Taiwan Stock Exchange - Rules & Regulations Directory

Title：Taiwan Stock Exchange Corporation Procedures for Merger or Assignment of Operations of Securities Firms（2015.06.04）

Categories：	Market Supervision > Regulation of Securities Firms

1
Mergers:

Securities firms undergoing merger shall do so in accordance with the Company Act and other applicable laws and regulations and report by letter to the Taiwan Stock Exchange Corporation (TWSE) for referring to the competent authority for approval.
Following approval by the competent authority, securities firms undergoing merger shall notify the TWSE by letter, with the required documents (as per Attachment 1), 7 business days prior to the scheduled date of record for the merger, for the purpose of public announcement.
The securities firm existing or newly established after the merger (hereinafter referred to as the "existing or newly established firm") shall report by letter to the TWSE within 5 days of convening the post-merger shareholders meeting or dissolution of the promoters committee in accordance with Article 318, paragraph 1 of the Company Act. Minutes of the shareholders meeting, the shareholder roster, and the amended or newly drafted articles of incorporation shall be attached, as well as four copies of the application for registration of incorporation or amendment of registration, along with the fees for amendment or incorporation and registration. The TWSE will append its opinion and submit the letter of report to the competent authority.
The securities firm existing or newly established after the merger shall succeed to all the rights and obligations of the securities firm extinguished due to the merger (hereinafter referred to as "the extinguished firm"), provided that any record of violations by the extinguished firm shall not be subject to this provision.
The contract for use of the centralized securities exchange market, the contract for use of market information, and the contract for computer linking:

The existing securities firm shall return to the TWSE the contracts entered into between the extinguished firm and the TWSE following close of market on the date of record of the merger. Where the existing securities firm continues to use an operating venue of the extinguished firm or a branch office of that firm, the existing firm shall also return the contract for computer linking entered into by the given venue or branch office, and shall carry out procedures for transfer of contract.
A newly established securities firm shall, after close of market on the date of record of the merger, return to the TWSE the contracts entered into between the extinguished firm and the TWSE and carry out procedures for transfer of contract.

The settlement and clearing fund:

Where the existing or newly established securities firm continues to use an operating venue of the extinguished firm or a branch office of that firm, the clearing and settlement fund that shall be submitted in connection with establishment of a new branch office or alteration of an operating venue will be deducted by the TWSE from the extinguished firm's settlement and clearing fund account, with no need for separate payment.
After the merger of securities firms becomes effective, the existing or newly established securities firm may, subsequent to discharging the settlement obligations of the extinguished firm and final settling of all accounts, apply for return of that portion of the combined settlement and clearing funds of the merged firms in excess of the amount legally stipulated by the competent authority.

The computer linking performance bond:

The extinguished firm shall, before the date of record of the merger, transfer the client funds kept in the settlement accounts to the securities funds book-entry accounts which are opened by the clients for trading in negotiable securities on the stock or over-the-counter market, unless the clients' settlement funds are to be kept in the settlement accounts of the existing or newly established securities firm with the consent of the clients.
Securities transaction charges and fees for use of computer facilities and access to information:

Computer terminals and trading information facilities:

Registration of changes in personnel:

Registration of the directors, supervisors, and managers of the extinguished securities firm shall be directly cancelled by the TWSE on the first business day after the date of record of the merger.
Where there are changes in the directors, supervisors, or managers of the existing securities firm, amendment of registration shall be performed in accordance with Article 16 of the Operating Rules of the Taiwan Stock Exchange Corporation. A newly established securities firm shall, within 5 days of the dissolution of the promoters committee, submit the rosters of directors, supervisors, and managers for registration.
The existing or newly established securities firm shall, following close of market on the date of record of the merger, return the registration certificates of the extinguished firm's operations personnel and carry out registration of personnel changes.

Transfer of operations:

The extinguished firm may not continue operation after the first business day after the date of record of the merger. Where the existing or newly established securities firm continues to use an operating venue of the extinguished firm, it shall first obtain the approval and certificate of license and other documents as required by law before beginning operation.
Where an extinguished firm or a branch office of an extinguished firm has not concluded matters relating to clearing and settlement, margin trading operations or the deposit, withdrawal, or transfer of centralized depository securities, such matters shall be undertaken by the existing or newly established securities firm or a branch office of that firm, beginning from the first business day after the date of record of the merger, in accordance with the regulations of the TWSE, the securities finance enterprise, and the Taiwan Depository & Clearing Corporation. Where the operating venue of an extinguished securities firm or branch office of that firm is dissolved, and the given operating venue is not in the same area as the existing or newly established securities firm, the existing or newly established securities firm shall entrust handling of the above matters to another securities firm in the same area.
Where breaches of contract by principals or account errors arising out of the extinguished firm's consignment trading or trading on its own accounts have not yet been resolved, the existing or newly established securities firm shall handle those matters in the name of the extinguished firm, beginning from the first business day after the date of record of the merger.
The extinguished firm shall cancel its special error account following market close on the date of record of the merger, and shall cancel its ordinary accounts with other securities firms following winding up of all account matters.
Where the existing or newly established securities firm retains the operating venue of the extinguished securities firm or a branch office of that firm, it shall notify its principals on the date of record of the merger or prior to beginning operation. The existing or newly established securities firm shall also produce a list of account numbers for its principals' consignment trading accounts, margin trading accounts, and centralized securities depository accounts and submit the lists respectively to the TWSE, the securities finance enterprise, and the Taiwan Depository & Clearing Corporation for updating of computer files before accept trading consignments.
An extinguished securities firm and its branch offices shall, on the afternoon of the date of record of the merger, deliver documents that shall be preserved relating to financial operations to the custody of the existing or newly established securities firm or a branch office of that firm in accordance with laws and regulations and the articles of incorporation of the TWSE.
The existing or newly established securities firm shall dispose of the real estate and equipment and non-operating real estate originally belonging to the extinguished securities firm, with the exception of assets retained of necessity for use in operations, in accordance with the regulations of the competent authority.
The extinguished securities firm shall, on the afternoon of the date of record of the merger, deliver ledger lists of securities it holds to the existing or newly established securities firm.

2
Assignment of operations:

Assignment of operations of securities firms shall be conducted in accordance with the Company Act and other relevant laws and regulations. A report of the assignment shall be submitted to the TWSE, which shall report the same to the competent authority for approval.
After a securities firm has received approval from the competent authority for assignment of operations, it shall send a letter of notification to the TWSE with related documents attached (as per Attachment 2) for the purpose of announcement 7 business days prior to the designated final business day.
Where an assignee continues to use an operating venue of the assignor's firm or a branch office of that firm, it shall do so in accordance with the provisions governing branch offices in the Standards Governing the Establishment of Securities Firms or the provisions governing alteration of operating venues in the Regulations Governing Securities Firms.
Provisions governing handling of the computer linking performance bond under "mergers" above shall be applied mutatis mutandis to handling of the computer linking performance bond of the assignor.
The computer terminals and trading information facilities originally belonging to the assignor may continue to be used by the assignee at the original operations venue.
Transaction charges and fees for use of computers and access to information payable by the assignor and its branch offices may be deducted by the TWSE from the funds to be returned by the TWSE.
Where the assignor files a report of dissolution with the competent authority, the TWSE shall cancel the registration of its directors, supervisors, and managers.
Where the assignor has not concluded matters relating to default, handling of account errors, margin trading operations or the deposit, withdrawal, or transfer of centralized depository securities, such matters shall be undertaken by the assignee or other securities firm, beginning from the first business day after the date of record of the merger, in accordance with the regulations of the TWSE, the securities finance enterprise, and the Taiwan Depository & Clearing Corporation.
The assignor shall, on the afternoon of the final day of business, cancel its special error account, and after settlement of all accounts, shall also cancel its ordinary trading accounts opened at other securities brokers.
Where the assignee continues to use the operating venue of the assignor, and where the agreement for assignment of operating assets provides that the assignee shall succeed to the contracts signed between the assignor and its principals for consignment trading and establishment of centralized securities depository accounts, while also providing that the assignee shall be responsible for seeking the assent of the principals, the assignee shall notify the principals 7 business days prior to the assignor's last day of business; before the assignee may undertake consignment trades, it shall also compile a table of the account numbers of the assignor's principals for their consignment trading accounts, margin trading accounts, and centralized securities depository accounts to be submitted to the TWSE, the securities finance enterprise, and the Taiwan Depository & Clearing Corporation for use in updating computer records. Where a principal expresses objection, or where a principal has not indicated assent to the assignee's succession to the aforesaid contracts within 6 months of commencement of operation of a branch office established by the assignee at the assignor's original venue, and there is no record of trades consigned by the principal, the assignee shall immediately cancel the principal's account and send a letter of notification to the TWSE, provided that given legitimate reasons, the assignee may notify the TWSE by letter and apply for an extension of the above period, such extension to be one time only and for a period of no more than 6 months.
The assignor shall, before the last day of business, transfer the client funds kept in the settlement accounts to the securities funds book-entry accounts which are opened by the clients for trading in negotiable securities on the stock or over-the-counter market, unless the clients' settlement funds are to be kept in the settlement account of the assignee with the consent of the clients.
Where the agreement for assignment of operating assets contains provisions that the assignee shall succeed to the consignment contracts and contracts for establishment of centralized securities depository accounts signed between the assignor and its principals, the assignor shall, on the afternoon of its last day of business, transfer all evidentiary documents that law and TWSE regulations require it to keep custody of relating to consignment trading to the custody of the assignee.
With the exception of fixed assets necessarily retained for operational use, the assignor shall dispose of any real estate and equipment and non-operating real estate that have been assigned to it, in accordance with the regulations of the competent authority.

3
Matters not provided for in these Procedures shall be undertaken in accordance with applicable laws and regulations and the bylaws and rules and circular letters of the TWSE.

4
These Procedures, and any amendments hereto, shall take force after reporting to the competent authority for recordation.