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Relevant Laws

Title：Standards Governing the Establishment of Securities Firms (2021.05.06)
Article 6     The business floor and the facilities of a securities firm shall be in accordance with the standards prescribed by a securities dealers' association or the Taipei Exchange (TPEx); for a securities firm which engages in brokerage or proprietary trading business in the stock exchange, they shall also be in accordance with the floor and facilities standards prescribed by the Taiwan Stock Exchange Corporation (TWSE).
Article 8     Prior to filing an application with the FSC for approval to engage in brokerage or proprietary trading business in the stock exchange, the applicant shall receive the consent of computer linkage from the securities central depository enterprise and, according to the type of business which it operates, receive the consent of computer linkage from the stock exchange as required below:
  1. A securities dealer: the linkage of the host computer or the terminal.
  2. A securities broker: the linkage of the host computer or the terminal.
    Prior to filing an application with the FSC for approval to engage in brokerage or proprietary trading business in the over-the-counter market by its head office and newly established branches, the applicant shall receive the consent of the computer linkage for its securities trading information from the TPEx.
Article 11 Securities firms shall establish a system of internal control referred to in Article 10, paragraph 1, subparagraph 4 in accordance with the Regulations Governing Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets and the regulations for establishing internal control systems by securities firms jointly prescribed by the TWSE and other related institutions.
Securities firms operating security token proprietary trading business or equity crowdfunding business shall handle their internal control system in accordance with applicable rules adopted by the TPEx. A securities firm that operates only security token proprietary trading business or equity crowdfunding business is not subject to the provisions of the preceding paragraph.
Article 12     In the event that a securities firm engages in two or more types of securities business, the calculation in compliance with the requirement stipulated in Article 3, 7, and 8 shall be that applicable to the total of the types of business that it operates.
Article 13     A financial institution which, in accordance with the Banking Act or other laws and regulations, may engage in securities business shall file the application under the name of the said financial institution.
Article 14     With the exceptions of futures commission merchants (FCM), proprietary trading of government bonds, foreign bond trading agency business, business with special approval granted by the FSC based on policy considerations, and business for which a permission for concurrent operation has been obtained prior to the issuance of these Standards, a financial institution that concurrently engages in securities business shall restrict such concurrent operations to only one of the following:
  1. Securities underwriting.
  2. Securities dealing.
  3. Securities trading brokerage or intermediary services.
  4. Securities underwriting and dealing.
  5. Securities dealing and securities brokerage at its place of business.
    An FCM that concurrently engages in securities business shall restrict such concurrent operations to only one of the following:
  1. Securities dealing.
  2. Securities trading brokerage or intermediary services.
  3. Securities dealing and securities trading brokerage or intermediary services.
    An FCM that is concurrently operated by another business may not apply to concurrently engage in securities business.
Article 15     A financial institution which concurrently operates securities business shall allocate the operating capital in the amount same as that required under Article 3 hereof; if the paid-in capital of the said financial institution is insufficient to allocate the operating capital, a capital increase has to be made before the application.
    A financial institution which concurrently operates securities business shall allocate operating capital through funds set aside especially for this purpose and unless governed by Article 102 of the Banking Act, may not use it for purposes other than securities business.
Article 16-1     An FCM that applies to concurrently engage in securities business shall meet all of the following requirements:
  1. Its CPA-audited and attested financial report for the most recent period shows no accumulated deficit, is in compliance with Article 17 of the Regulations Governing Futures Commission Merchants, and is free of the circumstances specified in Article 22 of those same Regulations.
  2. It has not been subject to a warning sanction by the FSC in the most recent 3 months.
  3. In the most recent half-year it has not been subject to any FSC sanction under Article 66, subparagraph 2 of the Act ordering the company to dismiss any director, supervisor, or managerial officer from office, nor subject to any FSC sanction under Article 100, paragraph 1, subparagraph 2 of the Futures Trading Act ordering it to dismiss its responsible person or other relevant personnel.
  4. It has not been subject to any FSC sanction suspending business operations in the most recent year.
  5. It has not been subject to any FSC sanction revoking a portion of its business permit in the most recent 2 years.
  6. It has not, in the most recent year, had its trading operations suspended or restricted pursuant to the bylaws of a futures exchange or futures clearing house.
  7. Other requirements as specified by the FSC.
    If an FCM is not in compliance with a requirement in subparagraphs 2 to 6 of the preceding paragraph, but the circumstances have shown concrete improvement, it may be exempted from those restrictions with the approval of the FSC.
Article 16-2     An FCM that applies to concurrently engage in securities business shall, except as otherwise provided by law, establish an independent department dedicated to handling securities business. That department's operations and accounting must be independent.
Article 19     A securities firm established under these Standards may apply for the establishment of a branch unit upon the completion of 1 year operation. Such restriction does not apply, however, to the establishment of a branch unit as a result of merger or transfer.
Article 20     A securities firm applying for the establishment of branch units shall meet all of the following requirements:
  1. The applicant's most recent CPA audited and attested financial report indicates that the net worth per share exceeds its par value and its financial condition complies with the standards stipulated under Article 49 of the Act; however, the requirement regarding the net worth per share exceeds par value shall not apply to a securities firm which increases branch units owing to merger, or acquisition other securities firms.
  2. The applicant has not been issued a warning by this FSC under Article 66, subparagraph 1 of the Act within the most recent 3 months.
  3. The applicant has not been sanctioned by the FSC's order under Article 66, subparagraph 2 of the Act to dismiss its directors, supervisors or managers within the most recent 6 months or ordered under Article 100, paragraph 1, subparagraph 2 of the Futures Trading Act to replace its responsible person or other related personnel.
  4. The applicant's operations have not been suspended by the FSC within the most recent year.
  5. The applicant's business licenses have not been revoked by the FSC within the most recent 2 years.
  6. The applicant has not been restricted or suspended to trade under the by-laws of the TWSE, TPEx, or TAIFEX within the most recent 1 year.
  7. The Capital Sufficiency Ratio of the securities firm is not lower than 150 percent.
    If a securities firm does not meet a requirement set forth in any of subparagraphs 2 to 6 of the preceding paragraph, but has shown concrete improvement in the circumstances, and the FSC has recognized the improvement, the securities firm may be exempted from the relevant requirement.
    For securities firms that increase branch units owing to merger or acquisition of the entire business, assets or facilities of other securities firms under the approval of the FSC, the requirements of subparagraphs 2, 3, and 7 of paragraph 1 shall not apply.
Article 29     A foreign securities firm applying for the establishment of a branch unit within the territory of the ROC should deposit operating capital which shall not be less than the total amount of the paid-in capital needed to be increased for establishment of a branch unit prescribed by Article 21, and the business bond and the settlement/clearance fund needed to be deposited in accordance with Articles 9 and 10 of the Regulations Governing Securities Firms, Article 6 of the Rules for Dealing with Margin Loans and Stock Loans by Securities Firms and the requirements stipulated by other rules and regulations. However, if applying for the establishment of a branch unit thereafter, the firm shall deposit the business bond and the settlement/clearance fund according to Articles 9 and 10 of the Regulations Governing Securities Firms regarding the procedure for establishing branch units.
    A foreign securities firm applying for the establishment of a branch unit shall maintain in the ROC assets which shall not be less than the amount of the special reserve appropriated in accordance with Article 14 of the Regulations Governing Securities Firms, and the amount of the liabilities on the balance sheet of the said branch unit.
Article 31     In filing an application with the FSC for the permit to establish branch units, a foreign securities firm shall submit all of the following documentation:
  1. The application for establishment of branch units (Annex 10).
  2. A certified copy of its articles of incorporation or equivalent documentation.
  3. A business plan which specifies: the principles of business operation; the division of internal organization; the employment of personnel; the description of facilities; and its financial projection for the next 3 years.
  4. The internal control system required by Article 11.
  5. The securities business license issued by the securities regulatory agency or an equivalent agency of its home country and the documentation certifying the compliance with the requirements stipulated under Article 28.
  6. A document issued by the competent securities authority of the home country of the foreign securities firm and its parent company approving its establishment of a branch unit within the territory of the ROC.
  7. Documentary proof that the parent company of the foreign securities firm has approved its establishment of a branch unit within the territory of the ROC and has made a commitment of financial responsibility regarding the branch unit.
  8. The list of directors, managers, and shareholders who possess more than five percent of its outstanding shares.
  9. A certified copy of the minutes of the board of directors meeting at which the resolution to establish branch units in the ROC was made.
  10. The names, nationalities and domiciles of directors and other responsible persons.
  11. The names, nationalities and domiciles or residence and the power of attorney of designated agents for litigious and non-litigious matters in the ROC.
  12. Balance sheets and income statements audited and attested by CPAs for the most recent 3 years.
  13. The power of attorney designating agents for the purpose of applying to the FSC for establishment of branch units.
  14. The documentation of identification for the agent for litigious and non-litigious matters in the ROC.
  15. The documentation affirming the availability to the computer linkage as required under Article 8.
  16. Other documents that the FSC may so require.
    All the aforesaid documentation in foreign language shall be accompanied by a Chinese translation.
Article 32     The establishment registration of a foreign securities firm's branch unit shall be completed within 6 months from the date of the permit issued by the FSC and all of the following documentation shall be submitted to the FSC to apply for a securities business operation license of the said branch unit:
  1. The application (Annex 11).
  2. A photocopy of the branch unit establishment registration certificate.
  3. The list of managers and associated persons with certification of their qualifications.
  4. The documentation certifying the compliance with Article 6.
  5. The documentation certifying the deposit of business bond.
  6. The contract affirming the availability to utilize the computer linkage facilities under Article 8.
  7. Other documents that the FSC may so require.
    The permit for the establishment of a foreign securities firm's branch unit shall be revoked if the applicant fails to apply for the license within the duration prescribed in the preceding paragraph. The duration prescribed in the preceding paragraph may be extended, however, should the said foreign securities firm apply to the FSC, with just cause, prior to the expiration of the duration. Such an extension shall not be more than 6 months and may be applied only once.
Article 32-1     In any of the following circumstances, the FSC may reject an application from a foreign securities firm for establishment of a branch unit:
  1. Any of the circumstances in Article 53 of the Act applies with respect to a managerial officer of the branch unit.
  2. Any misrepresentation or falsehood is found in any content or information in the application documents.
  3. The business plan or the internal control system is not concrete enough, or cannot be implemented effectively.
  4. Other circumstances under which denial of permission is considered necessary to protect the public interest.
    If the application documents submitted under this Chapter are incomplete or otherwise contain incomplete information, and the situation is not corrected within a time limit designated by the FSC, the application documents will be returned.