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Article 6
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No person to whom any of the following items applies shall serve as a promoter, director, supervisor, or managerial officer of a credit rating agency; those appointed and currently serving in any of these capacities shall be discharged by the FSC pursuant to the provisions of Article 18-1, paragraph 2 of the Act, whereby the provisions of Article 53 of the Act shall apply mutatis mutandis; the FSC shall also make written request to the Ministry of Economic Affairs to rescind the registration of such persons as director, supervisor, or managerial officer:
- Any of the circumstances listed in Article 30 of the Company Law.
- The person served as the director, supervisor, managerial officer or any other equivalent positions of a juristic person when such juristic person was adjudicated bankrupt, and a period of three years has not yet elapsed since the bankruptcy was concluded or a settlement has not yet been fulfilled.
- The person's account with a financial institution has been dishonored or the person has had a record of bad credit standing during the preceding three years.
- The person was discharged from functional duties pursuant to the provisions of Article 56 or Article 66, paragraph 2 of the Securities and Exchange Act or Article 103, paragraph 2 or Article 104 of the Securities Trust and Consulting Act, and a period of three (3) years has not yet elapsed since the discharge.
- The person has been replaced or discharged from functional duties pursuant to the provisions of Article 100, paragraph 1, subparagraph 2 or Article 101, subparagraph 1 of the Futures Trading Act, where a period of five (5) years has not yet elapsed since the discharge.
- The person has received a final and unappealable sentence for violation of the Securities and Exchange Act, the Banking Act, the Financial Holding Company Act, the Trust Enterprise Act, the Act Governing Bills Finance Business, the Financial Asset Securitization Act, the Real Estate Securitization Act, the Insurance Act, the Futures Trading Act, the Securities Investment Trust and Consulting Act, the Statute for Regulation of Foreign Exchange, the Credit Cooperative Act, the Agricultural Finance Act, the Farmers' Association Act, the Fishermen's Association Act, the Money Laundering Control Act, the Certified Public Accountant Act, the Business Accounting Act, or any other financial regulatory act, and the sentence has not yet been completed, or five years have not yet elapsed since the completion of the sentence, expiry of probation, or granting of pardon.
- The person has been provably engaged or involved in other dishonest or improper acts that are sufficient to show such person unqualified for the rating business.
If the promoter, director, or supervisor is a juristic person, the above provisions shall apply mutatis mutandis to the responsible person or authorized representative of that juristic person.
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Article 15
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A credit rating agency shall publicly disclose the following matters on its company website:
- Its business report, to be published within three months after the close of each fiscal year.
- Its credit rating procedures and methodologies, and key assumptions employed, and, in the event of any changes, the reasons for the change, the discrepancies, and the impact on the current ratings shall also be published.
- In conducting initial rating, surveillance rating, adjustment of ratings, and withdrawal of ratings, the credit rating agency shall immediately publish the credit rating result and the rating reasons, and the historical rating results for the past five years, except in cases where the rating is not intended for public use.
- Any of the following circumstances that is likely to cause a conflict of interest, if the circumstance is related to any individual credit rating, shall be published along with the credit rating results:
- The fee policy for providing the credit rating service.
- Any related services that the credit rating agency provides for the rated entity, or the issuer, originator, arranger, or underwriter of the rated instrument.
- The credit rating agency provides an initial rating evaluation prior to being engaged to conduct the rating.
- Any other conflict of interest that may affect the credit rating.
- Definitions of the credit rating scales for each class of credit ratings.
- An employee code of conduct.
When a credit rating agency makes any of the announcements under subparagraphs 2 and 3 of the preceding paragraph, it shall note any limitations in the data that were analyzed as well as risks that cannot be reflected by the credit rating. The credit rating agency must also use appropriate labeling to distinguish ratings for structured instruments or unsolicited ratings, and explain the meanings of such labeling, and shall publicly disclose the following matters:
- For credit ratings of structured instruments, the sensitivity analysis of the key assumptions, loss test and cash flow analysis, and the due diligence process used by the credit rating agency as a basis of assessment shall also be published.
- For unsolicited ratings, the level of participation by the rated entity in the rating process, and the information that such entity provides shall also be published.
The business report of paragraph 1 shall include the following items:
- A company profile, including the date of establishment, company history, organizational system, and the equity structure of the directors, supervisors, or major shareholders holding more than a 10 percent stake in the company. When a director or supervisor is a juristic person shareholder representative, it shall note the name of the juristic person shareholder and its shareholding ratio, and the names of the top ten shareholders and their shareholding ratios shall also be noted.
- Business overview, which shall include the following:
- Credit rating criteria, methodologies, models, and rating assumptions, and their differences from the previous year, and how the differences affect the ratings.
- The content of outsourced work.
- The credit ratings issued during the previous year and information on changes in the credit ratings, including the number of cases for each class of credit ratings, and the ratios of rating maintenance, rating upgrades, rating downgrades, default ratings, and rating withdrawals.
- The rates of default ratings for the most recent 10 years, and analysis of the transition matrix for the most recent 1, 3, 5, and 10 years for each class of credit ratings.
- The name and the percentage of operating income accounted for by any client, or any client in combination with its affiliated entities, whose contribution to operating income exceeds 10 percent.
- Financial condition, including the percentage of total operating income accounted for by credit rating services income, and the percentage of total operating income accounted for by operating income unrelated to credit rating services.
- A review and analysis of the company's financial condition and business development.
- Risk management matters, including, but not limited to operational risk, reputational risk, legal risk, and information security risk.
- Litigious or non-litigious events: If any major litigious, non-litigious, or administrative dispute that has been concluded by a final and unappealable judgment or is still pending could materially affect the company's finances or business, disclose the facts of the dispute, amount of money at stake in the dispute, the date of commencement of litigation, and the status of the dispute's handling as of the date of printing of the business report. If the credit rating agency is a branch office established in Taiwan by an internationally recognized credit rating agency, it also shall disclose any above-mentioned information of its head office.
- Matters of special note.
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Article 17
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A managerial officer of a credit rating agency shall, apart from not having any of the conditions referred to in paragraph 1 of Article 6, possess at least one of the following qualifications:
- A master's degree or above, and having been employed by a securities, financial, futures or relevant institutions or employed as a managerial officer by a private or government-run entity for one year or more, or having been employed as a lecturer or above position by a domestic or foreign college or higher institution or having work experience in rating related business for a year or more with good performance record.
- Being a college graduate or above, and having been employed by a securities, financial, futures or relevant institutions or employed as a managerial officer by a private or government-run entity for three (3) years or more, or having three-year or more working experience in rating related business with good performance record.
- Having been employed by a securities, financial, futures or relevant institution or employed as a managerial officer by a private or government-run entity for five (5) years or more.
- Possessing the professional knowledge or credit rating experience proven by other substantial facts, and being able to operate credit rating business well and efficiently.
The term "managerial officer" in the preceding paragraph shall mean president, vice president, assistant vice presidents and managers and assistant managers of the business units.
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