are cancelled.
The number of shares bought back under the preceding paragraphs may not exceed ten percent of the total number of issued and outstanding shares of the company. The total amount of the shares bought back may not exceed the amount of retained earnings plus premium on capital stock plus realized capital reserve.
Regulations regarding the procedure, price, quantity, method, conversion method, and public announcement to be reported in connection with buyback of shares by a company in accordance with paragraph 1 above shall be prescribed by the Competent Authority
The shares bought back by a company in accordance with paragraph 1, except for the portion referred to in subparagraph 3 for which amendment registration shall be effected within six months from the date of buyback, shall be transferred within five years from the date of buyback. The shares not transferred within the said time limit shall be deemed as not issued by the company, and amendment registration shall be processed.
The shares bought back by a company in accordance with paragraph 1 shall not be pledged. Before transfer, the shareholder's rights shall not be enjoyed.
In the event that a company buys back shares from the centralized securities exchange market or over-the-counter market, the shares held by its affiliated enterprises defined under Article 369-1 of the Company Act or its directors, supervisors, managerial officers, or shareholders holding more than 10 percent of the company’s total shares, shall not be sold during the buyback period.
The resolution referred to in paragraph 1 and the implementation thereof shall be reported in the most recent shareholders meeting. This provision shall also apply if the shares are not bought back for any reason.
The shares held by persons prohibited from selling their shares as set out in paragraph 6 shall include shares held by their spouses and minor children and those held under the names of other parties.
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Article 43
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(Payment or Settlement of Securities Trades)
The payment or settlement of securities listed on the stock exchange or traded on over-the-counter markets shall be effected on a cash payment and actual delivery basis. The settlement period and the margin deposit to be paid in advance shall be prescribed by an order of the Competent Authority.
Settlement for transactions in securities held in the custody of a securities depository may be effected through book-entry transfer; the guidelines for operation of such transfer shall be prescribed by the Competent Authority.
In the event that securities held in the custody of a securities depository are the subject of a pledge, the delivery of the pledge created may be effected through book-entry transfer; Article 908 of the Civil Code shall not be applicable.
The securities held in the custody of a securities depository on a commingled basis shall be co-owned by the owners in accordance with the types and quantities of securities deposited by them. Upon withdrawal, the securities with the same type and the same quantity may be returned.
To handle custody business, a securities depository may enter the stocks and corporate bonds held in its custody into the issuer's shareholders register or corporate bond counterfoils in its own name. Before the stock or corporate bond issuer calls a shareholders meeting or corporate bondholders meeting, decides to distribute dividends and bonus or other benefits, or pays principal or interest, the notification by a securities depository to the issuer of the true name or title, domicile or residence of the owner of stocks or corporate bonds held in its custody, and the amount held by such owner shall have the effect that such information has been entered into the issuer s shareholders register or corporate bond counterfoils or that the stocks or corporate bonds have been delivered to the issuer; the provisions of paragraph 1 of Article 165, Article 176, Article 260, and paragraph 3 of Article 263 of the Company Act shall not be applicable.
The provisions in the preceding two paragraphs shall apply mutatis mutandis to government bonds and other securities.
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Article 43-1
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(Regulation of Public Tender Offers for Securities)
Any person who acquires, either individually or jointly with other persons, more than 5 percent of the total issued shares of a public company shall report such acquisition to the Competent Authority and make a public announcement; the same applies when there is any change in the specifics reported. Regulations governing the reporting of the number of shares acquired, the purpose and the sources of funds for the acquisition of the shares, changes to the specifics reported, public announcement, terms, and any other matters requiring compliance, shall be prescribed by the Competent Authority.
Any public tender offer to purchase the securities of a public company bypassing the centralized securities exchange market or the over-the-counter market may be conducted only after the offeror has reported to the Competent Authority, providing proof that it has the ability to perform payment of the tender offer consideration, and publicly announced the specific matters, except under the following circumstances:
- The number of securities proposed for public tender offer by the offeror plus the total number of securities of the public company already obtained by the offeror and its related parties do not exceed 5 percent of the total number of voting shares issued by the public company.
- The securities purchased by the offeror through the public tender offer are securities of a company of which the offeror holds more than 50 percent of the issued voting shares.
- Other circumstances in conformity with the regulations prescribed by the Competent Authority.
Any person who independently or jointly with another person(s) proposes to acquire a certain percentage of the total issued shares of a public company or of the beneficial securities of a real estate investment trust under the Real Estate Securitization Act shall make the acquisition by means of a public tender offer, unless certain conditions are satisfied.
Regulations governing the scope, conditions, period, related parties, and particulars for filing and public announcement in connection with purchases of securities pursuant to paragraph 2, and the "certain percentage" and "conditions" in connection with the acquisition of a certain percentage of the total issued shares of a public company under the preceding paragraph shall be prescribed by the Competent Authority.
Any person who will make a public tender offer to purchase the beneficial securities of a real estate investment trust under the Real Estate Securitization Act may conduct the public tender offer only after filing with the Competent Authority and making a public announcement. Regulations governing the scope, conditions, period, related parties, and particulars for filing and public announcement in connection with purchases of real estate securitization beneficial securities, and the "certain percentage" and "conditions" in connection with the acquisition of beneficial securities of a real estate investment trust under paragraph 3 shall be prescribed by the Competent Authority.
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Article 43-5
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(Public Tender Offer Suspension Conditions and Amendments to the Public Tender Offer Report)
After a public tender offeror has initiated a public tender offer, it may not suspend the public tender offer except in any of the following circumstances, where the Competent Authority has granted approval:
- The public company whose securities are being purchased encounters any material change in its financial or business condition and the offeror has presented evidence of the change.
- The offeror becomes bankrupt, dies, is declared by a court to be under guardianship or assistance, or is required by a court ruling to undergo reorganization.
- Other circumstances specified by the Competent Authority.
Where content reported or publicly announced by an offeror violates an act or regulation, the Competent Authority may, as necessary to protect the public interest, order the offeror to amend the particulars of the public tender offer report and carry out reporting and public announcement procedures anew.
If the offeror fails to acquire the proposed number of shares within the tender offer period or suspension of the public tender offer is approved by the Competent Authority, the offeror may not, within one year therefrom, carry out a public tender offer on the same company, unless it has legitimate reasons and has obtained approval from the Competent Authority.
If, after the public tender offer, the total number of issued shares of the acquired company held by the offeror and its related parties exceeds 50 percent of the total number of shares issued by the company, the offeror may, by a proposal in writing, with reasons stated therein, request the board of directors to convene a special meeting of shareholders; the restrictions set forth in Article 173, paragraph 1 of the Company Act shall not apply.
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Article 43-6
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(Private Placement of Securities and Corporate Bonds)
A public company may carry out private placement of securities with the following persons upon adoption of a resolution by at least two-thirds of the votes of the shareholders present at a meeting of shareholders who represent a majority of the total number of issued shares; the restrictions of Article 28-1 and Article 139, paragraph 2 hereof and Article 267, paragraphs 1 to 3 shall not apply in such case:
- Banks, bills finance enterprises, trust enterprises, insurance enterprises, securities enterprises, or other juristic persons or institutions approved by the Competent Authority.
- Natural persons, juristic persons, or funds meeting the conditions prescribed by the Competent Authority.
- Directors, supervisors, and managerial officers of the company or its affiliated enterprises.
The total number of placees under subparagraphs 2 and 3 of the preceding paragraph shall not exceed 35 persons.
A private placement of ordinary corporate bonds shall have a total issue amount not exceeding 400 percent of its total assets less total liabilities, unless the Competent Authority has obtained the approval of the central authority with jurisdiction over the business of the company; such a private placement is not subject to the restrictions under Article 247 of the Company Act, and may be carried out in installments within one year of the date of the resolution of the board of directors.
Upon the reasonable request by a person(s) under paragraph 1, subparagraph 2 prior to consummation of the private placement, the company shall bear the obligation to provide information on company finances, business, or other information relevant to the current private placement of securities.
Within 15 days of the date the share payments or payments of the price of the corporate bonds or other securities have been made in full, the company shall submit the relevant documentation in a report to the Competent Authority for recordation.
For private placements of securities conducted pursuant to paragraph 1, the following particulars shall be enumerated and explained in the notice to convene the shareholders meeting, and shall not be raised as extemporary motions:
- The basis and rationale for the setting of the price.
- The means of selecting the specified persons. Where the placees have already been arranged, the relationship between the placees and the company shall also be described.
- The reasons necessitating the private placement.
For private placements of securities conducted pursuant to paragraph 1, where the relevant particulars of the private placement by installments have been enumerated and explained in the proposal to the shareholders meeting as provided in the subparagraphs of the preceding paragraph, the private placement may be carried out by installments within one year of the date of the resolution of the shareholders meeting.
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Article 44
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(Approval for Business and Approval for Establishment of a Branch Unit)
The approval and certificate of license from the Competent Authority are required for the operation of securities business by a securities firm; the operation of securities business by persons other than securities firms shall be prohibited.
Approval from the Competent Authority shall be required for the establishment of branch units by a securities firm.
The establishment of branch units by a foreign securities firm within the territory of the Republic of China shall be prohibited without the approval and a certificate of license from the Competent Authority.
Standards for establishment of securities firms governing matters including the conditions for establishment of securities firms and their branch units, the types of business in which they may engage, application procedures and documents to be attached, and regulations governing their finances, operations and other matters for compliance shall be prescribed by the Competent Authority.
The Competent Authority shall consult with the Central Bank of China when it adopts or amends provisions of the regulations referred to in the preceding paragraph regarding foreign exchange business.
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Article 60
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(Conduct Prohibited by Securities Firms)
Except with the approval of the Competent Authority, a securities firm may not engage in the following types of business:
- Providing margin purchases or short sales for securities transactions.
- Acting as an agent in margin purchases or short sales for securities transactions.
- Borrowing or lending securities, or acting as an agent or intermediary in the borrowing or lending of securities.
- Borrowing or lending money in connection with securities business, or acting as an agent or intermediary for such borrowing or lending of money.
- In connection with securities business, accepting a commission from a client to act as depository or invest the client's funds.
Regulations governing the qualifications, personnel, operations, and risk management of a securities firm applying for approval to engage in related business in accordance with the preceding paragraph shall be prescribed by the Competent Authority.
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Article 62
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(Restrictions on Over-the-Counter Trading)
Without the approval from the Competent Authority, the trading of securities by securities brokers or dealers in an over-the-counter market, on the account of its customers, or on its own account, shall be prohibited.
Regulations governing trading in the over-the-counter market referred to in the preceding paragraph shall be prescribed by the Competent Authority.
The provisions of Article 156 and 157 shall apply mutatis mutandis to the transaction referred to in paragraph 1 hereof.
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Article 93
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(Special Approval or Permit for Establishment)
A Special approval or permit or shall be obtained from the Competent Authority before the establishment of a stock exchange. The application procedures and other necessary matters shall be prescribed by the Competent Authority.
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Article 96
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(Restrictions on Eligibility to Operate)
Unless acting pursuant to this Act, no person shall engage in the operation of business similar to that of providing a centralized securities exchange market; this provision shall also apply to anyone which provides business premises or facilities for such proposes.
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Article 97
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(Name)
The name of a stock exchange shall explicitly bear the words "stock exchange." No person other than a stock exchange shall use names similar to that of a stock exchange.
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Article 98
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(Restrictions on Business)
The business of a stock exchange shall be to provide a centralized securities exchange market. A stock exchange shall not engage in nor invest in any other businesses without the approval of the Competent Authority.
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Article 116
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(Prohibition of Benefit Seeking by Insiders)
Representatives of member directors or supervisors, non-member directors, or any other employees of a membership stock exchange shall not, either for his own account or by commissioning others, purchase or sell securities in a centralized securities exchange market.
The persons referred to in the preceding paragraph shall be prohibited from providing funds to, sharing profits or losses with, or have any other business dealings or interests with members of the said stock exchange; however, this restriction shall not apply to persons who perform such acts on the behalf of the members they represent.
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Article 120
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(Prohibition Against Disclosure of Confidential Trading Information)
The directors, supervisors, or employees of a membership stock exchange shall not disclose any confidential information relating to securities transactions.
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Article 160
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(Premises for Taking Brokerage Orders)
A securities broker shall not accept orders for the purchase or sale of securities in premises other than its principal place of business and its branch units.
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Article 165-1
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(Provisions Applicable Mutatis Mutandis to Foreign Companies with a Primary Listing on the Exchange or OTC Market and Foreign Emerging Stock Companies)
When stock issued by a foreign company has been approved for the first time by the stock exchange or over-the-counter securities exchange for listed trading on the stock exchange or over-the-counter market or for registration as emerging stock, if the issuer’s stock is not traded on a foreign securities exchange, then, unless otherwise provided by the Competent Authority, the provisions of Articles 5 to 8, Articles 13 to 14-1, Article 14-2, paragraphs 1 to 4, and 6, Article 14-3, Article 14-4, paragraphs 1, 2, 5, and 6, Article 14-5, Article 14-6, Articles 19 to 21, Articles 22 to 25-1, Article 26-3, Article 27, Article 28-1, paragraphs 2 to 4, Article 28-2, Articles 28-4 to 32, Article 33, paragraphs 1, and 2, Articles 35 to 43-8, Article 61, Article 139, Articles 141 to 145, Article 147, Article 148, Article 150, and Articles 155 to 157-1 shall apply mutatis mutandis to the management and supervision of the public offering, issuance, private placement, and trading of the securities.
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Article 165-2
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(Provisions Applicable Mutatis Mutandis to Foreign Companies with a Secondary Listing on the Exchange or OTC Market)
When stock or securities representing stock issued by a foreign company other than under the preceding article is already traded on a foreign securities exchange, or the securities of a branch unit of a foreign financial institution or subsidiary of a foreign company meeting the requirements prescribed by the Competent Authority have been approved by the stock exchange or over-the-counter securities exchange for listed trading on the stock exchange or over-the-counter market, then, unless otherwise provided by the Competent Authority, the provisions of Articles 5 to 8, Article 13, Article 14, paragraphs 1 and 3, Articles 19 to 21, Article 22, Article 23, Articles 29 to 32, Article 33, paragraphs 1 and 2, Article 35, Article 36, paragraphs 1 to 6, Articles 38 to 40, Article 42, Article 43, Article 43-1, paragraphs 2 to 4, Articles 43-2 to 43-5, Article 61, Article 139, Articles 141 to 145, Article 147, Article 148, Article 150, and Articles 155 to 157-1 shall apply mutatis mutandis to the management and supervision of the public offering, issuance, and trading of the securities in the Republic of China.
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