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Relevant Laws

Title：Taiwan Stock Exchange Corporation Rules Governing Targeted Examinations of and Guidance to Securities Firms (2014.11.04)
Article 3     The TWSE shall perform a targeted examination upon discovering that any of the following occurs in respect of a securities firm:
  1. (Deleted)
  2. Receiving unsatisfactory ratings under the TWSE Rules Governing Early Warnings for Overall Operational Risk of Securities Firms, or incurring consecutive losses and having a net value below its paid-in capital by at least three-fifths.
  3. Receiving unsatisfactory ratings in the internal audit and showing no improvement in the assessment after receiving guidance.
  4. In material breach of laws or regulations or the rules of the TWSE and showing no improvement after being imposed multiple penalties by the competent authority or the TWSE.
  5. Having a regulatory capital adequacy ratio below the ratio stipulated in Article 66 of the Regulations Governing Securities Firms for three consecutive months.
  6. Other material unexpected events or matters instructed by the competent authority.
Article 4     To conduct a targeted examination, the TWSE may request the securities firms to submit a review report within the prescribed time. The review report shall include the following matters, be signed and sealed by the responsible person and heads of the relevant finance, sales and audit departments of the securities firm, and attach all of the relevant documents and forms:
  1. Analysis of the causes of any event referred to in the preceding article and an impact evaluation.
  2. Responsibility of the personnel committing the violation.
  3. Improvement plan.
  4. Custodian and locations of articles relating to accounts, documents and properties.
  5. Other matters specified by the competent authority or the TWSE.
    The report referred to in the preceding paragraph shall be submitted to the next board of directors' meeting of the company for discussion and approval within two months, signed by the supervisor(s) and submitted to the TWSE along with the minutes of said board of directors' meeting.