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Article 14
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(Definition of Financial Reports and Regulations Governing Their Preparation)
The term "financial reports" as used in this Act means the financial reports prepared by issuers, securities firms, and stock exchanges that are to be filed periodically with the Competent Authority in compliance with Acts and regulations.
Regulations governing the preparation of financial reports with respect to the content, scope, procedures, preparation, and other matters to be complied with for the financial reports referred to in the preceding paragraph shall be prescribed by the Competent Authority, and Chapters IV, VI, and VII of the Business Entity Accounting Act shall not apply to those financial reports.
The financial reports referred to in paragraph 1 shall be signed or stamped with the seal of the chairperson, managerial officer, and accounting officer, who shall also produce a declaration that the report contains no misrepresentations or nondisclosures.
The accounting officer referred to in the preceding paragraph shall possess certain qualifications and shall receive continuing professional education while holding the position. Regulations governing the qualifications of an accounting officer, the minimum hours of continuing education required, and the qualifications required of the institution offering the continuing education curriculum shall be prescribed by the Competent Authority.
When a company whose stock is listed for trading on the stock exchange or over-the-counter securities exchange prepares its annual financial report in accordance with paragraph 2, it shall additionally disclose relevant information, including the company's remuneration policy, the average salary of all the company's employees and any adjustments thereto, and the remuneration of the directors and supervisors, in accordance with the regulations prescribed by the competent authority.
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Article 14-1
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(Establishment of Internal Control Systems)
Public companies, securities exchanges, securities firms, and enterprises set forth in Article 18 shall establish financial and operational internal control systems.
The Competent Authority may prescribe rules governing internal control systems of companies or enterprises under the preceding paragraph.
A company or enterprise under paragraph 1 shall file an Internal Control System Statement with the Competent Authority within three months of the close of each fiscal year, unless approval otherwise has been granted by the Competent Authority.
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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 21-1
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(Signing of Treaties or Agreements for International Cooperation )
In order to further international cooperation between the competent securities authorities of the ROC government and foreign countries, the ROC government and agencies (or institutions) authorized by it may, based on the principle of reciprocity, enter into a cooperative treaty or agreement with a foreign government or agency (institution), or with an international organization, to facilitate matters such as information exchange, technical cooperation, and investigation assistance.
Unless such action otherwise conflicts with the interests of the state or the rights or interests of the investing public, the Competent Authority may, in accordance with the treaty or agreement made pursuant to the preceding paragraph, require related authorities or related agencies (institutions), juristic persons, associations, or natural persons to provide necessary information in accordance with the treaty or agreement, and based on the principles of reciprocity and confidentiality, provide such information to the foreign government, agency (institution), or international organization which has executed the given treaty or agreement.
In order to further international cooperation in securities markets, in cases in which a foreign government has undertaken investigation, prosecution, or judicial procedure in connection with any suspected violation of foreign financial regulatory legislation, when the foreign government requests assistance with investigation in accordance with the treaty or agreement made pursuant to paragraph 1, the Competent Authority may require agencies (institutions), juristic persons, associations, or natural persons related to the securities trading to present relevant account books or documents or to appear at its offices to give explanations. When necessary, the Competent Authority may request the foreign government to send representatives to participate in its investigations.
A party who is required to appear at the offices of the Competent Authority to provide explanations under the preceding paragraph may select and retain, to appear with the party, a lawyer, certified public accountant, other agent, or other assisting personnel that the Competent Authority has given permission to accompany the party.
An agency (institution), juristic person, body, or natural person referred to in paragraph 2 and paragraph 3 may not evade, impede, or refuse any requirement by the Competent Authority to provide relevant account books or documents or to appear at its offices to give explanations.
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Article 22
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(Public Offering and Issuance of Securities)
With the exception of government bonds or other securities exempted by the Competent Authority, the public offering or issuing of securities without an effective registration with the Competent Authority shall be prohibited.
An issuer under this Act shall be required to comply with the preceding paragraph when it issues new shares pursuant to the provisions of the Company Act, except where the issuance is handled under Article 43-6, paragraphs 1 and 2.
The provisions of paragraph 1 shall apply mutatis mutandis to a holder of securities as defined in Article 6, paragraph 1, or certificates of payment therefor, or documents of title thereto, or stock warrant certificates, or certificates of entitlement to new shares, who publicly offers to resell the securities or certificates.
Regulations governing the conditions, documents to be attached, review and approval procedures, and other matters for compliance with respect to the effective registrations under the preceding three paragraphs shall be prescribed by the Competent Authority.
In formulating or amending provisions of the preceding paragraph's regulations relating to foreign exchange, the Competent Authority shall consult the Central Bank of China.
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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 58
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(Filing of Commencement or Suspension of Business by a Securities Firm)
A securities dealer shall register the commencement or suspension of its business or that of its branch units with the Competent Authority for reference.
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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 61
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(Limits and Margin Requirements for Margin Purchases and Short Sales of Securities)
The permissible amount, terms, financing ratio, and the margin percentage required for margin purchases and short sales for securities transactions shall be prescribed by the Competent Authority after consultation with and consent from the Central Bank of China. The eligibility criteria of securities for margin purchases and short sales 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 69
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(Filing for Registration of Dissolution or Partial Business Cessation)
Where a securities firm dissolves or partially ceases a part of its business, its board of directors shall file a registration statement with the Competent Authority explaining the reasons.
The provisions of Article 67 and 68 shall apply mutatis mutandis to matters referred to in the preceding paragraph.
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Article 70
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(Regulations Governing Responsible Persons and Associated Persons of Securities Firms)
The rules governing matters regarding the responsible persons and associated persons of securities firms shall be prescribed by the Competent Authority.
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Article 79
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(Delivery of the Prospectus by the Underwriter)
An underwriter shall be required to deliver on the behalf of the issuer a prospectus in compliance with paragraph 1 of Article 31 when selling the securities it underwrites.
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Article 90
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(Content of the Articles of Association and Direction and Supervision of Business)
The material contents of the articles of association of a securities dealers association and matters regarding the direction and supervision of its business shall be prescribed by the Competent Authority.
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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 95
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(Standards for the Establishment of Stock Exchanges)
The standards for the establishment of stock exchanges shall be prescribed by the Competent Authority.
Each stock exchange shall be limited to operating one centralized securities exchange market.
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Article 102
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(Direction, Supervision, and Regulation)
Matters relating to the direction and supervision of the business operation of a stock exchange and the regulation of the responsible persons and associated persons shall be prescribed by the Competent Authority.
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Article 141
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(Entering Into and Recordation of the Listing Contract)
A stock exchange shall enter into a contact for public listing of securities with the company listing the securities. The contents of the contract shall not contradict the provisions of the rules on contract for public listing, and such contracts shall be filed with the Competent Authority for recordation.
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Article 144
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(Delisting)
A stock exchange may, pursuant to acts and regulations, or the provisions of the contact for public listing, terminate the public listing of securities, and such termination shall be filed with the Competent Authority for recordation.
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Article 145
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(Delisting)
An issuer of securities publicly listed on a stock exchange may, pursuant to the provisions of the contact for public listing, file an application with the stock exchange to terminate its listing.
The stock exchange shall draft procedures for the handling of applications to terminate listings, and submit the procedures, and any subsequent amendments thereto, to the Competent Authority for approval.
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Article 147
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(Recordation of Suspension or Resumption of Trading)
A stock exchange shall file a report with the Competent Authority for recordation in the event it suspends or reinstates the trading of listed securities pursuant to acts and regulations, the provisions of the contract for public listing, or for the protection of public interest.
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Article 152
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(Reporting of Suspension or Reopening of the Market)
A stock exchange shall be required to file a report with the Competent Authority in the event the centralized securities exchange market is to be suspended due to events of force majeure; this provision shall also be applicable in the reopening of the market.
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Article 159
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(Prohibition of Discretionary Trading)
A securities broker shall not accept any full authorization that allows him/her to determine the type, the number, or the price of securities to be bought or sold on the behalf of the principal.
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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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