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Article 3
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In case of any of the following events, a securities firm shall report to the FSC for approval in advance:
1. Change of name of the firm.
2. Change of capital amount, working capital, or funds for operating business.
3. Change of the business premises of the firm, a branch office, or a simple branch office.
4. Acquisition of the entire or major part of the business or assets of another person, or transfer of the entire or major part of the business or assets of the firm to another person.
5. Merger or dissolution.
6. Investment in a foreign securities firm.
7. Any other matters which under the regulation of the FSC shall be reported to and approved by the FSC in advance.
Where a securities firm has entered into a contract for using the centralized securities market with the TWSE, matters to be reported and approved as referred to in the preceding paragraph shall be submitted to the TWSE for transmittal to the FSC. Where a securities firm only entered into a contract for trading securities on the Taipei Exchange (TPEx), the submission shall be made to the FSC through the TPEx. Where no contract has been entered into, the submission shall be made to the FSC through the Securities Association.
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Article 9
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After completion of corporate registration, a securities firm shall deposit an operation bond with a bank designated by the FSC as follows:
1. A securities underwriter: NT$40 million.
2. A securities dealer: NT$10 million.
3. A securities broker: NT$50 million. However, if the securities broker operates only the following business, the bond shall be NT$10 million:
A. Operates only equity crowdfunding business.
B. Operates only brokerage business for trading and exchanging beneficial certificates of funds.
4. Operators of two or more types of securities business: aggregate of the amounts as referred to in the preceding three subparagraphs according to the types of business being engaged in.
5. Establishment of a branch office: additional NT$5 million for each branch.
6. Establishment of a simple branch office: additional NT$2 million for each simple branch.
7. Conversion of a branch office into a simple branch office: for each branch that is converted, and after the license for the simple branch has been obtained, the originally deposited operation bond will be reduced to NT$2 million.
The operation bond referred to in the preceding paragraph shall be deposited in cash, government bonds, or financial bonds.
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Article 10
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A securities firm operating the business of accepting brokerage orders to trade securities on the centralized securities exchange market shall make deposits to the TWSE settlement and clearing fund in the following manner:
1. Before commencement of business operation, the securities firm shall deposit a basic amount of NT$15 million. After commencement of business operation, it shall additionally deposit a specified percentage of the net receipt or net payment amount of the executed trades of TWSE listed securities for which it has accepted brokerage trading orders within 10 days after the close of each quarter until the end of the then-current year. The percentage shall be separately determined by the FSC.
2. From the year following the commencement of business operation, the originally deposited basic amount shall be reduced to NT$3.5 million and combined into the amount equal to the above-mentioned percentage of the net receipt or net payment amount of the executed trades of TWSE listed securities for which it accepted trading orders for the previous year on a yearly basis. At the end of January of each year, the insufficient or excess amount of the fund shall be deposited with or withdrawn from the TWSE.
Before the commencement of business operation, a securities firm operating the business of proprietary trading of securities on the centralized securities exchange market shall make a lump sum deposit of NT$5 million to the TWSE settlement and clearing fund. After commencement of business operation and from the year following commencement of business operation, in addition to the basic amount, it shall furthermore continue to make deposits to the fund based on a specified percentage of the net receipt or net payment amount of the trades of TWSE listed securities that it has executed in proprietary trading. The method for calculation and lodging of the deposit shall follow that set out in the preceding paragraph.
A securities firm operating the businesses of brokerage and proprietary trading of securities on the centralized securities exchange market shall deposit an aggregate of the amounts referred to in the preceding two paragraphs.
Before commencement of business operation of each domestic branch office, a securities firm shall make a lump sum deposit of NT$3 million to the settlement and clearing fund; provided that from the next year following the commencement of business operation, the originally deposited amount shall be reduced to NT$500,000.
A securities firm establishing a simple branch office or converting a branch office into a simple branch office is exempt from making a deposit to the TWSE settlement and clearing fund for such branch. For each branch office converted into a simple branch office, after obtaining the simple branch office license, the securities firm may apply to the TWSE for the return of the settlement and clearing funds it had originally deposited.
A joint liability system shall be adopted for the settlement and clearing fund deposited by securities firms, and a special management committee of the fund shall be set up. The management rules shall be drafted by the TWSE with input from the Securities Association and reported to the FSC for approval. This provision shall also apply to any amendment of the rules.
The special management committee of the fund may, depending on the degree of operational risk of a securities firm, notify the securities firm to make additional deposits to the settlement and clearing fund and report such to the FSC for recordation. The detailed rules for the above fund shall be drafted by the special management committee of the fund and reported to the FSC for approval. This provision shall also apply to any amendment of the rules.
A securities firm operating over-the-counter brokerage or proprietary securities trading business shall make deposits to the TPEx settlement and clearing fund in compliance with the applicable requirements of the TPEx.
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Article 16
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A securities firm, unless it is concurrently operated by a financial institution and subject to other relevant laws or regulations, may not purchase real property for non-operating purposes. However, this restriction shall not apply to a securities firm that holds real property for non-operating purposes as a result of a merger, acquisition, branch office or simple branch office closure, change in or reduction of places of business, or as a result of conducting business, or as approved by the FSC. The sum total held of real property and equipment for operating purposes and real property for non-operating purposes shall not be more than 60 percent of its total assets.
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Article 50
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A securities firm applying to invest in a foreign enterprise, unless otherwise provided by laws or regulations, shall meet the requirements listed below; however, if a securities firm does not meet a condition in subparagraphs 1 to 5, but concrete improvement has been made, and the improvement has been recognized by the FSC, it may be exempted therefrom:
1. Have not been sanctioned by the FSC with a warning in the most recent 3 months.
2. Have not been sanctioned by the FSC with an order to dismiss or replace any of its directors, supervisors, or managerial officers in the most recent 6 months.
3. Have not been sanctioned by the FSC with suspension of business within the last 1 year.
4. Have not been sanctioned by the FSC with revocation of the license of any branch office, simple branch office, or portion of its business within the last 2 years.
5. Have not been sanctioned with suspension or restriction of trading by the TWSE, TPEx, or TAIFEX pursuant to its rules or bylaws within the last 1 year.
6. Its regulatory capital adequacy ratio has not been below 200 percent within the most recent 3 months, and its CPA audited or reviewed financial report for the most recent period shows no accumulated deficit, and its financial condition meets the provisions of Articles 13, 14, 16, 18, 18-1 and 19. However, the requirement regarding the aforementioned regulatory capital adequacy ratio does not apply if special-case approval has been obtained due to special needs.
7. Its combined total amount invested in foreign enterprises plus any funds that the securities firm establishing an overseas branch office(s) appropriates there for local operations plus any amount invested in Mainland China enterprises do not exceed 40 percent of the securities' firm's net worth. However, when there is special need and approval as a special case has been received, this provision does not apply.
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Article 64
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When the regulatory capital adequacy ratio of a securities firm is at least 120 percent but is less than 150 percent, the FSC may take the following actions:
1. Postpone any additions by the securities firm to its types of operations or business items, any establishment of additional branch offices or simple branch offices, and any equity investment in any securities, futures, financial, or other enterprises.
2. Require the securities firm to strengthen its internal controls and increase the frequency of internal auditing, and within one week of filing the report, submit a concrete, detailed explanation and correction plan to the relevant authorities in accordance with Article 21, paragraph 4.
3. If the capital adequacy ratio has not been corrected by the end of the month preceding any proposal by the board of directors for distribution of profits, in addition to requiring the securities firm to deduct from its undistributed earnings those items required to be set aside according to regulations, it shall further be required to set aside 20 percent as special reserve in accordance with Article 41, paragraph 1 of the Act.
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Article 66
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When the regulatory capital adequacy ratio of a securities firm falls below 100 percent, the FSC, in addition to doing as set out in Article 64, subparagraphs 1 and 2 and Article 65, subparagraphs 1 and 2 herein, additionally may take the following actions:
1. Deny approval for its application for establishment of any additional branch office or simple branch office.
2. If the capital adequacy ratio has not been corrected by the end of the month preceding any proposal by the board of directors for distribution of profits, in addition to requiring the securities firm to deduct from its undistributed earnings those items required to be set aside according to regulations, it shall further be required to set aside the total amount as special reserve in accordance with Article 41, paragraph 1 of the Act.
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