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Title Standards Governing the Establishment of Securities Firms CH
Date 2009.06.16 ( Amended )

Article Content

Article 1
Article 2 Each type of securities business which may be operated by a securities firm shall be approved separately by the Financial Supervisory Commission (FSC), Executive Yuan under the Act and these Standards. The approved type of securities business shall be specified by the license of each securities company. The operation of securities business shall not he undertaken before it is approved and specified by the license.
Article 3
Article 4
Article 5
Article 6
Article 7
Article 8
Article 9
Article 10
Article 11 Securities firms shall establish the system of internal control referred to in Item 4 of Paragraph 1 of the preceding Article according to the Regulations Governing Establishment of Internal Control and Internal Audit System for a Service Enterprise in Securities and Futures Market and the regulations for systems of internal control for securities firms set by the Taiwan Stock Exchange Corporation and other related institutions.
Article 12
Article 13
Article 14 With the exceptions of futures commission merchants (FCM), financial institutions engaged in proprietary trading of government bonds, and those that have already obtained permission to engage in concurrent operations prior to the issuance of these Standards, a financial institution that concurrently engages in securities business shall restrict such concurrent operations to one of the following only:
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 one of the following only:
1. securities dealing;
2. securities trading brokerage or intermediary services;
3. proprietary trading of securities 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
Article 16
Article 16-1
Article 16-2
Article 17
Article 18
Article 18-1
Article 19
Article 20
Article 21
Article 22
Article 23
Article 24
Article 25
Article 25-1
Article 25-2 A securities firm establishing an overseas branch office(s) shall comply with the provisions of all the following subparagraphs:
1. concurrently operate three kinds of business, securities underwriting, proprietary trading, and brokerage or commission agency, and have net worth of not less than NT$3 billion on the financial report for the most recent period audited and attested by CPAs;
2. have net worth per share of not less than par value on the financial report for the most recent period audited and attested by CPAs and have financial condition complying with the standards prescribed in Article 49 of the Act;
3. comply with the provisions of Article 20, paragraph 1, subparagraphs 2 through 6;
4. have a regulatory capital adequacy ratio of not less than 200 percent and a sound financial structure;
5. comply with Article 6 of the Ministry of Economic Affairs Regulations Governing Reserve Allocated by Companies for Losses on Foreign Investment.
If a securities firm does not meet a requirement in subparagraph 3 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.
The sum of the funds that a securities firm establishing an overseas branch office(s) appropriates there for local operations plus the total funds the securities firm invests in foreign enterprises shall not exceed 20 percent of the securities firm's net worth; provided, this restriction shall not apply where approval has been granted on an ad hoc basis to meet special requirements.
Article 25-3
Article 26
Article 26-1
Article 26-2
Article 27
Article 28
Article 29 A foreign securities firm applying for the establishment of a branch office within the territory of the Republic of China 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 office 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 office 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 offices. A foreign securities firm applying for the establishment of a branch office shall maintain in the Republic of China assets which shall not be less than the amount of the reserve for trading losses, the reserve for breach of contract losses and the special capital reserve accumulated in accordance with Articles 11, 12, and 14 of the Regulations Governing Securities Firms, and the amount of the liabilities on the balance sheet of the said branch office.
Article 30
Article 31 In filing an application with the FSC for the permit to establish branch offices, a foreign securities firm shall submit the following documentation:
1. the application for establishment of branch offices (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 three years;
4. the system of internal control 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. the list of directors, managers, and shareholders who possess more than five percent of its outstanding shares;
7. a certified copy of the minutes of the board of directors meeting at which the resolution to establish branch offices in the Republic of China was made;
8. the names, nationalities and domiciles of directors and other responsible persons;
9. the names, nationalities and domiciles or residence and the power of attorney of designated agents for litigious and non-litigious matters in the Republic of China;
10. balance sheets and income statements audited by certified public accountants for the most recent three years;
11. the power of attorney designating agents for the purpose of applying to the FSC for establishment of branch offices;
12. the documentation of identification for the agent for litigious and non-litigious matters in the Republic of China;
13. the documentation affirming the availability to the computer linkage as required under Article 8; and
14. other documents that the FSC may so require.
All the aforesaid documentation in foreign language shall be accompanied by a Chinese translation.
Article 32
Article 33 A foreign financial institution, with approval from its home government, may apply to the FSC for the establishment of branch offices for the operation of securities business. The provisions of Articles 6, 8, 11 through 15, 19, 20, 29, 31, and 32 shall apply mutatis mutandis to foreign financial institutions, other than FCMs, that apply for their branch offices established within the territory of the Republic of China to concurrently operate securities business. The provisions of Articles 6, 8, 11 to 15, 16-1, 16-2, 19, 20, 29, 31, and 32 shall apply mutatis mutandis to foreign FCMs that apply for their branch offices established within the territory of the Republic of China to concurrently operate securities business.
Article 33-1
Article 33-2
Article 33-3
Article 34
Article 35
Article 36
Article 37
Article 38
Article 39
Article 40
Article 40-1
Article 41
Article 41-1
Article 42
Article 43
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