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Title Taipei Exchange Rules Governing Securities Trading on the TPEx CH
Date 2025.08.04 ( Amended )

Article Content

Article 1
Article 2     Unless otherwise provided in relevant laws and regulations, trading of securities on the Taipei Exchange ("TPEx trading" of securities or "TPEx traded" securities) shall be governed by these Rules.
Article 2-1
Article 2-2
Article 2-3
Article 2-4
Article 3
Article 3-1
Article 3-2
Article 4
Article 5
Article 6
Article 7
Article 8
Article 8-1
Article 8-2
Article 8-3
Article 9
Article 9-1
Article 10
Article 10-1
Article 10-2
Article 10-3
Article 11
Article 11-1
Article 11-2
Article 11-3
Article 11-4     (deleted)
Article 11-5     A trustee institution that issues REIT or REAT beneficial securities shall submit the following information in writing within the prescribed time periods:
  1. When any information on the interest of beneficial owners is publicly announced, the downloaded public announcement after the relevant particulars have been entered into the Internet information reporting system designated by the TPEx, except in the case where the written submission is exempted under the TPEx List of Required Tasks for Trustee Institutions of REAT Beneficial Securities. Where particulars that should have been publicly announced were not announced, or where the announced items were not sufficiently explanatory, the TPEx may give notice via letter to make the announcement or to supplement or amend the announcement.
  2. Before trading of REIT beneficial securities on TPEx commences, at least 2,000 copies of the prospectus shall be submitted for distribution to and review by the public; provided, only four copies are required to be submitted where it is been reported on the Internet information reporting system designated by the TPEx by means of an electronic file in the format prescribed by the TPEx.
  3. The trust property assessment committee established by the trustee institution shall review the REIT or REAT trust property at least once every 3 months and submit two copies of the report after reporting it to the Board of Directors.
  4. Two copies of each shall be submitted at the time that the balance sheet, profit and loss statement, and trust property management and application report prepared by the trustee institution are reported to the trust supervisor and notice is given to the beneficial owners.
  5. Two copies of the beneficial owners meeting minutes shall be submitted within 20 days after the beneficial owners meeting.
  6. Other information as required by the competent authority and the TPEx.
    The TPEx may make available for public review the originals or abstracts of any information submitted under the preceding paragraph.
Article 11-6     A SITE and a FTE shall file the following information within the prescribed time periods:
  1. When any information on the interest of beneficial owners is publicly announced, the relevant particulars shall be entered into the TPEx-designated Internet information reporting system.
  2. Where an approval is obtained to issue passive ETF or active ETF beneficial certificates through public offer, the electronic file of the prospectus shall be uploaded to the TPEx-designated Internet information reporting system following the instructions provided by the TPEx in a notice.
  3. At the time when the annual financial report or semi-annual financial report of the fund is filed with the competent authority, the electronic file shall be uploaded to the TPEx-designated Internet information reporting system .
Article 11-7     An ETN issuer shall submit the following information within the prescribed time periods:
  1. When any information on the interest of ETN holders is publicly announced, the relevant particulars shall be entered into the TPEx-designated Internet information reporting system. Where a required public announcement is not made or where the matters contained therein are not fully expressed, the TPEx may notify the issuer in writing to make supplementations or corrections.
  2. Where an approval is obtained to issue ETNs, electronic files of prospectuses shall be uploaded to the TPEx-designated Internet information reporting system following the instructions provided by the TPEx in a notice, with two copies of each prospectus submitted to the TPEx.
  3. Other information as required by the competent authority and the TPEx.
    The TPEx may make available for public review the originals or abstracts of any information submitted under the preceding paragraph.
Article 12     If any of the following circumstances exists with respect to an issuer, the TPEx may place the TPEx listed securities under an altered trading method; a securities broker, when accepting an order to trade such securities, shall take full delivery of the funds or securities before making trading quotes:
  1. Where its financial report for the most recent period as publicly announced and filed in accordance with Article 36 of the Securities and Exchange Act shows that its net worth is lower than half of its share capital stated on the financial report. However, when a TPEx listed company records as a deduction from net worth the cost of shares bought back by it pursuant to Article 28-2 of the Securities and Exchange Act or of shares held in said TPEx listed company by subsidiaries thereof, the par value of treasury stock held in said TPEx listed company by the TPEx listed company and subsidiaries thereof may be deducted from the share capital stated on the financial statement in the calculation of the above-stated ratio; when share capital collected in advance and share capital to be canceled are listed as an addition to or deduction from net worth, the par value of the relevant shares shall be added to or deducted from the share capital for the calculation of the above-stated ratio.
  2. Where the issuer fails to call a regular shareholders meeting within 6 months after the closure of a fiscal year.
  3. Where, for the issuer's financial report for the most recent period publicly announced and filed pursuant to Article 36 of the Securities and Exchange Act, the CPAs issue an audit report or review report indicating substantial uncertainty concerning the issuer’s ability to continue as a going concern, or the issuer's attesting CPAs issue an audit report containing a qualified opinion or a review report containing a qualified conclusion. However, this restriction shall not apply if otherwise provided by applicable laws and regulations of the competent authority, or in the case of an interim financial report if the reason is that investment in a non-major subsidiary, or investment accounted for using the equity method, and the gain or loss thereupon, is calculated on the basis of the investee company's financial statements that have not been audited or reviewed by CPAs, and the issuer's attesting CPAs fully disclose in the audit or review report the reasons for the qualified opinion and the monetary amounts of any accounting items that may be affected thereby, and no material irregularities are present. However, if the subsidiary is a major subsidiary included in the preparation of the consolidated statement, or a subsidiary of a financial holding company, its interim financial report shall be audited or reviewed by CPAs in accordance with applicable laws and regulations.
  4. Where the issuer has any of the conditions under Article 15 of the TPEx Procedures for Verification and Disclosure of Material Information of Companies with TPEx Listed Securities, Article 11 of the TPEx Handling Procedures for Routine Regulation and Regulation by Exception of Financial and Business Affairs of TPEx Listed Companies, or Article 6 of the Rules Governing Information Reporting by Companies with TPEx Listed Securities, and the circumstances are serious.
  5. Where two-thirds or more directors and supervisors are under court order of suspension of performing job responsibilities.
  6. Where an application to the court for reorganization in accordance with Article 282 of the Company Act has been filed.
  7. Inability to punctually repay straight corporate bonds or convertible corporate bonds upon maturity or upon the demand of creditors.
  8. Dishonor of a negotiable instrument by a financial institution because of insufficient funds on deposit, where the TPEx is aware of such dishonor.
  9. Where more than one-half of the directors or supervisors have changed, with any of the following the results, and correction has not been made within the time limit prescribed by the TPEx:
    1. The shareholding is too concentrated to meet the shareholding dispersion criteria for TPEx listing.
    2. Any of the circumstances set forth in Article 10, paragraph 1, subparagraph 7 of the Review Rules or Article 9, paragraph 1, subparagraph 4 of the Review Rules for Foreign Securities exists with respect to any newly appointed director, supervisor, or general manager.
  10. Where the number of companies held by an investment holding company is less than two, provided that this restriction shall not apply to a TPEx primary listed company; for investment holding companies created as the result of share conversion, general assignment, assignment of business, corporate demerger, or change of company name this shall not apply within 1 year of commencement of TPEx trading.
  11. Where, after a company demerger, paid-in capital fails to reach the standard set forth in Article 3, paragraph 1, subparagraph 1 of the Review Rules; or where, after a demerger of a TPEx primary listed company, its net worth fails to reach the standard set forth in Article 4, paragraph 1, subparagraph 3 of the Review Rules for Foreign Securities.
  12. Where an already TPEx listed parent company (including a financial holding company or investment holding company) fails to abide by an undertaking under Article 12-2, paragraph 7 to purchase the shares held by the other shareholders of a TWSE listed or TPEx listed subsidiary in which it has shareholding of more than a certain percentage.
  13. Where any of the following circumstances applies to the issuer in the handling of shareholder services:
    1. The issuer fails to engage a shareholder services agent, and is not reviewed and approved by the Taiwan Depository and Clearing Corporation to handle shareholder services matters.
    2. An audit by the Taiwan Depository and Clearing Corporation has found significant deficiency in the shareholder services, and corrective action has not been taken within the time limit set by the TPEx.
  14. Where explanations given in a press conference concerning material information fail to clarify points in question, and the TPEx deems it necessary to protect the rights and interests of investors.
  15. The number of TPEx listed common shares does not reach 25 percent of the total number of the issuer's issued common shares, and does not reach 5 million shares, or the share capital of the TPEx listed common shares does not reach 50 million shares. However, for a TPEx primary listed company, if the amount of the net worth of its TPEx listed common shares calculated as a ratio of its total number of issued common shares reaches NT$100 million or more, this restriction does not apply.
  16. The requirements of Article 12-1, paragraph 2, subparagraph 3 cannot be met within 6 months after trading is suspended pursuant to Article 12-1, paragraph 1, subparagraph 17.
  17. The board of directors resolves to refer a dissolution proposal to a shareholders' meeting for resolution.
  18. There is any violation by the issuer of Article 8-1 or 8-2, and the circumstances are serious.
  19. The number of a TPEx primary listed company's directors with a household registration in the Republic of China does not exceed one-half the number of director seats or there are less than two independent directors with a household registration in the Republic of China, and a shareholders meeting is not convened to hold a by-election within 60 days from the occurrence of the fact.
  20. The venture capital company's financial report for the most recent period shows any of the following circumstances:
    1. Its investment in shareholding in any single public company exceeds 30 percent of the total issued voting shares of that public company, and correction has not been made within the time limit prescribed by the TPEx.
    2. Its total investment in any investee company exceeds 20 percent of its total assets as reported in its financial statement for the most recent period, and correction has not been made within the time limit prescribed by the TPEx.
    3. Its total investment is less than 60 percent of its total assets, and correction has not been made within the subsequent 12 financial reporting periods. However, this restriction does not apply if the requirement is met when the calculation is based on total assets less valuation adjustment for a net increase in investments measured at fair value.
    4. It engages in any business other than as provided in the Regulations Governing Guidance for Venture Capital Enterprises, and correction has not been made within the time limit prescribed by the TPEx.
  21. Other causes for which the TPEx deems it necessary.
    For the securities whose trading requires collection in advance of the full amount of the purchase price or the securities for sale pursuant to the preceding paragraph, those measures shall be implemented from the second business day after the date of the public announcement by the TPEx.
    The duration for which securities are placed under the altered trading method by the TPEx for any reason set forth in a subparagraph of paragraph 1, except for those subject to disposition under subparagraph 6, may not be less than 3 months, or, unless otherwise provided by these Rules, upon the extinguishment of the reason and in the absence of any other reason set forth in the subparagraphs of that paragraph, the TPEx may publicly announce the reinstatement of normal settlement trading for such securities beginning from the second business day after the public announcement date.
    When an issuer of TPEx listed securities placed under the altered trading method by the TPEx due to a circumstance in subparagraph 1, 7, 8, 15, or 16 of paragraph 1 achieves compliance with all of the subparagraphs below, and in the absence of any other reason set forth in the subparagraphs of paragraph 1, the TPEx may reinstate normal settlement trading:
  1. After the securities have been placed under the altered trading method due to the circumstances under paragraph 1, subparagraph 1, the financial report for the most recent period as publicly announced and registered by the issuer pursuant to Article 36 of the Securities and Exchange Act indicates that its net worth is not lower than one-half the value of its share capital as reported in that financial report, and the stated net worth is higher than the previous period. However, this subparagraph shall not apply in the case of an issuer that has carried out a capital reduction but has not yet completed the procedures for replacement of its old shares with new shares and whose old shares are still being traded on the market.
  2. After the securities have been placed under the altered trading method due to the circumstances under paragraph 1, subparagraph 7, the issuer has already settled the obligation, or reached an agreement with the creditor resolving the obligation.
  3. After the securities have been placed under the altered trading method due to the circumstances under paragraph 1, subparagraph 8, the issuer completes any of the remedial procedures listed below within 3 months, presents a direct or indirect note from the clearing house as evidence thereof, and there is no further instance of the dishonoring of its negotiable instruments prior to reinstatement of normal settlement trading. However, if the TPEx listed company adopts the remedial procedure of "extinguish the debt under the negotiable instrument by actual settlement of the amount of the instrument," it shall additionally submit a rechecking form prescribed by the TPEx. The form shall be signed and certified by a CPA and a lawyer and submitted to the TPEx along with the other relevant documents and materials for approval and recordation:
    1. Extinguish the debt under the negotiable instrument by actual settlement of the amount of the instrument.
    2. Deposit the amount of the instrument into the financial enterprise that dishonored the instrument with a request that it be listed as provision for payment under "other payables."
    3. Pay the amount of the instrument out of the checking account or other payables account upon re-presentment of the instrument subsequent to its dishonoring.
  4. After the securities have been placed under the altered trading method due to the circumstances under paragraph 1, subparagraph 15, supplementation or correction has been made so that the circumstance under that subparagraph no longer exists, and the single-quarter net profit before tax attributable to owners of the parent for each of the most recent consecutive two quarters is positive.
  5. Within two years after the securities have been placed under the altered trading method due to the circumstances in paragraph 1, subparagraph 16, the sum of the net profit before tax attributable to owners of the parent stated in the publicly announced and filed financial reports for the most recent four periods reaches 2 percent or more of the share capital stated in the financial reports for the most recent period, and the requirements of Article 12-1, paragraph 2, subparagraph 3, items 2 to 6 are met; or, for a TPEx primary listed company, the net profit before tax stated in the publicly announced and filed financial reports for the most recent four periods account reaches 2 percent or more of the equity attributable to owners of the parent stated in the financial report for the most recent period, and the requirements of Article 12-1, paragraph 2, subparagraph 3, items 2 to 6 are met. For a TPEx listed company whose stock has no par value or a par value other than NT$10 per share, the company's net worth on its most recent financial report shall be substituted for share capital in the calculation of the aforesaid ratio, and at least one-half of the specified ratio shall be reached.
    The TPEx may impose the periodic trading method for the TPEx listed securities of an issuer to which any of the circumstances listed below applies, and implement that method beginning on the second business day after the public announcement date:
  1. Its TPEx listed securities are placed under an altered trading method by the TPEx due to the existence of circumstances under subparagraphs 6, 7, 8, or 17 of paragraph 1.
  2. Its TPEx listed securities are placed under an altered trading method by the TPEx due to the existence of circumstances under subparagraph 1 of paragraph 1, and the net worth stated in the financial report for the most recent period as publicly announced and filed by the issuer pursuant to Article 36 of the Securities and Exchange Act is lower than three-tenths of the share capital stated in the financial report. The aforementioned net worth and ratio shall be calculated in accordance with paragraph 1, subparagraph 1.
  3. Its TPEx listed securities are placed under an altered trading method by the TPEx, and the TPEx deems it necessary to impose the periodic trading method for the securities.
    Orders for securities for which periodic trading is imposed pursuant to the preceding paragraph shall be matched once every 30 minutes.
    When the reason for which the TPEx imposes periodic trading for securities pursuant to paragraph 5 is extinguished, and absent any of the circumstances in the other subparagraphs of that paragraph, the TPEx may publicly announce the cancellation of the periodic trading method for such securities from the second business day following the public announcement date. However, this shall not apply for securities for which periodic trading is imposed pursuant to subparagraph 2 of paragraph 5 if the issuer has carried out a capital reduction but has not yet completed the procedures for replacement of its old shares with new shares and its old shares are still being traded on the market.
    When the TPEx duly places TPEx listed securities under an altered trading method, reinstates normal settlement trading, or imposes or cancels the periodic trading method, the public announcement date and implementation date shall be determined in accordance with the provisions of this Article; however, the implementation date may be on the business day following the public announcement date, in order to meet needs of cross-market operations or when the TPEx deems it necessary. The TPEx shall report the abovementioned matters to the competent authority for recordation within 1 month from the public announcement date.
    However, if a stock has no par value or a par value per share other than NT$10, when applying the provisions of this article relating to share capital, the calculation of the share capital shall include the capital surplus in excess of par value.
Article 12-1     If any of the following circumstances exists with respect to an issuer, the TPEx may suspend the TPEx trading of its securities and report the matter to the competent authority for recordation, or the issuer may apply to terminate the TPEx trading of its securities in accordance with the TPEx Procedures for Applications by TPEx Listed Companies for the Delisting of Securities:
  1. Where the issuer meets the condition under Article 282 of the Company Act and the court makes a ruling to prohibit its stocks from being transferred in accordance with subparagraph 5 of paragraph 1 of Article 287 of the Company Act.
  2. Where the issuer has established a securities transfer institution at the locale of the TPEx and subsequently withdraws the same, or it is found by the TPEx to have nominally set up a transfer institution without actually handling transfer business, and corrective action has not been taken within the time limit set by the TPEx, or more than three months have elapsed since the dispositive measures imposed pursuant to Article 12, paragraph 1, subparagraph 13 but corrective action still has not been taken.
  3. Where any document or information that has been submitted is suspected to be untrue, and upon the request of the TPEx to explain the matter, no reasonable explanation is provided within the prescribed time period.
  4. Where the issuer fails to make public announcement or report of a financial report or financial forecast by the deadlines provided in laws and regulations.
  5. Where the financial report publicly announced and filed under Article 36 of the Securities and Exchange Act fails to comply with relevant regulations and generally accepted accounting principles to serious extent, and the said report is not duly rectified or restated within the time limit; or where in connection with the publicly announced and filed financial report, the attesting CPAs issue an audit report containing a disclaimer of opinion or an adverse opinion in the audit report, or issues an adverse conclusion or disclaimer of conclusion in the review report; or where, in a publicly announced and filed financial forecast of the issuer that has obtained CPA limited assurance, the attesting CPAs express a modified conclusion in the assurance report.
  6. Where the issuer has any of the conditions under Article 15 of the TPEx Procedures for Verification and Disclosure of Material Information of Companies with TPEx Listed Securities, Article 11 of the TPEx Handling Procedures for Routine Regulation and Regulation by Exception of Financial and Business Affairs of TPEx Listed Companies, or Article 6 of the TPEx Rules Governing Information Reporting by Companies with TPEx Listed Securities, and the circumstances are serious enough to necessitate termination of TPEx trading of its securities.
  7. Where the issuer has violated any undertakings made when applying for TPEx trading. However, when a TPEx primary listed company violates its undertaking to protect shareholders' equity as prescribed in Article 4, paragraph 1, subparagraph 13 of the TPEx Rules Governing the Review of Foreign Securities for Trading on the TPEx, then Article 11, paragraphs 3 to 8 of these Rules shall apply instead of this subparagraph.
  8. Where a private enterprise undertaking public construction project has serious schedule delay or other serious default or breach of construction or operation contract.
  9. Where a negotiable instrument has been dishonored by a financial institution because of insufficient funds on deposit and the issuer has failed to accomplish remedial procedures as set forth in paragraph 4, subparagraph 3 of the preceding Article and submit relevant written documentation within 3 months of a disposition referred to in the preceding article.
  10. Where the issuer is unable to redeem a bond at maturity or on creditor demand, and has not repaid its debt or reached an agreement with its creditor resolving the relevant debt issue within 3 months after a disposition has been made under the preceding Article.
  11. Where a financial holding company loses its controlling interest, as defined in subparagraph 1 of Article 4 of the Financial Holding Company Act, in a banking subsidiary, insurance subsidiary, or securities subsidiary, and the competent authority has ordered it to make corrections by a certain deadline.
  12. Where the number of companies held by an investment holding company falls below two companies, and correction has not been made after 3 months have elapsed following disposition pursuant to Article 12, provided that this requirement shall not apply to a TPEx primary listed company.
  13. Where, after a company demerger, paid-in capital fails to reach standards, and correction has not been made after 3 months have elapsed following disposition pursuant to Article 12.
  14. Where an already TPEx listed parent company (including a financial holding company or investment holding company) fails to abide by an undertaking to purchase the shares of minority shareholders of a TWSE listed or TPEx listed subsidiary in which it has shareholding of more than a certain percentage.
  15. Where suspension of trading of the issuer's TWSE listed stock is announced by the Taiwan Stock Exchange Corporation.
  16. After a disposition has been imposed under Article 12, paragraph 1, subparagraph 15 due to failure to meet the required standard for the number of TPEx listed common shares, 3 years have elapsed and the criterion of Article 12, paragraph 4, subparagraph 4 has not yet been met.
  17. Where there is a change in managerial control, and there is a material change in the scope of business within a certain period of time before or after the change in managerial control; provided that this rule does not apply where a TPEx listed company or a TPEx primary listed company conducts a merger or acquisition, private placement, or public tender offer with another TPEx (or TWSE) listed company or TPEx (or TWSE) primary listed company pursuant to the Business Mergers and Acquisitions Act or other laws or regulations.
  18. Where the requirements of Article 12, paragraph 4, subparagraph 5 cannot be met within two years after the securities have been placed under the altered trading method due to the circumstances in Article 12, paragraph 1, subparagraph 16.
  19. There is any violation by the issuer of Article 8-1 or 8-2, and the circumstances are serious.
  20. For its financial report publicly announced and filed under Article 36 of the Securities and Exchange Act, the attesting CPAs issue an audit or review report indicating substantial uncertainty about its ability to continue as a going concern, and more than 3 years have elapsed since imposition of dispositive measures pursuant to Article 12, paragraph 2 but the reason therefor is not yet extinguished.
  21. More than 3 years have elapsed since imposition of dispositive measures against its securities pursuant to Article 12, paragraph 5, subparagraph 2 but the reason therefor is not yet extinguished.
  22. Where a TPEx primary listed company has failed to make corrections after 3 months have elapsed following a disposition pursuant to Article 12, paragraph 1, subparagraph 19.
  23. More than 3 months have elapsed since imposition of dispositive measures against its securities pursuant to Article 12, paragraph 1, subparagraph 20 but the reason therefor is not yet extinguished.
  24. Where there is any other condition for which the TPEx trading of securities shall be terminated in accordance with TPEx rules or opinions of the TPEx.
    If TPEx trading of the issuer's securities is suspended due to the circumstances under any subparagraph of the preceding paragraph, then when the reason for suspension is extinguished and no circumstance under any of the other subparagraphs of that paragraph exist, with the exceptions of the circumstances of subparagraphs 4, 5, 9, 17, and 18, in which case the requirements set out below must additionally be met before trading may be resumed, then the issuer may submit the relevant documentary evidence and apply for resumption of trading, and the TPEx may resume the trading on the second business day following the public announcement of the resumption, and report the matter to the competent authority for recordation:
  1. After trading is suspended pursuant to subparagraph 4 or 5 of the preceding paragraph, the issuer submits the financial report or financial forecast that it previously failed to publicly announce and report in accordance with regulations, and there is not an audit report containing a qualified opinion or a review report containing a qualified conclusion as referred to in Article 12, paragraph 1, subparagraph 3. If the financial forecast has not yet been duly announced on a make-up basis in the current fiscal year, the already announced and filed financial report for the same fiscal year may be used as a substitute.
  2. Within 6 months after trading is suspended pursuant to subparagraph 9 of the preceding paragraph, the remedial procedures as set forth in paragraph 4, subparagraph 3 of the preceding article are completed and the TPEx listed company produces the relevant documentary evidence indicating that remedial procedures have been completed, and the cause of suspension is deemed extinguished.
  3. Within 6 months after trading is suspended pursuant to subparagraph 17 of the preceding paragraph, the underwriter's evaluation report is obtained and the following circumstance are met:
    1. The sum of the net profit before tax attributable to owners of the parent stated in the publicly announced and filed financial reports for the most recent four periods reaches 1 percent or more of the share capital stated in the financial report for the most recent period; or, for a TPEx primary listed company, the net profit before tax stated in the publicly announced and filed financial reports for the most recent four periods reaches 1 percent or more of the equity attributable to owners of the parent stated in the financial report for the most recent period, and the requirements of Article 12-1, paragraph 2, subparagraph 3, items 2 to 6 are met. For a TPEx listed company whose stock has no par value or a par value other than NT$10 per share, the company's net worth on its most recent financial report shall be substituted for share capital in the calculation of the aforesaid ratio, and at least one-half of the specified ratio shall be reached.
    2. The share capital of TPEx listed common shares is NT$30 million or more, and the number of TPEx listed common shares reaches 3 million shares or more; or the amount of the net worth of its TPEx listed common shares calculated as a ratio of its total number of issued common shares reaches reaches NT$60 million or more.
    3. It obtains a CPA reasonable assurance report with an unqualified conclusion on the CPA internal control system engagement.
    4. It is free of the conditions set out in Article 10, paragraph 1, subparagraphs 1, 3, 4, 6, 7, 8, and 10 of the TPEx Review Rules; if a TPEx primary listed company, it is free of the conditions set out in Article 9, paragraph 1, subparagraphs 1, 3, 4, 5, and 8 of the TPEx Review Rules for Foreign Securities.
    5. It complies with Article 3, paragraph 1, subparagraphs 3 and 10 of the TPEx Review Rules; if a TPEx primary listed company, it complies with Article 4, paragraph 1, subparagraphs 7 and 16 of the TPEx Review Rules for Foreign Securities.
    6. The company's directors, supervisors, and greater than 10 percent shareholders have placed all of their common shares in the company into centralized custody (in the case of shares obtained through public offering and issuance) or have provided written undertakings that they will not transfer shares (in the case of shares obtained through private placement ) and that during the period of the undertaking not to transfer shares, they shall place in centralized custody any of those shares that are approved for retrospective public issuance. They may withdraw or transfer the shares only after the requirements of this subparagraph have been met and one year has passed from the day that the normal trading method has reinstated by the TPEx for the company's securities.
  4. Within 6 months after trading is suspended pursuant to subparagraph 18 of the preceding paragraph, the sum of the net profit before tax attributable to owners of the parent in the publicly announced and filed financial reports for the most recent four periods accounts reaches 2 percent or more of the share capital stated in the financial report for the most recent period, and the requirements of items 2 to 6 of the preceding subparagraph are met; or, for a TPEx primary listed company, the net profit before tax stated in the publicly announced and filed financial reports for the most recent four periods reaches 2 percent or more of the equity attributable to owners of the parent stated in the financial report for the most recent period, and the conditions of Article 12-1, paragraph 2, subparagraph 3, items 2 to 6 are met. For a TPEx listed company whose stock has no par value or a par value other than NT$10 per share, the company's net worth on its most recent financial report shall be substituted for share capital in the calculation of the aforesaid ratio, and at least one-half of the specified ratio shall be reached.
    Except in the case of suspension of trading under subparagraph 1 or 15 of paragraph 1, for any securities whose suspension or termination of TPEx trading is approved in accordance with paragraph 1 above, suspension or termination will take place beginning from the second business day after the date of public announcement by the TPEx. The TPEx listed company concerned shall make a disclosure on the Internet information reporting system designated by the TPEx within 2 days from the date on which it receives notification.
    If any of the circumstances under the following subparagraphs exists with respect to an issuer, the TPEx shall suspend trading of the issuer's securities beginning from the next business day after the date of public announcement and notify the issuer to make a disclosure by entering information into the Internet information reporting system designated by the TPEx 2 hours prior to the opening of trading hours on the next business day after public announcement by the TPEx:
  1. Where trading of the issuer's securities is suspended under subparagraph 1 or 15 of paragraph 1, in which case a public announcement shall be made immediately by the TPEx, on the same date it learns of the matter or is notified by the court, or by the issuer, on the same date it discloses the material information (whichever of the above is earlier).
  2. Where a cause under subparagraph 22 of paragraph 1 exists in the nature of an emergency.
    When the TPEx publicly announces suspension of trading of an issuer's securities due to a cause set out in the subparagraphs, other than subparagraphs 1 and 15, of paragraph 1, if before the date the suspension of trading is executed the issuer has re-submitted a financial report or made correction for the cause, or the cause is otherwise extinguished, the suspension of trading need not be executed but instead a report on the handling process shall be submitted to the competent authority for recordation.
    The provisions of Article 12, paragraph 9 shall apply mutatis mutandis to the calculation of share capital under this Article.
Article 12-2     If any of the following circumstances exists with respect to an issuer, the TPEx may terminate the TPEx trading of its securities and report the termination to the competent authority for recordation:
  1. Where the securities have been listed on the Taiwan Stock Exchange Corporation.
  2. Where the issuer has been adjudicated bankrupt by a court and such adjudication has become final.
  3. Where the court has ruled for re-organization or where the court has dismissed an application for re-organization pursuant to Article 285-1, paragraph 3, subparagraph 2 of the Company Act, and the said ruling/dismissal has become final.
  4. Where the financial report for the most recent period that is publicly announced and filed under Article 36 of the Securities and Exchange Act shows a negative net worth; likewise, where a financial report subsequently publicly announced and filed shows a negative net worth. However, an issuer having applied for TPEx trading of its stock pursuant to Article 3, paragraph 4 of the Review Rules is exempted from the restriction of this subparagraph if 3 years have not elapsed from the listing of its stock on the TPEx.
  5. Where the issuer has a record of refusal by a financial institution to transact with it, or of the circumstances referred to in subparagraph 9 of paragraph 1 of the preceding Article where the company has failed to accomplish remedial procedures as set forth in paragraph 4, subparagraph 3 of Article 12 and submit relevant written documentation. However, if the negotiable instrument is retrieved by means of a settlement within 3 months of the suspension of trading, an application may be filed with the TPEx for re-calculation of the aforesaid 6-month period as beginning from a date approved by the TPEx. Such application shall be accompanied by the settlement document, a photocopy of the negotiable instrument, and other relevant materials, and no more than one extension shall be granted.
  6. (deleted)
  7. Where the company's operation is completely suspended for more than 6 months or for 6 continuous months the publicly announced operating revenue is zero or negative; provided that this shall not apply in any of the following circumstances:
    1. A TPEx listed company that applied under Article 3, paragraph 4 of the Review Rules is a new drug research and development enterprise and has operating revenue that is zero or negative during the 3 years from the next month following its TPEx listing date.
    2. A private enterprise has no operating revenue during the period of undertaking construction of public concession projects.
    3. The TPEx determines that it is due to industry characteristics, government policies, or other reasonable causes.
  8. Where there is false statement or omission of material information in the application or the attached documents, and according to the fact ascertained in the final and unappealable decision of a judicial authority, the issuer has any of the following conditions:
    1. Where the financial reports and account books provided by the company upon application for TPEx trading of its stock contains false statement or concealment, and after imputation or deduction of the falsely stated or concealed amount, the profitability does not meet the requirements for listing on the TPEx; provided that this provision shall not apply if 5 years have elapsed from the date of TPEx trading to the date on which the decision of the judicial authority becomes final and unappealable.
    2. Where the issuer satisfies the proviso in the preceding item but the accounting items involved in the false statement or concealment still exists when the decision becomes final and unappealable, and after imputation or deduction, the profitability of the year in which the decision becomes final and unappealable does not meet the requirements for listing on the TPEx.
  9. Where the issuer has any of the conditions under Article 315, paragraph 1, subparagraphs 1 to 4, and has completed dissolution registration, or where it has any of the conditions under Article 9, Article 10, Article 11, Article 17, paragraph 2, Article 315, paragraph 1, subparagraph 8, and Article 397 of the Company Act or other conditions, and its corporate registration is voided or revoked, or it is ordered to dissolve, or its permit is revoked, by the relevant competent authority, or it is subject to dissolution by a court ruling.
  10. Where the issuer has any of the conditions under Article 251 or Article 271 of the Company Act or other conditions, and the approval is voided by the relevant competent authority.
  11. Where the issuer has materially violated the TPEx trading contract.
  12. Where any of the following circumstances applies to the securities:
    1. Where 6 months after TPEx trading of its securities was suspended pursuant to Article 12-1, paragraph 1 of these Rules, trading of its securities has not been resumed, provided that this rule does not apply to trading suspended pursuant to paragraph 1, subparagraph 17 of that article.
    2. Where TPEx trading of its securities is resumed less than 6 months after being suspended pursuant to Article 12-1, paragraph 1, subparagraph 1, if within 6 months from the resumption of TPEx trading, its TPEx trading is suspended again pursuant to subparagraph 1 of paragraph 1 of that article, and the combined period for which its TPEx trading has been suspended exceeds 6 months.
  13. Where the total amount or number of issued preferred (special) shares traded on the TPEx is less than that prescribed in Article 15, paragraph 7 of the Review Rules or Article 30, paragraph 4 of the Review Rules for Foreign Securities.
  14. (deleted)
  15. (deleted)
  16. Where a financial holding company's permit is revoked by the competent authority.
  17. Where the issuer has already become a subsidiary of a domestic TWSE listed or TPEx listed company that holds more than 70 percent of its shares. However, this shall not apply if the other TPEx listed or TWSE listed company has acquired the shares of the issuer and conducted a merger or share conversion, where done in compliance with Chapter II-1.
  18. Where, if a financial institution, the issuer has become subject to receivership duly imposed by the competent authority in charge of the relevant industry.
  19. Where the Taiwan Stock Exchange Corporation has publicly announced the termination of trading of the issuer's TWSE listed stocks.
  20. Where the issuer undergoes a merger, assignment, demerger, or transfer of equity interests in a subordinate company, that results in a violation of Article 15-2, Article 15-3, Article 15-11, Article 15-20, Article 15-32, or the proviso to paragraph 2 of Article 15-33 herein; or the company's name is changed to "investment holding company," and it fails to comply with a requirement of Article 3, paragraph 1, subparagraph 1, 3, 4, 6, 7, 8, 9, or 12 of the TPEx Supplemental Directions for Applications by Investment Holding Companies for TPEx Listing.
  21. Where there is any other significant event for which the trading of securities shall be terminated.
    Where trading of the issuer's securities is suspended by the TPEx due to any circumstance set forth in paragraph 1, subparagraph 4 or 5 of the preceding paragraph and 6 months thereafter correction has not yet been made, or where due to the existence of the circumstances set forth in subparagraph 5 of the preceding paragraph the TPEx has announced the termination of TPEx trading of its securities but the termination has not yet been implemented, if the issuer meets all of the following requirements, none of the circumstances set forth in the other subparagraphs of the preceding paragraph exist, and it submits the relevant evidence and applies to the TPEx not less than 8 business days before the date of termination of TPEx trading, the TPEx may announce an exemption from the termination of its TPEx trading:
  1. Where trading of the issuer's securities is suspended by the TPEx due to the existence of circumstances set forth in paragraph 1, subparagraph 4 or 5 of the preceding paragraph and 6 months thereafter correction had not yet been made, and it is subsequently found that the issuer has met the remedial conditions set forth in Article 12-1, paragraph 2, subparagraph 1.
  2. After termination of its TPEx trading under subparagraph 5 of the preceding paragraph is publicly announced its financial institution places it on a blacklist or dishonors its negotiable instrument due to insufficient funds on deposit, and it completes the remedial procedures as set forth in Article 12, paragraph 4, subparagraph 3 and submits the relevant documentary evidence.
    An issuer that makes full supplementations or corrections before the date of termination of TPEx trading following public announcement of termination of TPEx trading of its securities shall be eligible for an exemption from termination only if such issuer has never previously been granted an exemption from termination of TPEx trading based on the same reasons.
    Upon the termination by the TPEx of TPEx trading of a security, the TPEx shall publicly announce the termination by more than 40 days before the implementation date, except in the case of a financial institution subject to the circumstances in paragraph 1, subparagraph 18, in which case the financial institution shall be subject to the procedures under paragraph 5.
    Where a financial institution has become subject to receivership duly imposed by the competent authority in charge of the relevant industry, the TPEx, upon receiving notification of the receivership from the competent authority, will publicly announce that beginning from the next day following the date of announcement, the trading of its securities shall be suspended for a period of 10 days, and before the expiration of the period of suspension of trading, the TPEx will publicly announce that the securities shall be traded under an altered trading method by means of periodic call auction trading for 20 days beginning from the next day following the expiration of the suspension period, and the trading of the securities shall then be terminated.
    Where TPEx trading of a security is terminated pursuant to Article 15-1, Article 15-7, Article 15-12, Article 15-13, Article 15-18, Article 15-31, and Article 15-33, paragraph 1 or paragraph 2, and Article 15-34 of these Rules or because a TPEx listed company becomes listed on the Taiwan Stock Exchange, the TPEx shall publicly announce the termination by more than 5 days before the implementation date.
    Where TPEx trading is terminated pursuant to paragraph 1, subparagraph 17 herein, or the security is delisted pursuant to Article 50, paragraph 1, subparagraph 15, Article 50-3, paragraph 3, subparagraph 10, or Article 50-10, paragraph 1, subparagraph 13 of the TWSE Operating Rules, the TPEx listed parent company shall undertake to unconditionally purchase all remaining outstanding shares of the listed/TPEx listed company.
    Bonds may be exempted from the public announcement date requirements in paragraphs 4 and 6, subject to the approval of the competent authority considering their maturity or any other special circumstances.
    Within 2 days counting inclusively from receipt of the TPEx notice of termination of TPEx trading of its securities, an issuer shall disclose the termination on the Internet information reporting system designated by the TPEx.
Article 12-3     If an issuer that has applied in accordance with Article 3-1 of the Review Rules for its stock to be traded on the TPEx as managed stock ("TPEx traded managed stock") wishes to convert its stock to ordinary TPEx traded stock, it shall complete an Application for Conversion of Managed Stock into Ordinary TPEx Traded Stock and file the application with the TPEx, and furthermore shall satisfy all of the following conditions:
  1. None of the circumstances set out in Articles 12, 12-1, and 12-2 of these Rules applies to the issuer.
  2. The issuer satisfies the conditions set out in all of the subparagraphs of Article 3, paragraph 1 of the Review Rules, excluding subparagraph 7 thereof.
  3. None of the circumstances set out in any subparagraph of Article 10, paragraph 1 of the Review Rules applies to the issuer, excluding subparagraph 9 thereof.
Article 12-4     If any of the circumstances listed below exists with respect to a TPEx secondary listed company, the TPEx may place its TPEx listed securities under an altered trading method; a securities broker, when accepting an order to trade such securities, shall take full delivery of the funds or securities before making trading quotes:
  1. The company fails to publicly announce and file its financial report by the prescribed deadline.
  2. The net worth indicated in its duly announced and filed financial report for the most recent period is less than one half of its share capital stated in the financial report. If the stock has no par value or a par value per share other than NT$10, the share capital shall refer to the sum of the share capital plus the capital surplus in excess of par value.
  3. For the duly announced and filed financial report for the most recent period, the CPAs issue an audit report or review report indicating substantial uncertainty concerning the issuer’s ability to continue as a going concern, or the issuer's attesting CPAs issues a qualified opinion in the audit report or a qualified conclusion in the review report; however, this restriction shall not apply to an interim financial report for which the CPAs have issued the qualified opinion for the reason that the amount of investments by subsidiaries or the amount of investments accounted for using the equity method, and the relevant gain or loss is calculated on the basis of financial statements of the investee company that have not been audited or reviewed by CPAs, and the attesting CPAs fully disclose in the audit or review report the reasons for the qualified opinion and the monetary amounts of any accounting items that may be affected thereby, and no material irregularities are present.
  4. For the duly announced and filed financial report for the most recent period, the CPAs issue a disclaimer of opinion or an adverse opinion in the audit report, or issues an adverse conclusion or disclaimer of conclusion in the review report.
  5. The company is unable to punctually repay straight corporate bonds or convertible corporate bonds upon maturity or upon the demand of creditors.
  6. Dishonor of a negotiable instrument by a financial institution because of insufficient funds on deposit, where the TPEx is aware of such dishonor.
  7. Any document or information that has been submitted is suspected to be untrue, and upon the request of the TPEx to explain the matter, no explanation is provided within the prescribed time period.
  8. The company has violated relevant rules concerning the material information of the TPEx listed foreign securities, and failed to correct the situation within the specified time after having been notified to proceed with the disclosure process, and such violation is serious.
  9. The company has breached an undertaking it gave when applying for TPEx listing, and failed to make supplementation or correction within a prescribed time limit after having had a penalty imposed and been ordered to make supplementation or correction within a prescribed time limit by the TPEx.
  10. After a TPEx secondary listed company has received written notice to make supplementation or correction under Article 19 of the TPEx Procedures for the Review of Financial Reports of TPEx Listed Companies or Article 17 of the TPEx Handling Procedures for Routine Regulation and Regulation by Exception of Financial and Business Affairs of TPEx Listed Companies, the company fails to make the supplementation or correction within the deadline.
  11. Other causes for which the TPEx deems it necessary.
    If the TPEx listed securities of a TPEx secondary listed company have been placed under an altered trading method due to a circumstance in a subparagraph of the preceding paragraph, upon compliance with the conditions listed below, and in the absence of any other of those circumstances in the preceding paragraph, the TPEx may restore the original trading method for the company's securities:
  1. Where after the imposition of an altered trading method pursuant to subparagraph 1 of the preceding paragraph, a supplementary financial report is duly announced and filed.
  2. Where after the imposition of an altered trading method pursuant to subparagraph 2 of the preceding paragraph, the duly announced and filed financial report for the most recent period shows that its net worth is not less than one-half of its share capital stated on the financial report, and the stated net worth is higher than the previous period; however, if the stock has no par value or a par value per share other than NT$10, the share capital shall refer to the sum of the share capital plus the capital surplus in excess of par value.
  3. Where after the imposition of an altered trading method pursuant to subparagraph 3 of the preceding paragraph, supplementary or corrective action is taken and the circumstance set out in that subparagraph does not exist any longer..
  4. Where after the imposition of an altered trading method pursuant to subparagraph 4 of the preceding paragraph, the CPAs have re-audited the financial report, and issued an audit report free of the original disclaimer of opinion or adverse opinion, or a review report free of the original adverse conclusion or disclaimer of conclusion, and there is no qualified opinion in the audit report or qualified conclusion in the review report as specified in subparagraph 3 of the preceding paragraph.
  5. Where after the imposition of an altered trading method pursuant to subparagraph 5 of the preceding paragraph, the company has repaid the debt or reached a settlement agreement with the creditors.
  6. Within 3 months from the following business day after the imposition of an altered trading method pursuant to subparagraph 6 of the preceding paragraph, the company extinguishes the debt under the negotiable instrument by actual settlement of the amount of the instrument, or completes debt settlement negotiations with the financial institutions, and the documents are duly signed and certified by the CPAs and lawyer, and then submitted to the TPEx along with other relevant documents and data for approval and recordation.
  7. Where after the imposition of an altered trading method pursuant to subparagraph 7 of the preceding paragraph, the situation has been duly corrected or explanations have been made as required by the TPEx, and substantial evidence is provided.
  8. Where after the imposition of an altered trading method pursuant to subparagraph 8 of the preceding paragraph, the company has proceeded with the disclosure process as required by the notification.
  9. Where after the imposition of an altered trading method pursuant to subparagraph 9 of the preceding paragraph, the company has duly made supplementation or correction, and fulfilled the undertaking that it gave.
  10. Where after the imposition of an altered trading method pursuant to subparagraph 10 of the preceding paragraph, the company has duly made supplementation or correction.
  11. Where after the imposition of an altered trading method pursuant to subparagraph 11 of the preceding paragraph, the company has made supplementation or correction as required by the TPEx.
    With respect to the implementation methods and procedures for imposition of an altered trading method or resumption of the trading method of the securities of a TPEx secondary listed company as referred to in the preceding two paragraphs, Article 12 of these Rules shall apply mutatis mutandis, and the company shall file a report with the competent authority for recordation within 1 month after the date of public announcement.
    If a TPEx secondary listed company, or a foreign issuer of Taiwan Depositary Receipts or the depositary institution thereof, have breached an undertaking that was given when applying for TPEx listing, the TPEx may impose a penalty of NT$30,000, and order supplementation or correction within a prescribed time limit.
Article 12-5     If any of the circumstances listed below exists with respect to a TPEx secondary listed company, the TPEx may suspend the TPEx trading of its securities and report the matter to the competent authority for recordation:
  1. The foreign securities represented by the TPEx listed stocks or Taiwan Depositary Receipts of a TPEx secondary listed company have been suspended from trading on the securities market on which they are listed.
  2. The foreign securities represented by the TPEx listed stocks or Taiwan Depositary Receipts of a TPEx secondary listed company have been prohibited from transfer by a ruling of a competent court of the issuer's country of registration or the country of listing.
  3. There is any other reason for suspending the TPEx trading of securities, based on TPEx rules, or as deemed necessary by the TPEx.
    When the TPEx trading of securities of a TPEx secondary listed company is suspended due to a circumstance in a subparagraph in the preceding paragraph, the TPEx secondary listed company may, after the cause for such trading suspension ceases to exist, or supplementation or correction has been completed, and none of the other circumstances in the preceding paragraph exists, submit relevant documentary proof to the TPEx to apply for resumption of trading. The TPEx may then announce the resumption of such TPEx trading and report to the competent authority for recordation.
    With respect to the implementation methods and procedures for the suspension of TPEx trading, or resumption of TPEx trading of the securities of a TPEx secondary listed company, Articles 12-1 of these Rules shall apply mutatis mutandis.
    When a special cause exists for a TPEx secondary listed company, such as stock price sensitive information pending announcement or the occurrence of a material event, upon a voluntary application by the TPEx secondary listed company, or upon an announcement, by the securities market that originally listed the company's securities, of the halting of trading thereof, the TPEx may announce halting of trading of the company's TPEx listed foreign stock or Taiwan Depositary Receipts. Upon a voluntary application by the TPEx secondary listed company, or upon an announcement, by the securities market that originally listed the company's securities, of the resumption of trading thereof, the TPEx may announce the resumption of trading of the company's TPEx listed foreign stock or Taiwan Depositary Receipts, provided that the specific instance of halting of trading did not result in any material violation of TPEx rules in connection with material information, necessitating suspension of trading of the TPEx listed foreign stock or Taiwan Depositary Receipts.
    When the TPEx announces halting or resumption of trading of the TPEx listed foreign stock or Taiwan Depositary Receipts of a TPEx secondary listed company under the preceding paragraph, it may first proceed to make the announcement, and then file a report with the competent authority for recordation.
Article 12-6     If any of the circumstances listed below exists with respect to a TPEx secondary listed company, the TPEx may terminate the TPEx trading of its securities and report the matter to the competent authority for recordation:
  1. The trading of its TPEx listed stock, or the securities represented by its Taiwan Depositary Receipts, on the securities exchange on which it is listed is terminated.
  2. The net worth, as indicated in its duly announced and filed financial report for the most recent period, of less than one third of its share capital stated in the financial report. If the stock has no par value or a par value per share other than NT$10, the share capital shall refer to the sum of the share capital plus the capital surplus in excess of par value.
  3. The company's organization and registration have been voided by the country of registration, or the company has been dissolved.
  4. The company has filed for reorganization with a court of the country of registration or country of listing.
  5. The company has filed for bankruptcy with a court of the country of registration or country of listing.
  6. (deleted)
  7. A demerger, general assignment, or transfer of equity in a subsidiary company, does not satisfy the standard for continued TPEx listing under Article 15-32 of these Rules.
  8. In any of the events in Article 156, applied mutatis mutandis under Article 165-2, of the Securities and Exchange Act, the company has been ordered by the competent authority to suspend the trading of all securities for a period of 3 months or more.
  9. The company's TPEx listed securities have been suspended from TPEx trading pursuant to Article 12-5, paragraph 1 of these Rules, and trading of the securities has not been resumed after 6 full months have elapsed.
  10. Its stocks or Taiwan Depositary Receipts listed on the TPEx exceed 50 percent of the total number of its issued shares.
  11. The foreign issuer or the agent or depositary institution engaged by it violates government laws or regulations, TPEx bylaws or public announcements, refuses to pay TPEx trading fees, or fails to perform obligations required under the TPEx trading contract.
  12. Violation of Article 12-4, paragraph 1, subparagraphs 1, 4, 5, 6, or 10, and failure to meet the criteria of Article 12-4, paragraph 2, subparagraph 1, 4,5, 6, or 10 within 6 months from the next business day following the imposition of the altered trading method.
  13. After a TPEx secondary listed company has received written notice to make supplementation or correction under Article 19 of the TPEx Procedures for the Review of Financial Reports of TPEx Listed Companies or Article 17 of the TPEx Handling Procedures for Routine Regulation and Regulation by Exception of Financial and Business Affairs of TPEx Listed Companies, the company fails to make the supplementation or correction within the deadline, and the circumstances in the specific case are serious.
  14. where the TPEx, based on other reasons sufficient to affect the market order or interests of the investors, deems it necessary to terminate the TPEx trading of its securities.
    A TPEx secondary listed company and its agency or depositary institution that apply for termination of TPEx trading of its securities due to the expiration of the issuance period or pursuant to Article 10 of the Regulations may do so only after obtaining the TPEx's approval for termination of TPEx trading and reporting the matter to the competent authority for recordation.
    If because any circumstance in any subparagraph of paragraph 1 exists with respect to a TPEx secondary listed company, and the TPEx has announced the termination of TPEx trading of its securities, but the termination has not yet been implemented, if the cause for termination of TPEx trading ceases to exist, or supplementation or corrective action is completed, and none of the other circumstances in any subparagraph of paragraph 1 exists, the issuer may submit relevant substantiating evidence to apply to the TPEx at least 8 working days before the date of termination of TPEx trading, and, the TPEx may announce an exemption from the termination of TPEx trading and report the matter to the competent authority for recordation. However, this shall apply only insofar as no exemption from termination of TPEx trading has previously been granted for the same reason.
    Article 12-2 of these Rules shall apply mutatis mutandis to the implementation methods and procedures for the termination of TPEx trading or resumption of TPEx trading of the securities of a TPEx secondary listed company under paragraphs 1 to 3; however, the TPEx may shorten the time limit for public announcement for termination of TPEx trading in special circumstances as the TPEx deems necessary.
    In cases of termination of TPEx trading under paragraph 1 or 2, at least the foreign issuer and all of its directors with the exception of independent directors shall undertake to purchase its TPEx traded securities. The purchase period shall be 50 days beginning on the date of termination of TPEx trading. The purchase price shall be set according to the following standards, and may not be lower than the company's net worth per share, or net worth per Taiwan depositary receipt unit calculated by the net worth per share and the number of shares of original stock represented thereby, according to the latest financial report audited or reviewed by CPAs:
  1. If TPEx trading is terminated by the TPEx under paragraph 1, the purchase price may not be lower than the simple mathematical average of the closing prices during the month prior to the date of the TPEx's announcement of termination of TPEx trading.
  2. If TPEx trading is terminated through an own-initiative application under paragraph 2, the purchase price may not be lower than the simple mathematical average of the closing prices of the company's securities during the month prior to the date of the resolution by the directors meeting or the date of the resolution by the shareholders meeting, whichever is higher.
Article 12-7     Once the duration of the rights to exercise the warrants attached to preferred shares with warrants or corporate bonds with warrants has expired or such rights have been completely exercised, the TPEx may publicly announce the termination of TPEx trading of the corporate bonds or preferred shares of which the warrants have become void.
    To subsequently effect TPEx trading of such corporate bonds or preferred shares of which the warrants have become void, the issuer shall reapply pursuant to the Review Rules. However, if the rights and obligations of the preferred shares of which rights to exercise the warrants have become void are the same as those of other preferred shares of the issuer already being traded on the TPEx, the shares may be combined for TPEx trading with no need to reapply.
    If at the time of filing of the application or report for TPEx trading of corporate bonds with warrants, the intention to continue TPEx trading of corporate bonds of which the attached warrants have become void was specifically stated to the TPEx, there shall be no need to reapply for TPEx trading.
    Once the duration of the rights to exercise detached company warrants has expired or the rights have been completely exercised, the TPEx may proceed directly to publicly announce the termination of TPEx trading of the warrants.
    When the balance of detached company warrants that remains outstanding is lower than 10 percent of the originally issued total amount, the TPEx listed company may apply to the TPEx for the termination of TPEx trading of the warrants, without being subject to the TPEx Procedures for Applications by TPEx Listed Companies for the Delisting of Securities.
    Upon an application for termination of TPEx trading of detached company warrants under the preceding paragraph, the TPEx may terminate the TPEx trading of the warrants and report the matter to the competent authority for recordation, and by more than 20 days before the termination is implemented shall publicly announce the termination, and additionally shall notify the TPEx listed company to make a disclosure on the Internet information reporting system designated by the TPEx within 2 days counting inclusively from the date of receipt of the TPEx notice.
Article 12-8     Where any of the following events occurs with respect to beneficial securities or asset-backed securities traded on the TPEx, the TPEx may suspend TPEx trading of such securities and report the matter to the competent authority for recordation:
  1. Failure to produce, and report and publicly announce, relevant forms, statements, or account books in accordance with Articles 36, 91, and 92 of the Financial Assets Securitization Act.
  2. An event as set forth in Article 47 of the Financial Assets Securitization Act.
  3. Any other cause that in the opinion of the TPEx necessitates the suspension of TPEx trading.
    If trading of beneficial securities or asset-backed securities is suspended due to any event enumerated in the preceding paragraph, the trustee institution or special purpose company may, upon extinction of the given cause and in the absence of any other cause under the preceding paragraph, submit relevant supporting documents to apply for reinstatement of trading. The TPEx may publicly announce the reinstatement of TPEx trading and report the matter to the competent authority for recordation.
    When the trading of beneficial securities or asset-backed securities is suspended pursuant to paragraph 1 above, suspension of trading will begin from the fifth business day after the date of the TPEx public announcement, and the trustee institution or special purpose company shall make a disclosure on the Internet information reporting system designated by the TPEx within 2 days after receipt of notification.
Article 12-9     The TPEx may directly make a public announcement of termination of TPEx trading of beneficial securities or asset-backed securities traded on the TPEx when the special purpose trust deed is terminated or the date of expiry of the special purpose company is reached.
    Where any of the following events occurs with respect to beneficial securities or asset-backed securities traded on the TPEx, the TPEx may terminate TPEx trading of such securities and report the matter to the competent authority for recordation:
  1. The trustee institution or special purpose company is sanctioned by the competent authority for the target industry under Article 106 of the Financial Assets Securitization Act.
  2. The special purpose company shall be dissolved because of any of the events set forth in Article 96 of the Financial Assets Securitization Act.
  3. Trading is suspended under Article 12-8 of these Rules, and corrections have not been made after 6 months.
  4. Any other cause that in the opinion of the TPEx necessitates termination of TPEx trading of the beneficial securities or asset-backed securities.
    Where trading of beneficial securities or asset-backed securities is terminated in accordance with the provisions in paragraph 1 and paragraph 2 above, the TPEx shall publicly announce that such termination of trading will be implemented from the fifth business day following the announcement date, and shall notify the trustee institution or special purpose company to make a disclosure on the Internet information reporting system designated by the TPEx within 2 days after receipt of notification.
Article 12-10     When the underlying domestic securities represented by TPEx traded call (put) warrants or company warrants are placed under an altered trading method or are halted, suspended, or terminated from TPEx trading, the TPEx may simultaneously announce a change of the trading method or a halt of trading of the call (put) warrants or company warrants and, within 1 month, report to the competent authority for recordation; or publicly announce the suspension or termination of TPEx trading of the warrants and report the matter to the competent authority for recordation.
    When the securities represented by call (put) warrants or company warrants referred to in the preceding paragraph are restored to their original trading method, or their trading is resumed after the suspension or halt, or they are exempted from delisting from the TPEx, the TPEx may restore the original trading method, or resume halted trading, of the warrants, and file a report with the competent authority for recordation within 1 month; or announce the resumption of suspended trading or exemption from termination of TPEx trading, and report the matter to the competent authority for recordation.
    Where any issuer of call (put) warrants meets any conditions of Article 12-1 or Article 12-2, the TPEx shall publicly announce a respective suspension or termination of the TPEx trading of the warrants and report the matter to the competent authority for recordation.
    When the underlying foreign security represented by the TPEx listed call (put) warrants is announced as delisted by the securities exchange on which the security is traded, or when the underlying foreign index represented by the warrants is announced by the index provider as suspended from compilation, the issuer shall immediately report by letter to the TPEx, and the TPEx may terminate the TPEx trading of the warrants and report the matter to the competent authority for recordation.
    When the underlying foreign security represented by the TPEx listed call (put) warrant is announced as halted or suspended from trading by the securities exchange on which the security is traded, the issuer of the call (put) warrant shall immediately notify the TPEx. The TPEx may announce the halting or suspension of trading of the call (put) warrants, and report to the competent authority for recordation, and the same procedure shall apply to the resumption of halted or suspended trading.
Article 12-11     In any of the following events, the TPEx may suspend the TPEx trading of TPEx traded REIT or REAT beneficial securities and report the matter to the competent authority for recordation:
  1. Failure to produce, and report and publicly announce, relevant forms, statements, or account books in accordance with Articles 26 and 27, applied mutatis mutandis under Articles 26, 27, and 36, of the Real Estate Securitization Act.
  2. A change in the REIT plain or REAT plan, where there is a likelihood of material impact on beneficial interests.
  3. An event under subparagraphs 1 to 3 of paragraph 1 of Article 6 of the Regulations Governing the Offering or Private Placement of Real Estate Investment Trust or Real Estate Asset Trust Beneficial Securities by Trustee Institutions, where corrections have not been made by the deadline after the trustee institution gives notice of a need for corrections in accordance with subparagraph 4 of the same article and paragraph.
  4. Any other cause that in the opinion of the TPEx necessitates the suspension of TPEx trading of the securities.
    If trading of REIT or REAT beneficial securities is suspended due to any event enumerated in the preceding paragraph, the trustee institution may, upon extinction of the given cause and in the absence of any other cause under the preceding paragraph, submit relevant supporting documents to apply for reinstatement of trading. The TPEx may publicly announce the reinstatement of TPEx trading report the matter to the competent authority for recordation.
    When trading of REIT or REAT beneficial securities is suspended pursuant to paragraph 1 above, suspension of trading will begin from the fifth business day after the date of the TPEx public announcement, and the trustee institution shall make a disclosure on the Internet information reporting system designated by the TPEx within 2 days after receipt of notification.
Article 12-12     Upon expiry of the duration of the contract for or the issuance period of TPEx traded REIT or REAT beneficial securities, the TPEx may make a direct announcement of the termination of TPEx trading of such beneficial securities.
    In any of the following events, the TPEx may terminate the TPEx trading of beneficial securities referred to in the preceding paragraph and report the termination to the competent authority for recordation:
  1. Change to an open-ended investment fund upon a resolution of the beneficial owners meeting and reporting to and approval by the competent authority, or in accordance with the terms of the REIT contract; termination of the REIT contract or REAT contract.
  2. The competent authority for the target industry orders the trustee institution to transfer the trust property to a new trustee institution under Article 55 of the Real Estate Securitization Act.
  3. Where TPEx trading of securities has been suspended pursuant to Article 12-10 of these Rules for 6 months and circumstances in any subparagraph of paragraph 1 of said Article continue to exist.
  4. Any other cause that in the opinion of the TPEx necessitates the termination of TPEx trading of the securities.
    When TPEx trading of REIT or REAT beneficial securities is terminated pursuant to paragraph 1 or paragraph 2 above, their TPEx trading will be terminated from the fifth business day after the date of the TPEx public announcement, and the trustee institution shall make a disclosure on the Internet information reporting system designated by the TPEx within 2 days after receipt of notification.
Article 12-13     Upon expiration of the duration of a passive ETF or active ETF, or upon termination of a securities investment trust contract or futures trust contract, the TPEx may directly make a public announcement for the termination of the TPEx trading of the related beneficial certificates.
    When any of the following circumstances occurs to a passive ETF or active ETF managed by a SITE or FTE, the TPEx may terminate TPEx trading of the related beneficial certificates and report the termination to the competent authority for recordation:
  1. Upon occurrence of any circumstance in Article 79, paragraph 2 or 3 of the Regulations Governing Securities Investment Trust Funds or any circumstance in Article 83, paragraph 2 or 3 of the Regulations Governing Futures Trust Funds.
  2. Upon occurrence of a termination event under the securities investment trust contract or futures trust contract for the TPEx listed beneficial certificates, where the SITE or FTE has filed with the TPEx for termination of TPEx trading.
  3. The SITE or FTE has published material information on the Market Observation Post System (MOPS) that the net asset value per beneficial unit of its managed passive ETF or active ETF is zero or a negative number.
  4. The TPEx deems it necessary to terminate the TPEx trading of the beneficial certificates thereof for any other reason.
    When any of the following circumstances occurs with respect to a SITE's managed beneficial certificates denominated in an additional currency, the TPEx may terminate TPEx trading of the additional-currency beneficial certificates and report the termination to the competent authority for recordation:
  1. Any circumstance stipulated in the securities investment trust contract of the TPEx listed beneficial certificates as grounds for termination, where the SITE has applied to the TPEx for termination of TPEx trading.
  2. The SITE has published material information on the Market Observation Post System (MOPS) that the net asset value per beneficial unit of the additional-currency beneficial certificates is zero or a negative number.
  3. The TPEx has terminated the TPEx trading of the beneficial certificates of the passive ETF.
  4. The TPEx deems it necessary to terminate the TPEx trading of the beneficial certificates for any other reason.
    When TPEx trading is to be terminated pursuant to either of the preceding two paragraphs, the TPEx shall make a public announcement more than 5 days prior to the termination of TPEx trading.
    If termination of TPEx trading is required upon occurrence of the circumstance in paragraph 2, subparagraph 3 to a passive ETF or active ETF or the circumstance in paragraph 3, subparagraph 2 to additional-currency beneficial certificates, the TPEx will immediately make a public announcement for suspension of trading of its TPEx listed beneficial certificates until the date of termination of TPEx trading. The same applies to additional-currency beneficial certificates of a passive ETF if the circumstance for termination of TPEx trading in paragraph 2, subparagraph 3 applies to the ETF.
    When a cause arises with respect to a passive ETF or active ETF that requires suspension of trading of its TPEx listed beneficial certificates under the preceding paragraph, the TPEx will make a public announcement after confirmation and the trading of its TPEx listed beneficial certificates will be suspended starting from the beginning of the trading session immediately following the public announcement.
Article 12-14
Article 12-15
Article 13
Article 13-1     If any of the following circumstances exists with respect to an issuer, the TPEx may terminate the TPEx trading of its managed stock and report the termination to the competent authority for recordation:
  1. Where the stocks have been listed on Taiwan Stock Exchange Corporation.
  2. Where the stocks have been changed to ordinary TPEx traded stocks pursuant to Article 12-3 of these Rules.
  3. Where the application and the attached documents contain false statement or omission in connection with significant issues or facts.
  4. Where the most recent financial report publicly announced and filed under Article 36 of the Securities and Exchange Act shows that the net worth is minus twice the paid-in capital; likewise, where a subsequently publicly announced and filed individual financial report shows that the net worth is minus twice the share capital stated on the financial report.
  5. Where the issuer has any of the conditions under Article 9, Article 10, Article 11, Article 17, paragraph 2, of Article 315, paragraph 1, subparagraphs 1 to 7, and Article 397 of the Company Act or other conditions, and its corporate registration is voided or the company is dissolved by the relevant competent authority.
  6. Where the issuer has any of the conditions under Article 251 or Article 271 of the Company Act or other conditions, and the approval is voided by the relevant competent authority.
  7. Where an application for re-organization is dismissed pursuant to Article 285-1, paragraph 3, subparagraph 2 of the Company Act and such dismissal becomes final.
  8. Where the issuer is adjudicated bankrupt by the court and such adjudication becomes final.
  9. Where, if a financial institution, the issuer has become subject to receivership duly imposed by the competent authority in charge of the relevant industry.
  10. Where TPEx trading of the stocks has been suspended under any subparagraph of Article 13, paragraph 1 herein, and any circumstance set out in any subparagraph of paragraph 1 of that article subsequently continues to exist after 6 months has elapsed.
  11. Where the issuer has materially violated the contract for TPEx trading of securities or these Rules, or where other significant event occurs, and the TPEx decides that it is improper for the issuer's stock to trade as TPEx traded managed stock.
  12. Where there is any other matter for which it is necessary to terminate the TPEx trading of managed stock.
    If the issuer's stock has been traded as TPEx traded managed stock for a period of longer than 2 years, the TPEx shall terminate the trading of its TPEx traded managed stock, and report to the competent authority for recordation.
    Subparagraph 9 of paragraph 1 shall also apply to any company whose stock fell in the category of TPEx traded managed stock and to which the cause set forth in that subparagraph applied prior to the addition of that subparagraph.
    When TPEx trading of a managed stock is terminated pursuant to paragraph 1 or paragraph 2, the TPEx shall publicly announce the termination by more than 20 days before the implementation date, except in the case of paragraph 1, subparagraph 9, in which case Article 12-2, paragraph 5 shall apply mutatis mutandis.
    The provisions of Article 12, paragraph 1, subparagraph 1, and paragraph 9, shall apply mutatis mutandis to the calculation of share capital under this Article.
Article 13-2     Before an issuer, or a foreign issuer and its depositary institution, commences to trade its stocks or Taiwan depositary receipts on the TPEx, if it is discovered based on concrete facts or evidence that, before or after the contract for TPEx trading of securities becomes effective, any of the circumstances under the Review Rules apply to the issuer, whereby TPEx trading might be improper, the TPEx may defer the TPEx trading of the stocks or Taiwan depositary receipts, conduct an examination, and report to the competent authority for recordation. In the event that the issuer, or the foreign issuer and its depositary institution, refuses to accept the TPEx's examination or provide necessary information, or that it is verified that there is a situation whereby TPEx trading becomes improper, the TPEx shall void the TPEx trading contract or terminate the TPEx trading and report the matter to the competent authority for recordation. If after verification, there are no improper circumstances, the TPEx shall notify the issuer, or the foreign issuer and its depositary institution, to reinstate TPEx trading and shall report the matter to the competent authority for recordation. However, if the matter which makes TPEx trading improper still remains to be verified, the TPEx may continue to defer the TPEx trading of the stocks or Taiwan depositary receipts.
    Before TPEx trading of REIT or REAT beneficial securities commences, if it is discovered based on concrete facts or evidence that, before or after the contract for TPEx trading of REIT or REAT beneficial securities becomes effective, there is a likelihood of any circumstance under Article 12-10, paragraph 1 or Article 12-11, paragraph 2 herein, the TPEx may defer the TPEx trading, conduct an examination, and report to the competent authority for recordation. In the event that the trustee institution refuses to accept the TPEx's examination or provide necessary information, or it is verified that any of the above circumstances exists, or the competent authority voids or revokes the approval of its application for public offering, the TPEx shall void the TPEx trading contract or terminate the TPEx listing and report the matter to the competent authority for recordation. If after verification, none of the above circumstances is found to be present, the TPEx shall give notice of reinstatement of TPEx trading and report the matter to the competent authority for recordation. However, if any circumstance above still awaits verification, the TPEx may continue to defer TPEx trading.
    Paragraph 1 applies mutatis mutandis to passive ETF or active ETF beneficial certificates or ETNs where, before the commencement of TPEx trading of the beneficial certificates or ETNs, it is found through concrete evidence that they are likely to be unsuitable for TPEx listing either before or after the date on which the contract for TPEx trading of the beneficial certificates or contract for TPEx trading of the ETNs becomes effective.
Article 14     In connection with the termination of TPEx trading of stocks, passive ETF beneficial certificates, active ETF beneficial certificates, ETNs, beneficial securities, asset-backed securities, or REIT or REAT beneficial securities, the date of termination publicly announced by the TPEx shall be the date of termination of the contract for the TPEx trading of such securities.
Article 15     When TPEx trading of stocks, passive ETF beneficial certificates, active ETF beneficial certificates, ETNs, financial bonds, corporate bonds, beneficial securities, asset-backed securities, or REIT or REAT beneficial securities is suspended or terminated, the issuer shall make a disclosure on the Internet information reporting system designated by the TPEx within 2 days after receipt of notification from the TPEx.
Chapter II-1 TPEx Listed Company Mergers, Acquisitions, Share Conversions, and Demergers
Section I Mergers
Article 15-1     In the event that a TPEx listed company or a TPEx primary listed company merges with another TPEx (or TWSE) listed company or another TPEx (or TWSE) primary or secondary listed company or a foreign company that is listed on the main board of an overseas securities market approved by the competent authority, the surviving TPEx listed company or TPEx primary listed company after the merger may continue to be listed on the TPEx, and the non-surviving company shall make a public announcement of the termination of the TPEx trading of its securities or of the delisting of its securities from the TWSE, as the case may be. If by reason of the merger, the surviving company issues new shares or certificates of entitlement to new shares of the same class of stocks that are already listed on the TPEx, TPEx trading of the shares may commence from the record date of the merger, and an application shall be completed and filed with the TPEx, annexing the relevant documents, at least 30 business days before (and exclusive of) the record date of the merger. However, trading of the securities of the non-surviving TPEx listed company shall be suspended from the 8th business day before (and exclusive of) the record date of the merger.
    The phrase "overseas securities market approved by the competent authority" in the preceding paragraph shall be defined in accordance with Article 2, subparagraph 5 of the TPEx Rules Governing the Review of Foreign Securities for Trading on the TPEx.
    The termination of the TPEx trading contracts for the securities of the non-surviving company under paragraph 1 shall be reported by the TPEx to the competent authority for recordation.
Article 15-2     Except in the case of a securities, financial, or insurance company with special approval from the authority in charge of the industry concerned, or in a case in which the merged company is a subsidiary in which the merging company holds 90% or more of the issued shares, where a TPEx listed company or a TPEx primary listed company merges with a domestic company that is neither TPEx listed nor TWSE listed, by using as consideration a follow-on issue (whether by public offering and issuance or private placement) of shares, or securities that may be converted into or may be used to subscribe shares, the merged company shall meet all of the conditions listed below:
  1. The financial information of the merged unlisted company as well as the consolidated financial information of the merging and merged companies shall meet the profitability requirement under Article 3, paragraph 1, subparagraph 2 of the Review Rules; provided, this restriction shall not apply in any of the following circumstances:
    1. The net worth per share of the surviving company after the merger, both in the most recent financial year and on the most recent pro forma financial report, is higher than the net worth per share of the original TPEx listed company or TPEx primary listed company. Where this provision is satisfied, if the TPEx listed company, TPEx primary listed company, or the merged unlisted company, from the date next following the date of the balance sheet in the most recent financial report to the date the application is filed with the TPEx, undergoes any material change in capital affecting the net worth per share, such as a capital increase or reduction or distribution of dividends, the net worth per share of the surviving company shall be higher than the net worth per share of the original TPEx listed company or TPEx primary listed company, and the attesting CPAs shall submit a review opinion following the imputed adjustment.
    2. An express evaluation opinion of the Industrial Development Administration, Ministry of Economic Affairs is obtained concluding that the merger will effectively increase synergy.
  2. The merged company is free of the conditions under Article 10, paragraph 1, subparagraphs 1, 3, 4, 7, 11, and 12 of the Review Rules, or the conditions under subparagraph 6 where an examination or CPA opinion shows that the company fails to prepare financial reports in accordance with relevant laws and regulations and generally accepted accounting principles, or where the CPA statement shows that significant deficiency is found in the company's internal control.
  3. The financial report for the most recent accounting year shall have been audited and attested by CPAs approved by the competent authority to perform auditing and attestation of financial reports of public companies, and the CPAs have issued an audit report with an unqualified opinion.
Article 15-3     Except in a case in which the merged foreign company is a subsidiary in which the merging company holds 90% or more of the issued shares, where a TPEx listed company or a TPEx primary listed company merges with a foreign company that is not a TPEx (or TWSE) primary or secondary listed company and is not listed on the main board of an overseas securities market approved by the competent authority by using as consideration a follow-on issue (whether by public offering and issuance or private placement) of shares, or securities that may be converted into or may be used to subscribe shares, the merged foreign company shall meet all of the conditions listed below:
  1. The financial information of the merged company as well as the consolidated financial information of the merging and merged companies shall meet the profitability requirement under Article 4, paragraph 1, subparagraph 6 of the Review Rules for Foreign Securities, provided that this restriction does not apply to one that satisfies the proviso of Article 15-2, paragraph 1, subparagraph 1.
  2. The merged company is free of the conditions for unsuitability for TPEx listing under Article 9, paragraph 1, subparagraphs 1, 3, 4, 6, and 8 of the Review Rules for Foreign Securities, or the condition where an examination or the CPA opinion shows that the company fails to prepare financial reports in accordance with relevant laws and regulations and generally accepted accounting principles, or where the CPA statement shows that significant deficiency is found in the company's internal control.
  3. The financial report for the most recent accounting year shall have been audited and attested by CPAs approved by the competent authority to perform auditing and attestation of financial reports for public companies, and the CPAs have issued an audit report with an unqualified opinion.
Article 15-4     If the new shares issued by a TPEx listed company or a TPEx primary listed company for capital increase as a result of merger are of a different class from the shares already listed on the TPEx, then unless otherwise provided by law or regulation, they shall respectively meet the conditions under Article 15, paragraphs 7 and 9 of the Review Rules and Article 30, paragraphs 4 and 6 of the Review Rules for Foreign Securities, before the shares may be traded on the TPEx.
Article 15-5     When a TPEx listed company or a TPEx primary listed company is to conduct a merger pursuant to Articles 15-1 to 15-3, it shall complete an application form and submit it along with relevant attachments to the TPEx to apply for issuance of an opinion letter that the case complies with the conditions provided in each article. The opinion letter from the TPEx may be used by the applicant company only for the purpose of filing with the competent authority for capital increase and issuance of new shares as a result of the merger.
    When a TPEx listed company or a TPEx primary listed company is to conduct a merger, if the financial report of any domestic company that is not TPEx (or TWSE) listed and that participates in the merger is not prepared in accordance with the International Financial Reporting Standards (IFRS) endorsed by the competent authority, the company conducting the merger shall additionally submit the CPA opinion on the differences between the IFRS endorsed by the competent authority and the accounting principles applied by the company not listed on the TPEx (or the TWSE) and the effect on the financial report.
    Where a TPEx listed company or a TPEx primary listed company is to conduct a merger and applies to the TPEx for an opinion letter pursuant to paragraph 1, it shall also submit the following documents if any foreign company will participate in the merger:
  1. If documentation of approval issued by the Department of Investment Review, Ministry of Economic Affairs is required to be obtained for the merger cases under the laws and regulations of the ROC, such documentation shall be submitted.
  2. Photocopy of documents, legalized by an overseas representative office of the ROC, proving that the foreign company is a company limited by shares, organized, registered, and effectively existing under the laws and regulations of the country in which it is registered.
  3. An opinion by Taiwan CPAs regarding the differences in accounting principles applied in the ROC and in the foreign company's home country and the resultant effects on the financial report.
  4. A written report analyzing and explaining the reasonableness of the share exchange ratio and price and overall synergy at the time of the merger between the TPEx listed company or the TPEx primary listed company and the foreign company, issued by CPAs, other than the original attesting CPAs, who are approved by the competent authority to perform auditing and attestation of financial reports of public companies.
Article 15-6     Where a TPEx listed company or a TPEx primary listed company carries out a merger in accordance with Article 15-2 or Article 15-3, and the additional common shares or overseas depositary receipts issued (whether by public offering or private placement) due to that merger will account for 10 percent or more of the aggregate shares already issued and anticipated to be issued by the TPEx listed company or the TPEx primary listed company, any director, supervisor, or shareholder holding more than 10 percent of issued shares of the merged company who holds common shares or overseas depositary receipts issued due to the merger (including those publicly offered and issued or privately placed) shall comply with all the below-listed provisions. However, this requirement may be waived where a TPEx listed company merges with a subsidiary in which it holds 90 percent or more of the outstanding shares:
  1. Such persons shall deposit all such common shares publicly offered and issued due to the merger and held by them into central custody. Further, the total amount of shares under custody shall not be less than 30 percent of the common shares publicly offered and issued due to the merger. In case of a shortfall, negotiation shall be made with other shareholders holding common shares publicly offered and issued due to the merger to make up the shortfall. Of the shares placed in central custody, one-half may be withdrawn after full 6 months has elapsed from the date that TPEx listed trading thereof commences. The remaining portion of shares may be withdrawn in full only after 1 full year has elapsed from the date that TPEx listed trading commences. However, where, pursuant to Article 316-2 of the Company Act, a TPEx listed company or a TPEx primary listed company merges with a subordinate company of which it holds 50 percent or more of the issued shares, it may be exempted from the restriction that the total amount shall not be less than 30 percent of the new stocks issued for capital increase due to the merger.
  2. Such persons shall provide a written undertaking that for a certain period of time they shall not redeem or transfer the overseas depositary receipts issued due to the merger (including those publicly offered and issued or privately placed) held by them, and the surviving company after the merger shall incorporate provisions restricting redemption or transfer into the contract signed and entered into with the custodian institution, undertaking that they shall not redeem or transfer for a certain period of time shares numbering in total not less than 30 percent of the number of overseas depositary receipts issued due to the merger (including those publicly offered and issued or privately placed). In case of a shortfall, negotiation shall be made with other shareholders holding overseas depositary receipts issued due to the merger (including those publicly offered and issued or privately placed) to make up the shortfall. The period of restriction of redemption or transfer and the provisions for release of the restriction shall accord with the preceding subparagraph concerning the deposit into central custody of common shares publicly offered and issued due to the merger.
  3. Such persons shall provide a written undertaking that for a certain period of time they shall not transfer the common shares they hold through private placement due to the merger, undertaking as follows: The total position that shall not be transferred for the certain period of time shall not be less than 30 percent of the number of common shares privately placed due to the merger; in case of a shortfall, they shall arrange with other shareholders holding common shares privately placed due to the merger to make up the shortfall; the period of restriction of transfer and the provisions for release of the restriction shall accord with subparagraph 1 concerning the deposit into central custody of common shares publicly offered and issued due to the merger. In addition to stating that the shares "shall not be transferred for a certain period," the undertaking referred to in this subparagraph shall also contain at least the following language: "For as long as the common shares that I hold remain common shares privately placed due to the merger, the Taipei Exchange may from time to time carry out spot checks to ascertain whether I have faithfully abided by the undertaking. For common shares that I hold that continue to be classified as common shares privately placed due to the merger, I shall continue to abide by the restrictions on transfer under Article 43-8 of the Securities and Exchange Act even after and despite the expiration of the period of restricted transfer under this subparagraph."
Article 15-7     If a TPEx listed company or a TPEx primary listed company will be extinguished as a result of statutory merger with another company that is neither TPEx listed nor TWSE listed, or as a result of statutory consolidation with another company, it shall file an application with the TPEx, annexing the relevant documents, by the 30th business day before the record date of the merger or consolidation. Trading will be suspended from the 2nd business day before (and exclusive of) the book closure date, and TPEx trading will be terminated on the merger record date.
    If a TPEx listed company, under the Business Mergers and Acquisitions Act, or a TPEx primary listed company, under the the laws and regulations of its country of registration, will undergo a merger with another company, and the parent of the other company will use newly issued shares or cash as the consideration for acquisition of the shares of the TPEx listed company or TPEx primary listed company, and the TPEx listed company or TPEx primary listed company will become a 100 percent wholly owned subsidiary of that other company's parent company, such TPEx listed or TPEx primary listed company shall file an application with the TPEx, annexing the relevant documents, by the 30th business day before the record date of the merger. After the TPEx has inspected the documents and found them to be in accordance with the applicable requirements, trading of the company's shares will be suspended from the 2nd business day before (and exclusive of) the book closure date, and TPEx trading will be terminated on the merger record date.
    The termination of the TPEx trading contract for the securities of a TPEx listed company or TPex primary listed company under the preceding two paragraphs shall be reported by the TPEx to the competent authority for recordation.
Section II Acquisitions
Article 15-8     Where a TPEx listed company or a TPEx primary listed company acquires shares, business, or assets of a domestic company that is neither TPEx listed nor TWSE listed, with shares, or securities that may be converted into or may be used to subscribe shares, as consideration, if such transaction reaches any one of the standards listed below, the acquired domestic company shall additionally comply with all the conditions set out in Article 15-2:
  1. If the book entry amount of the shares, or securities that may be converted into or may be used to subscribe shares, as consideration obtained by the unlisted company as a result of being acquired reaches 70 percent or more of its book net asset value, or the shares, or securities that may be converted into or may be used to subscribe shares, paid as consideration by the TPEx listed company or the TPEx primary listed company for the acquisition reach 10 percent or more of the aggregate shares already issued and anticipated to be issued by the TPEx listed company.
  2. If the total number of shares acquired from shareholders of the unlisted company reaches 70 percent or more of its issued shares.
  3. If the operating revenue or operating profit or book net asset value of a division being spun off from the unlisted company to the TPEx listed company or the TPEx primary listed company reaches 70 percent or more of its entire operating revenue or operating profit or book net asset value, or reaches 10 percent or more of the entire operating revenue or operating profit or book net asset value on the pro forma financial statements of the TPEx listed company or the TPEx primary listed company.
Article 15-9     If a TPEx listed company or a TPEx primary listed company acquires shares, business, or assets of a foreign company that is not a TPEx (or TWSE) primary or secondary listed company and is not listed on the main board of an overseas securities market approved by the competent authority, if such acquisition reaches any of the standards listed in any subparagraph of the preceding article, the acquired foreign company shall meet all of the conditions under Article 15-3.
Article 15-10     When a TPEx listed company or a TPEx primary listed company conducts an acquisition pursuant to the preceding two articles, it shall complete an application form and submit it along with relevant attachments to the TPEx to apply for issuance of an opinion that the case complies with the conditions provided in each article, and Article 15-5 shall apply mutatis mutandis to the procedures of application, documents that shall be submitted, and other requirements. For the acquired company, and any director, supervisor, or greater than 10 percent shareholder thereof, that has holdings of the additional common shares or overseas depositary certificates issued because of the said acquisition (including those publicly offered and issued or privately placed), Article 15-6 shall apply mutatis mutandis to the placement of shares in custody and withdrawal of shares upon expiration of custody.
Article 15-11     Where a TPEx listed company, pursuant to Article 27 of the Business Mergers and Acquisitions Act, undergoes a general assignment, or pursuant to Article 185, paragraph 1, subparagraph 2 of the Company Act or to other provisions of law, assigns the whole or any essential part of its business or assets, the TPEx listed company shall, by at least 30 business days prior to the assignment record date, file an application with the TPEx, whereupon the TPEx will check whether all required documents have been submitted and its administering department will conduct a review, and the TPEx listed company will be required to be free of any of the circumstances listed below:
  1. The pro forma operating revenue or operating income as stated in the consolidated or parent company only (or individual) pro forma financial statements that have obtained CPA reasonable assurance, excluding the business or assets under assignment, for each of the most recent 2 accounting years, has declined by 50 percent or more, compared with the operating revenue (including discontinued operations) or operating income (including discontinued operations) as stated in the consolidated or parent company only (or individual) financial statements of the same periods.
  2. The pro forma operating loss as stated in the consolidated or parent company only (or individual) pro forma financial statements that have obtained CPA reasonable assurance, excluding the business or assets under assignment, for each of the most recent 2 accounting years is greater than the operating loss (including discontinued operations) as stated in the consolidated or parent company only (or individual) financial statements of the same period.
    Where a TPEx listed company, pursuant to Article 27 of the Business Mergers and Acquisitions Act, undergoes general assignment, or pursuant to Article 185, paragraph 1, subparagraph 2 of the Company Act, establishes an investment holding company, and the investment holding company complies with the conditions set forth in Article 3, paragraph 1, subparagraphs 1, 3, 4, 6, 7, 8, 9, and 12 of the TPEx Supplementary Provisions for Applications for TPEx Listing by Investment Holding Companies, and it holds 100 percent of the shares of the transferee company, it shall file an application with the TPEx for amendment of the content of TPEx listed securities pursuant to Article 9-1 of these Rules.
Section III Share Conversions
Article 15-12     Where a single TPEx listed company converts its shares into shares of another newly incorporated company or already-TPEx-listed or TPEx-primary-listed existing company pursuant to Article 31 of the Business Mergers and Acquisitions Act, and becomes a 100 percent wholly owned subsidiary of such newly established or already-TPEx-listed or TPEx-primary-listed existing company, the securities of the newly incorporated or already-TPEx-listed or TPEx-primary-listed existing company shall be listed for TPEx trading after completion of applicable TPEx listing procedures, and the TPEx listing of the securities of the original TPEx listed company shall be terminated on the record date of the share conversion.
    The making of the contract for TPEx trading of the securities of the newly incorporated company and the termination of the contract for TPEx trading of the securities of the original TPEx listed company, as referred to in the preceding paragraph, shall be reported by the TPEx to the competent authority for recordation.
Article 15-13     The preceding article shall also apply in cases where a single or multiple company(ies) limited by shares or foreign company(ies) convert their shares into a newly established or already-TPEx-listed or TPEx-primary-listed existing company. But, if a domestic company that is neither TWSE listed nor TPEx listed, or a foreign company that is not a TPEx (or TWSE) primary or secondary listed company and is not listed on the main board of an overseas securities market approved by the competent authority, participates in the conversion, such domestic company that is neither TWSE listed nor TPEx listed, or such foreign company that is not a TPEx (or TWSE) primary or secondary listed company and is not listed on the main board of an overseas securities market approved by the competent authority, shall respectively conform to each subparagraph under Article 15-2 or Article 15-3, unless it is a subsidiary in which the TPEx listed company or TPEx primary listed company holds 90% or more of the issued shares.
Article 15-14     Where a TPEx listed company establishes an investment holding company by means of share conversion pursuant to the preceding two articles, such investment holding company shall comply with subparagraphs 1, 3, 4, 6, 7, 8, 9, and 12 of paragraph 1 of Article 3 of the TPEx Supplementary Provisions for Applications for TPEx Listing of Investment Holding Companies before it may be listed on the TPEx.
Article 15-15     Where a company(ies) limited by shares or a foreign company(ies) converts its shares into shares of another newly incorporated company under provisions of Articles 15-12 to 15-14, the TPEx listed company whose converted shares are anticipated to account for the greatest proportion of the anticipated issued shares of the newly incorporated or already-TPEx-listed or TPEx-primary-listed existing company shall carry out with the TPEx the various procedures set forth in the subparagraphs hereinbelow on behalf of all the companies whose shares are being converted, and, after the TPEx has inspected all the documents submitted by the company for completeness, examined and found them to be in accordance with the applicable requirements, and reported the conversion to the board of directors for review and approval, the trading of such company's(ies') original TPEx securities shall be suspended from the 2nd business day prior to (and non-inclusive of) the book closure commencement date; provided, where shares of a single or multiple TPEx listed or TWSE listed companies are converted into a newly incorporated company to form an investment holding company, the securities of the investment holding company may be traded on the TPEx from the record date of the share conversion, but trading of the original TPEx securities shall be suspended from the 8th business day prior to (and non-inclusive of) the record date of the share conversion:
  1. An Application for TPEx Trading of Shares of a Newly Incorporated Company or TPEx listed company Receiving Assignment of Shares shall be completed and filed, along with all specified attachments, with the TPEx no later than 30 business days prior to (and non-inclusive of) the record date of the share conversion.
  2. An Application for Suspension of Share Transfers shall be completed and the TPEx shall directly make an announcement to the market of suspension of amendments to entries in the shareholder rosters of the TPEx listed company(ies) among the companies participating in the conversion.
    Where a company(ies) limited by shares or a foreign company(ies) converts its shares into shares of an already-TPEx-listed or TPEx-primary-listed existing company under provisions of Article 15-12 to 15-14, such already-TPEx-listed or TPEx-primary-listed existing company shall complete the application under subparagraph 1 of the preceding paragraph and file the application with the TPEx. If the already-TPEx-listed or TPEx-primary-listed existing company into which the shares are converted is a TPEx listed or TPEx primary listed company, those companies shall proceed pursuant to the provisions of subparagraph 2 of the preceding paragraph.
Article 15-16     When a TPEx listed company or a TPEx primary listed company carries out a share conversion under provisions of Articles 15-12 to 15-14, after the TPEx has examined and approved the application, a written opinion approving the share conversion will be sent to the company. The opinion letter from the TPEx may be used by the applicant company only for the purpose of filing with the competent authority for capital increase and issuance of new shares as a result of the said share conversion. However, if shares of a single or multiple TWSE listed or TPEx listed companies are converted into a newly established company to form an investment holding company, the case shall be submitted directly to the competent authority after examination and approval by the TPEx.
    If a foreign company participates in the conversion under an application case referred in the preceding paragraph, Article 15-5, paragraph 3 shall apply mutatis mutandis with respect to the additional documents required to be submitted with the application
Article 15-17     Where a company whose shares are converted under circumstances set forth in Articles 15-12 to 15-14 is, before the conversion, a TPEx (or TWSE) listed company or a TPEx (or TWSE) primary or secondary listed company, those shares already duly placed in centralized custody by directors, supervisors, and shareholders with shareholding of 10 percent or higher at the time of initial TPEx (or TWSE) listing shall remain in centralized custody after the conversion until the expiration of the custody period; if before the conversion the company was a domestic company that was neither TPEx nor TWSE listed or a foreign company that was not a TPEx (or TWSE) primary or secondary listed company, and it is anticipated that the converted shares will account for 10 percent or more of the aggregate shares already issued and anticipated to be issued by the company that is the transferee of the shares, then the directors, supervisors, and major shareholders of the company whose shares are converted shall still place in centralized custody all of the shares they hold in the company that is the transferee of the shares, and Article 15-6 shall apply mutatis mutandis to the placement of shares in centralized custody and the withdrawal of shares upon expiration of custody.
Article 15-18     Where a TPEx listed company or a TPEx (or TWSE) primary or secondary listed company, solely, or jointly with one or more other companies, convert its or their shares into shares of an existing, non-TPEx-listed company pursuant to Article 31 of the Business Mergers and Acquisitions Act, and thus becomes a wholly-owned subsidiary of such existing company, it shall file an application with the TPEx, annexing the relevant documents, by 30 business days before the record day of the share conversion, and upon approval by the competent authority in response to a report submitted by the TPEx, the trading of its securities shall be suspended from the 2nd business day before (and exclusive of) the book closure commencement date, and the TPEx trading thereof shall be terminated on and after the record date.
Section IV Demergers
Article 15-19     If a TPEx listed company that has carried out a demerger of one or more departments capable of operating independently pursuant to applicable law wishes to continue TPEx trading of its TPEx listed securities, or if the existing company or newly incorporated company that acquired the business of the aforesaid department(s) after the demerger (the "transferee company of the demerger") wishes to list its securities for TPEx trading, the company shall without exception comply with this Section, and shall carry out applicable procedures for a company demerger and for TPEx listing.
    The preceding paragraph shall also apply where a single TPEx listed company demerges simultaneously into multiple transferee companies of the demerger, or multiple TPEx companies demerge simultaneously into a single transferee company of the demerger.
Article 15-20     A TPEx listed company to which any circumstance set forth in the preceding article applies shall submit an application to the TPEx at least 30 business days before the record date of the demerger, and annex an opinion of an independent expert on the share exchange ratio for the demerger, the reasonableness of the acquisition price, and the effect on the shareholders' equity of the TPEx listed company, whereupon the TPEx will check whether all required documents have been submitted and its administering department will conduct a review, and the TPEx listed company will be required to be free of any of the circumstances listed below:
  1. The pro forma operating revenue or pro forma operating income, as shown on the consolidated or parent company only (or individual) pro forma financial statements for each of the most recent 2 accounting years, excluding the financial data for the demerged department(s) and having obtained CPA reasonable assurance, has declined by 50 percent or more from the operating income shown on the consolidated or parent company only (or individual) financial statements for the same periods.
  2. The pro forma operating loss, as shown on the consolidated or parent company only (or individual) pro forma financial statements for each of the most recent 2 accounting years, excluding the financial data for the demerged department(s) and having obtained CPA reasonable assurance, is greater than the operating loss shown on the consolidated or parent company only (or individual) financial statements for the same period.
    Except under any of the circumstances listed below, a TPEx listed company to which any circumstance set forth in the preceding article applies shall consolidate into a single case the filing for the demerger and capital reduction and issuance of the exchanged securities. Trading of its TPEx listed securities shall be suspended from the second business day before the book closure date until the expiration of the book closure period, and the procedures for issuing the new replacement securities shall be completed within the period as prescribed in Article 9-1 and the TPEx Operating Procedures for Replacement Issues of TPEx Listed Securities:
  1. Where a TPEx listed company demerges but does not carry out a capital reduction, and issue of replacement shares is unnecessary.
  2. Where the demerger of the TPEx listed company does not involve subsequent confirmation of the shareholder roster, or there is no difference in shareholder equity before and after the record date of the suspension of share transfer, and suspension of margin purchase and short sale or compulsory covering of short sale positions are unnecessary.
Article 15-21     Where a TPEx listed company establishes an investment holding company for reasons of carrying out a demerger under Article 15-19, the TPEx listed company that undergoes the demerger may continue to be listed if it complies with Article 3, paragraph 1, subparagraphs 1, 3, 4, 6, 7, 8, 9, and 12 of the TPEx Supplementary Directions for TPEx Listing Applications by Investment Holding Companies; Article 15-20, paragraph 1, subparagraphs 1 and 2 shall not apply.
Article 15-22     Where a TPEx listed company carries out capital reduction due to a demerger referred to in Article 15-19, and the newly incorporated company that acquires its business issues new shares for which the acquired business is the consideration, and issues them in full to the original shareholders of the demerged company on a pro-rata basis, approval may be given for TPEx listing and trading of the securities of the newly incorporated transferee company if it complies with all of the conditions listed below; provided, simultaneous application may not be made of related exclusion conditions such as those in Article 3, paragraph 4 of the Review Rules or those concerning incorporation period or profitability in the Supplementary Provisions for Applications for TPEx Stock Listing by Private Organizations Participating in Public Infrastructure Projects:
  1. Capitalization: the share capital stated on the pro forma financial statement for the most recent period at the time of application complies with Article 3, paragraph 1, subparagraph 1 of the Review Rules.
  2. Profitability: complies with Article 3, paragraph 1, subparagraph 2 of the Review Rules, according to the pro forma financial statement.
  3. Complies with Article 3, paragraph 1, subparagraph 10 of the Review Rules, and is free of any circumstance in Article 10, paragraph 1, subparagraphs 1, 3, 4, 6, 7, 8, 11, and 12 of the Review Rules.
  4. The pro forma financial statements for the most recent fiscal year shall have obtained reasonable assurance, with an assurance report expressing an unqualified conclusion, by CPAs approved by the competent authority to perform auditing and attestation of financial statements for public companies.
  5. Underwriting shall be carried out pursuant to Article 2 of the TPEx Directions Concerning the Requirement that a Public Company Applying for TPEx Trading of Its Stock Engage a Recommending Securities Firm to Carry Out Underwriting.
  6. Centralized custody shall be carried out pursuant to Article 3, paragraph 1, subparagraph 4 of the Review Rules.
Article 15-23     When undergoing a demerger pursuant to Article 15-19, if the TPEx listed company does not carry out capital reduction or carries out only a partial reduction, the newly formed transferee company of the demerger, when applying to the TPEx for TPEx listing, shall comply with all of the below-listed conditions, in addition to complying with the requirements of each paragraph of the preceding article:
  1. Incorporation period: the time of incorporation of the demerged department, as shown in the financial data of the demerged company, shall comply with Article 3, paragraph 1, subparagraph 2 of the Review Rules.
  2. Shareholding dispersion: shall conform to Article 3, paragraph 1, subparagraph 3 of the Review Rules.
  3. If at the time of application, the company belongs to a business group or is a parent or subsidiary, it shall comply with Articles 2 and 3 of the TPEx Supplementary Provisions for Applications for TPEx Stock Listing by Group Enterprises.
  4. Complies with Article 3, paragraph 1, subparagraph 10 of the Review Rules, and is free of any circumstance in Article 10, paragraph 1, subparagraphs 1, 3, 4, 6, 7, 8, 10, 11, and 12 of the Review Rules.
    If more than one TPEx listed company demerges and makes an assignment to a single transferee on the same record date, the calculation of the incorporation period under subparagraph 1 of the preceding paragraph shall be based upon the TPEx listed company that assigned the business of which the operating revenue or operating income accounts for 50 percent or more of the total operating revenue of the transferee company and accounts for 10 percent or more of the overall operating revenue or discernible assets of such TPEx listed company.
Article 15-24     When a TPEx listed company carries out a demerger pursuant to Article 15-19, if the transferee company of the demerger is an existing company and the operating revenue or operating income of a single TPEx listed company acquired by it accounts for 50 percent or more of the total operating revenue or operating income on its pro forma financial statements, and accounts for 10 percent or more of the overall operating revenue or discernible assets of the demerged company, the applicable review standards shall comply with Article 15-22 and Article 15-23, paragraph 1.
Article 15-25     In a demerger referred to in Article 15-22, Article 15-23, or Article 15-24, where the securities of the demerged TPEx listed company have been listed on the TPEx for a full 3 years and the transferee company of the demerger submits an application accompanied by the relevant documents to the TPEx in accordance with prescribed procedures within 1 year of the day of completion of amendment registration of the demerger, the procedures for TPEx listing shall be as enumerated below:
  1. For a newly formed transferee company of a demerger according to Article 15-22 whose TPEx listing application has passed review for completeness of the submitted application documents and passed review by the administering department for compliance with regulations, and has been considered and passed by the TPEx board of directors, the TPEx may publicly announce the listing and report the matter to the competent authority for recordation.
  2. For a newly formed transferee company of a demerger according to Article 15-23 or an existing transferee company of a demerger according to Article 15-24, the procedures for reviewing the TPEx listing application shall be governed by the procedures for reviewing initial applications for TPEx listing of stock.
Article 15-26     If a TPEx listed company acquires equity interest in a transferee company of a demerger pursuant to Article 15-23 or Article 15-24, and if within 1 year from the date on which the amendment registration in connection with the demerger is completed, the total or cumulative total of equity interest disposed of by the TPEx listed company or waived by the original shareholder(s) in respect of the preemptive right to subscribing for shares on cash capital increase reaches 20 percent or more of the equity interest acquired in the demerger, such disposal or waiver shall be passed by a resolution at a shareholders meeting, and carried out with the resolution of the board of directors, and both of those two resolutions shall constitute material information that is subject to regulatory filing and disclosure, wherein the disclosure shall include such information as the method of determining the transferee under the disposal or the specified persons with whom to arrange for the subscription for the shares that have been waived by the original shareholders in the cash capital increase, the method of determining the disposal price or the price of the cash capital increase, and a statement describing the reasonableness of such determination methods.
Article 15-27     Where a TPEx listing application by a transferee company of a demerger is rejected by the TPEx, the applicant company may, within 20 days from the day following the issuance date of the TPEx's rejection notice letter, submit an appeal, along with relevant materials, to the TPEx on the basis that the grounds for the original rejection were erroneous. The TPEx shall follow the below subparagraphs after accepting the applicant's appeal case for processing:
  1. For an appeal with respect to a TPEx listing application under Article 15-22, the administering department shall review whether the grounds for the original rejection decision were erroneous and whether any other conditions have subsequently arisen rendering the applicant unsuitable for TPEx listing.
  2. An appeal with respect to a TPEx listing application under Article 15-23 or Article 15-24 shall be governed by the appeal procedures for an initial application for TPEx trading of stock.
Article 15-28     If a transferee company of a demerger fails to apply to the TPEx for TPEx listing in accordance with prescribed procedures, annexing relevant documents, within 1 year of the day of completion of amendment registration of the demerger, and subsequently files an initial application for TPEx listing, Article 15-23 and Article 15-24 may respectively be applied mutatis mutandis to the calculation of the incorporation period thereof.
Article 15-29     Within 2 years from the date of TPEx (or TWSE) listed trading of securities of a transferee company of a demerger of a TPEx listed company pursuant to Articles 15-22 to 15-24, or to applicable provisions for listing after a demerger under the Operating Rules of the Taiwan Stock Exchange Corporation, any further transferee company of a demerger of such TPEx listed company may not apply for TPEx listing of its securities pursuant to this Section.
Article 15-30     This Section may be applied mutatis mutandis where, after a demerger of a TPEx listed company, the transferee company of the demerger wishes to apply for TPEx listing and trading of its securities.
Article 15-31     If a TPEx listed company, after carrying out a demerger, wishes to apply for termination of TPEx trading of its securities, or such company is extinguished due to the demerger of its entire operations or assets, the TPEx may terminate TPEx trading of its TPEx securities and report the matter to the competent authority for recordation.
Article 15-32     Where a TPEx primary or secondary listed company, pursuant to the laws and regulations of the country of registration or the country of listing, transfers equity interests in its subordinate company and such transfer of equity results in a decline by 25 percent or more in the operating income or operating revenue as stated in the financial statements for the most recent accounting year, or undergoes a demerger or general assignment, it shall, at least 30 trading days prior to the effective date of the transfer of equity interest, the demerger record date, or the assignment record date, file an application with the TPEx, whereupon the TPEx will check whether all required documents have been submitted and its administering department will conduct a review, and the TPEx listed company will be required to be free of any of the circumstances listed below:
  1. The pro forma operating revenue or operating income as stated in the pro forma financial statements that have obtained CPA reasonable assurance, excluding the already transferred assets (operating departments or equity investments), for each of the most recent 2 accounting years, has declined by 50 percent or more, compared with the operating revenue or operating income as stated in the financial statements of the same periods.
  2. The pro forma operating loss as stated in the pro forma financial statements that have obtained CPA reasonable assurance, excluding the already transferred assets (operating departments or equity investments), for each of the most recent 2 accounting years is greater than the operating loss as stated on the financial statements of the same period.
Section V Conversion into a Financial Holding Company
Article 15-33     Where a single TPEx listed company is converted into a financial holding company pursuant to Article 29 of the Financial Holding Company Act, the securities of the financial holding company shall be listed for TPEx trading from the record date of the share conversion, and the TPEx listing of the securities of the original TPEx listed company shall be terminated on the same date.
    The preceding paragraph shall also apply in cases where multiple TPEx (or TWSE) listed companies are converted into a single financial holding company. However, if any company that is neither TPEx listed nor TWSE listed is converted together with other TPEx or TWSE listed companies, such unlisted company shall conform to the following conditions:
  1. It shall be free of any of the circumstances specified in subparagraphs 1, 3, 4, 6, 7, 11, and 12 of paragraph 1 of Article 10 of the Review Rules.
  2. Its most financial report for the most recent fiscal year shall have been audited by CPAs approved by the competent authority to perform auditing and attestation of financial reports for public companies and have received an unqualified opinion from such CPAs.
    Where circumstances in paragraph 1 or paragraph 2 apply to a TPEx listed or TWSE listed company(ies), the TPEx listed company whose converted shares are anticipated to account for the greatest proportion of the anticipated issued shares of the financial holding company shall carry out with the TPEx the various procedures set forth in the subparagraphs herein below on behalf of all the companies whose shares are being converted, and, after the TPEx has inspected all the documents submitted by the company for completeness, examined and found them to be in accordance with the applicable requirements, and reported the conversion to the board of directors for review and approval, the trading of such company's(ies') original TPEx securities shall be suspended from the 8th business day prior to (and non-inclusive of) the record date of the share conversion:
  1. An Application for TPEx Trading of Shares of a TPEx (or TWSE) Listed Company Converted into a Financial Holding Company shall be completed and filed, along with all specified attachments, with the TPEx at least 30 business days prior to (and non-inclusive of) the record date of the share conversion.
  2. A Declaration of Suspension of Share Transfer Registrations of a TPEx Listed Company(ies) Participating in Conversion and Establishment of a Financial Holding Company shall be completed and filed by (inclusive of) the application date in the preceding subparagraph. The TPEx shall directly make an announcement to the market of suspension of amendments to entries in the shareholder rosters of the TPEx listed companies participating in the conversion into a financial holding company.
    Where circumstances set forth in paragraphs 1 and 2 or in Article 15-34 apply to a company limited by shares participating in the share conversion and the company was a TPEx (or TWSE) listed company before conversion, shares that prior to conversion were already duly placed in centralized custody by the company's directors and supervisors and by shareholders with holdings of 10 percent or more shall remain in centralized custody after the conversion, but the period for which they were in custody prior to the conversion may be deducted, and the shares shall be withdrawn in percentage installments in accordance with the regulations in effect at the time the shares were placed in custody. If a converted company was neither a TPEx listed nor TWSE listed company prior to conversion and it is anticipated that the company's converted shares will account for 10 percent or more of the financial holding company's issued shares and shares anticipated issued to be issued by it, the directors and supervisors and the shareholders with holdings of 10 percent or more of such unlisted company shall place all of their shares in the financial holding company in centralized custody. The method for withdrawal of the shares from custody shall be governed by mutatis mutandis application of the TPEx Rules Relating to Article 3, Paragraph 1, Subparagraph 4 of the Taipei Exchange Rules Governing the Review of Securities for Trading on the TPEx concerning withdrawal of shares upon expiration of custody.
    The preceding paragraph shall not apply to a company required to transfer or sell shares of a financial holding company pursuant to Article 31 of the Financial Holding Company Act.
    The making of the contract for TPEx trading of the securities of the financial holding company and the termination of the contract for TPEx trading of the securities of the original TPEx listed company, as referred to in paragraph 1, shall be reported by the TPEx to the competent authority for recordation.
Article 15-34     Where shares of a single or multiple TPEx listed company(ies) limited by shares are converted into shares of a TPEx listed financial holding company pursuant to Article 29 of the Financial Holding Company Act, the financial holding company shall complete the relevant documentation and submit an application to the TPEx according to the procedures in paragraph 3 of the preceding article, and the TPEx listed securities participating in the conversion shall be delisted from the TPEx on the record date of the share conversion and the shares of the financial holding company into which they are converted shall be listed on the TPEx on the same day; provided, any company(ies) limited by shares that are neither TPEx nor TWSE listed that participate in the share conversion shall conform to the requirements set forth in paragraph 2, subparagraphs 1 and 2 of the preceding article.
    The termination of the contract for TPEx trading of the securities of the TPEx listed company(ies) participating in the conversion under the preceding paragraph shall be reported by the TPEx to the competent authority for recordation.
Article 15-35     A financial holding company established after conversion that meets the requirements set out in Article 22 of the TPEx Rules Governing Information to be Published in Prospectuses for Applications for Trading of Securities on the TPEx may deliver a simplified prospectus to the share subscribers.
Article 15-36     Where a financial holding company is established by means of assignment of operations by a TPEx listed company pursuant to Article 24 of the Financial Holding Company Act and the financial holding company holds 100 percent of the shares of the assigned company, an application for amendments to TPEx listed securities, accompanied by relevant documentation, shall be filed with the TPEx pursuant to Article 9-1 hereof.
Article 15-37     Article 15-33, paragraphs 2 and 3 and Article 15-34 concerning suspension of trading of securities and delisting from the TPEx shall also apply to a TPEx listed company converted into a listed financial holding company pursuant to Article 29 of the Financial Holding Company Act.
Article 16     (deleted)
Article 16-1     (deleted)
Article 16-2     (deleted)
Article 16-3     (deleted)
Chapter III Securities Firms Engaging in TPEx Trading
Article 17     A securities firm shall not engage in TPEx trading without approval of the competent authority and entering into, with the TPEx, a Contract for Trading of Securities on the TPEx by a Securities Firm and paying into the clearing and settlement fund in accordance with regulations.
    A securities firms engaging purely in trading through the Electronic Bond Trading System or trading by price negotiation at its place of business shall be exempted from paying into the clearing and settlement fund referred to in the preceding paragraph to the TPEx.
    The clearing and settlement fund paid by the securities firms shall have common liabilities, and a fund management committee shall be set up; the rules for its management shall be prescribed by the TPEx after consulting with the securities dealers association and sent to the competent authority for approval; the same procedures shall apply with amendments.
Article 17-1     A securities firm that trades bonds through the TPEx Electronic Bond Trading System or a foreign bond electronic trading platform shall pay to the TPEx the payment settlement reserve in accordance with the TPEx Regulations Governing Bond Payment Settlement Reserves for the Electronic Bond Trading System prescribed by the TPEx. Where the payment settlement reserve paid by a securities firm is lower than the minimum required by the TPEx, the securities firm shall supplement such shortfall by 9:00 a.m. the next business day.
    The aforesaid Rules Governing Payment Settlement Reserve of the Electronic Bond Trading System shall be separately prescribed by the TPEx.
Article 18     A securities firm engaging in TPEx trading shall follow the rules and public announcements of the TPEx and pay business service fee, facility use fee, information use fee, etc. as required. The fee schedule or amount shall be decided by the TPEx and approved by the competent authority.
Article 19     In addition to complying with Article 17, a securities firm applying to engage in TPEx trading shall fill in and submit an application, together with the following documents, to the TPEx for registration:
  1. Photocopy of permit of securities firm.
  2. Photocopy of company documentation of company registration (or of documentation following amendment registration); if the securities firm is operated on a concurrent basis by a financial institution not organized as a company, documentary proof of the approval of establishment.
  3. Articles of incorporation and operation bylaws.
  4. (deleted)
  5. Registration list of managers and associated persons for TPEx trading.
  6. Facility layout and description of business floor.
  7. A statement of completion of the information facilities and readiness for transmission required for TPEx trading business.
  8. Other documents as required by the TPEx.
Article 20     After a securities firm has been approved by the competent authority for establishment of a domestic branch office and obtained a permit/license, it shall submit the following documents to the TPEx for recordation before commencing business:
  1. Photocopy of the permit for establishment of the domestic branch office.
  2. Registration list of the responsible person and associated persons of the branch office.
    Securities firms which have been approved by the competent authority to establish foreign branch offices or representative offices shall submit the following documents to the TPEx for recordation before commencing business:
  1. Photocopy of the permit for establishment issued by the domestic competent authority and of the documents of approval of establishment issued by the foreign competent authority.
  2. List of managers and associated persons of the branch office or representative office.
  3. Date of establishment and detailed address of the branch office or representative office.
    Article 23 shall apply to the standards of the business floor and facilities of the branch office of a securities firm.
Article 21     A securities firm and its branch office engaging in TPEx trading shall report to the TPEx 5 business days before the commencement of TPEx trading.
Article 22     If there is any change in the registration items of a securities firm and its branch office engaging in TPEx trading, it shall commence amendment procedures with the TPEx within 5 days of such change.
Article 23     The business floor and facilities of a securities firm engaging in TPEx trading shall meet the standards prescribed by the TPEx.
Article 23-1     A securities firm shall establish its business premises at its registered location, and may not share its business premises with any other securities firm. In the case of a major event of force majeure such that it is unable to operate normally at its business premises, a securities firm may find a temporary business premises and apply to the TPEx for continued operation. The use of such premises may not exceed 3 months, and by the expiration of this time period, a permanent business premises shall be located. Such premises shall conform with the Standards for Business Premises and Facilities of Securities Firms prescribed by the TPEx, and may not be used until amendment registration has been performed in accordance with regulations.
    The equipment used for linkage between the securities firms and the TPEx shall be installed as follows:
  1. Securities brokers shall install such equipment at the business counters of the business premises of their head offices and branches.
  2. Securities dealers shall install such equipment at their business premises.
    In the event that a major event of force majeure occurs to the trading transmission system of a securities firm such that its equipment malfunctions, the securities firm may do one of the following at its choice:
  1. Borrow the equipment of its head office or branch and report in writing to the TPEx on the following business day for recordation.
  2. Borrow the spare (including cloud-based backup) equipment of the TPEx in the market, limited to two sets. The securities firm shall contact the TPEx by telephone in advance and submit an application bearing its corporate seal and the seal of its responsible person to the TPEx.
    Subparagraph 2 of the preceding paragraph shall apply mutatis mutandis to a securities firm borrowing the TPEx's equipment for lending auction and reverse auction transactions.
Article 24     A securities firm engaging in TPEx trading shall maintain complete account books. The accounting items and financial report shall be handled in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Firms prescribed by the competent authority.
    A securities firm engaging in TPEx trading shall place its account books and relevant certificates, vouchers/documents, books and statements, and contracts in its business premises. The period of safekeeping shall be in accordance with the Business Entity Accounting Act and the Required Periods for Preservation of Accounting Statements and Vouchers by Securities Firms Trading on the TPEx as prescribed by the TPEx. However, if the account opening contract signed between a securities broker and principal is saved using a non-revisable, non-erasable electronic storage medium, and furthermore the original can be made available at any time, then the place where the hard copy of the contract is kept is not subject to the restriction that it must be in the firm's business premises.
    The TPEx may send its personnel to inspect or inquire about the documents referred to in the preceding paragraph based on the rules for inspection of finance and business prescribed by the TPEx. The securities firm engaging in TPEx trading shall not refuse or avoid such inspection or inquiry. The securities firm engaging in TPEx trading shall further consent that the TPEx may query the Joint Credit Information Center for information concerning the securities firm's credit with financial institutions.
    The Operation Rules for Audits of Securities Firms and Follow-up, Assessment, and Guidance with Respect to Deficiencies shall be prescribed by the TPEx.
    With respect to various reports produced by a securities firm, where reporting is made by Internet connection, the handling rules governing such reporting shall be separately prescribed by the TPEx.
    When an account opening contract, as mentioned in paragraph 2, is not kept in the firm's business premises, the securities broker shall be diligent about the security of the place, environment, and equipment where it is kept, and shall enhance security maintenance measures for access and safekeeping of the contract, and adopt relevant measures in its internal control system.
Article 24-1     A securities firm shall prepare a monthly general ledger account item summary, a revenue and expenditure status report, and a net available funds calculation sheet on a monthly basis and submit them to the TPEx by Internet connection by the seventh day of the following month.
    A securities firm shall prepare a capital sufficiency statement on a monthly basis and submit it to the TPEx by Internet connection by the tenth day of the following month.
    For any reporting item submitted by Internet connection, the TPEx, as it deems necessary for business needs, may notify the securities firm to make an additional hard-copy submission, which shall be delivered to the TPEx within the specified deadline.
    An enterprise from another industry that concurrently operates securities business and has only signed with the TPEx a Contract for Trading of Securities on the TPEx by a Securities Firm, when preparing financial reports in accordance with the requirements of the competent authority in charge of its industry, shall additionally disclose a balance sheet, a statement of comprehensive income, accompanying notes, and statements of major accounting items for its independent securities division, prepared in accordance with Chapter II of the Regulations Governing the Preparation of Financial Reports by Securities Firms. This requirement does not apply, however, if the enterprise from another industry only concurrently operates proprietary bond trading business.
    When a financial report referred to in the preceding paragraph is for the first half of the fiscal year, two duplicates of the report shall be submitted to the TPEx within 2 months after the end of each fiscal half-year, and the TPEx shall forward one of the duplicates to the competent authority. When a financial report is for the full fiscal year, two duplicates of the report shall be submitted to the TPEx within 3 months after the end of each fiscal year, and the TPEx shall forward one of the duplicates to the competent authority. However, if the competent authority in charge of the enterprise's industry has made other provisions with respect to the deadlines for filing of the financial reports, those provisions shall be followed.
    When any financial report is submitted under the preceding paragraph, the report shall simultaneously be filed with the TPEx by Internet connection.
Article 24-2     A securities firm's own assets shall be kept independent of the clearing and settlement money paid by customers and other moneys received by the securities firm as the agent for payment.
Article 25     The qualifications, change, training, prohibition, award, or commendation of the associated persons for trading on TPEx shall be in conformity with the provisions in the competent authority's Regulations Governing Responsible Persons and Associated Persons of Securities Firms.
    The registration of the associated persons of a securities firm for TPEx trading shall become void upon the removal or change of duties by the securities firm; provided that the securities firm shall still take the responsibilities under paragraph 2 of Article 26 for the acts of such associated persons committed before the registration is amended or voided in accordance with the provisions referred to in the preceding paragraph.
    Where an associated person registered for TPEx trading is removed per the order of the competent authority, the TPEx shall void the registration.
Article 26     An employee of a securities firm engaging in TPEx trading shall fully understand the provisions regarding TPEx trading business and abide by relevant laws, regulations, and rules, and shall have no excuse for not knowing the same.
    A securities firm shall be fully responsible for the business performed with outside parties by the employee referred to in the preceding paragraph.
Article 27     A securities firm engaging in TPEx trading shall not concurrently employ the business personnel of the TPEx in any manner, grant an honorary position to, or have any investment, lending, or guarantee relation with such personnel.
Article 28     A securities firm shall engage in TPEx trading in the following manners:
  1. A securities dealer shall purchase or sell securities for its own account and not for customers' accounts.
  2. A securities broker shall purchase or sell securities for customers' accounts and not for its own account.
  3. A securities firm concurrently engaging in proprietary and brokerage business shall distinguish the trading for its own account from that for customers' account in the written documents of each trade.
Article 28-1     When the internal personnel of a securities firm place orders for the purchase or sale of TPEx traded securities, they shall do so in compliance with the TPEx Rules Governing Insiders of Securities Firms Opening Accounts at Their Securities Firms for Securities Brokerage Trading. Those Rules shall be separately prescribed by the TPEx.
    The internal personnel of a TPEx securities firm referred to in the preceding paragraph refers to the following persons:
  1. Directors, supervisors, and employees of a securities firm; provided that in the case of directors and supervisors of a juristic person, only the juristic person itself and its representatives shall be subject to this requirement; if the securities firm is concurrently operated by a financial institution, "employees" means to the personnel of its securities division.
  2. Spouses and minor children of the persons referred to in the preceding paragraph.
Article 28-2     A securities firms recommending its customers to purchase/sell securities shall act in accordance with the TPEx Rules Governing Securities Firms Recommending Trades in Securities to Customers (the "Recommendation Rules").
    The Recommendation Rules shall be separately prescribed by the TPEx.
    The website offered by a securities firm shall expressively present risks-warning information and contingent measures in case where electronic transmission fails, and shall transmit the latest information. A securities firm shall be prudent in selecting websites for hyperlink, and shall be responsible for supervising and administrating its personnel with the respect to business-related conducts through e-mails, group e-mail accounts, BBS, and websites.
Article 29     A securities firm engaging in TPEx trading shall prepare a daily business report in the form prescribed by the TPEx and based on the type of operation. A bonds dealer shall also prepare a monthly business report for inspection.
    The statements referred to in the preceding paragraph may be stored in media but shall be printed out for inspection.
Article 30     A securities firm shall prepare a reconciliation statement in duplicate on monthly basis and fill in the same by the fifth day of the following month. One copy shall be delivered to the customers by the tenth day of the following month, the other copy shall be kept by the securities firm; provided that this provision shall not apply to bond trading through the TPEx Electronic Bond Trading System, or where no trade is consummated in the given month and the customer does not request such statement in writing.
    The form of the statement referred to in the preceding paragraph and the information to be stated therein shall be as prescribed by the competent authority.
Article 31     A securities firm recommending a stock for TPEx trading ("recommending securities firm") shall report to the TPEx in writing regarding the number, ratio, and purchase price of the shares of the recommended public issuer held by such securities firm 5 business days before the commencement of TPEx trading of the stock.
Article 31-1     (deleted)
Article 32     A recommending securities firm shall not resign within 1 year from the date of commencement of TPEx trading of a stock that it recommends.
    When the recommending securities firm plans to be replaced by another securities firm, the new and old recommending securities firms shall jointly apply to the TPEx in writing for approval by submitting a letter of consent of the issuer and a letter of undertaking to the effect that the new recommending securities firm will be responsible for the obligations of a recommending securities firm, together with the information regarding the number of shares and ratio of the stocks of the recommended public issuer held by the new recommending securities firm.
Article 32-1     A securities firm shall engage in TPEx trading of securities in the following manners:
  1. Stocks may be traded by the securities firm as a dealer in the TPEx through price negotiation, or traded by the firm as a dealer or broker by participating in the TPEx automated trade matching system, large volume trading system, after-hours fixed-price trading system and odd-lot trading system; provided that sale of stocks, obtained in accordance with paragraph 2 of Article 71 of the Securities and Exchange Act, by securities underwriter(s) shall be made through automated trade matching system.
  2. Bonds may be traded by the securities firm on the TPEx through price negotiation, or traded by the firm as a dealer by participating in the TPEx Electronic Bond Trading System.
Article 32-2     A securities underwriter that engages the TPEx to handle business shall perform its business in accordance with the bylaws, public announcements, and relevant provisions of the TPEx.
    To handle the business referred to in the preceding paragraph a securities underwriter shall pay a processing fee to the TPEx. The fee schedule shall be decided by the TPEx in conjunction with Securities Dealers Association and reported to the competent authority for approval.
Chapter IV TPEx Trading
Section I Trading Principles
Article 33     When conducting TPEx trading for a customer, a securities firm shall prudently take into consideration the intention, condition, investment experience, investment purpose, and financial capability of the customer.
Article 34     The clearing and settlement of TPEx trading shall be effected on a cash payment and actual delivery basis.
Article 35     Where a securities broker accepts a customer's order to purchase or sell shares or bonds, or where a securities dealer purchases or sells securities or bonds for its own account rather than directly negotiate price with a customer over the counter, such broker or dealer shall enter the volume, price or yield in the trading system of the TPEx for matching price or matching bond yield; provided that the number of shares entered for any single trade shall be less than 500 trading units. Trading quotes for the automated trade matching system may be entered beginning from 30 minutes prior to the opening of market trading hours.
    The methods for the execution of trades through the automated trade matching system are divided into call auction trading and continuous trading. Call auction trading shall be used for the first matching in a given trading session, and continuous trading shall then be used for subsequent matching until a certain period of time before market close (i.e. the end of trading hours). For the certain period of time before market close, all trading quotes shall be accumulated and matched by call auction. The methods for the execution of trades and the sequential priority given to trading quotes are governed by the following provisions:
  1. Trade prices in call auction trading shall be determined by the following principles:
    1. Satisfying the maximum trade volume: buy quotes higher than the determined price and sell quotes lower than the determined price must all be satisfied.
    2. One side of the buy quotes or sell quotes at the determined price must be satisfied in full.
    3. When two or more prices conform to the principles described in the preceding two items, the price closest to the last trade price in the current session shall be used. If no trade price is yet available in the current session, the price closest to the basis price for the opening of trading in the current session shall be selected.
  2. Trade prices in continuous trading shall be determined for each successively entered buy quote or sell quote based on the following principles:
    1. When the currently entered buy quote is higher than or equal to the lowest previously entered sell quote, it shall be matched and executed against individual sell quotes sequentially from lowest to highest, until the current buy quote is completely satisfied or the price of the current buy quote is lower than the prices of any unexecuted sell quotes.
    2. When the currently entered sell quote is lower than or equal to the highest previously entered buy quote, it shall be matched and executed against individual buy quotes sequentially from highest to lowest, until the current sell quote is completely satisfied or the price of the current sell quote is higher than the prices of any unexecuted buy quotes.
  3. The priority for satisfying trading quotes shall be based on the following principles:
    1. Price priority principle: higher-priced buy quotes shall have priority over lower-priced buy quotes. Lower-priced sell quotes shall have priority over higher-priced sell quotes. For quotes of the same price, the priority shall be based on the time priority principle.
    2. Time priority principle: for quotes entered before market opening (i.e. the beginning of trading hours), the priority shall be determined by random arrangement by computer; for quotes entered after market opening, the priority shall be determined by the chronological order in which the quotes are entered.
  4. Trading quotes entered before market opening that are unexecuted shall continue to be matched in the order randomly arranged by computer.
    The trade price of all the trading quotes that are accumulated for a certain period of time before market close and matched by call auction shall be the closing price. If no trade is executed for that period, the price of the last trade during trading hours on the current day shall be the closing price.
    If, during the one minute prior to market opening or to market close for a security under the automated trade matching system, any given computed execution price fluctuates beyond 3.5 percent from the previous computed execution price (if there is no previous computed execution price available from during the 30 minutes before market opening, the fluctuation shall be based on the basis price of the opening of trading; if there is no previous computed execution price available a period of time before market close, the fluctuation shall be based on the last trade price; if there is no last trade price available, the fluctuation shall be based on the basis price of the opening of trading), or if the volume of cancellations and changes of trading quotes during the one minute prior to market opening reaches 30 percent or more of the volume of trading quotes prior to market opening, the first matched trade for the current session, or the matching at market close, for that security is postponed. For a security for which the first matched trade for the current session is postponed, matching and execution for the security will proceed sequentially after 2 minutes of postponement. For a security for which the matching at market close is postponed, entries, cancellations, and changes of trading quotes for that security will continue to be accepted from 1:31 p.m. to 1:33 p.m., and matching and execution will then proceed sequentially at 1:33 p.m. However, this restriction shall not apply to securities for which the basis price of the opening of trading is lower than NT$1, call (put) warrants, or company warrants.
    The standard for the "period of time" referred to in paragraph 3 shall be prescribed by the TPEx and publicly announced for implementation after approval and recordation by the competent authority; the same shall apply to amendments thereto.
    The rules for trading on the Electronic Bond Trading System referred to in paragraph 1 above shall be separately prescribed by the TPEx.
    During the 30 minutes before market opening and a certain period of time before market close, the TPEx shall disclose on a real-time basis computed execution prices and volumes, and the computed prices and volumes of the five highest unexecuted buy quotes and five lowest unexecuted sell quotes. During trading hours, the TPEx shall disclose on a real-time basis executed trade prices and volumes, and the prices and volumes of the five highest unexecuted buy quotes and five lowest unexecuted sell quotes. During trading hours, the TPEx shall also disclose on a real-time basis, for managed stock and for securities for which extended matching intervals have been implemented under rules or regulations of the TPEx, the computed execution prices and volumes, and the computed prices and volumes of the five highest unexecuted buy quotes and five lowest unexecuted sell quotes. For other trading quotes, however, the TPEx may make appropriate disclosures of prices and volumes depending on market needs.
    When a securities firm enters quotes through the automated trade matching system, whether for customers' accounts or for its own account, if the total quoted amount of either purchases or sales in a single day exceeds four times its net worth, the TPEx may suspend further entries of buy or sell quotes by the securities firm.
    Where a securities firm's net worth is less than, but more than half of, its paid-in capital, or its regulatory capital adequacy ratio falls within the range set forth in Article 65 of the Regulations Governing Securities Firms, the multiple in the preceding paragraph may be adjusted lower to three times its net worth; for those whose regulatory capital adequacy ratio meets the criteria set forth in Article 66 of the Regulations Governing Securities Firms, the TPEx may further adjust the multiple of the preceding paragraph lower, depending on the severity of the circumstances; for those whose net worth is less than one-half of its paid-in capital, the multiple of the preceding paragraph may be adjusted lower to two times its net worth; for those whose net worth is lower than one-half of its paid-in capital for 3 consecutive months, the multiple of the preceding paragraph may be adjusted lower to one time its net worth. However, when a securities firm's statements filed on a monthly basis indicate that the reason for such adjustments has diminished, its multiple may gradually be adjusted commensurate with the degree of such diminution; where the ratio of a securities firm's net worth to paid-in capital is raised due to a capital reduction, the corresponding multiples for purchases and sales must be maintained for 3 consecutive months before they may be adjusted pursuant to the above provisions.
    Where a securities firm has a substandard rating under the Regulations Governing Early Warning of Overall Operational Risk of Securities Firms, or any of the events specified in Article 7 of the TPEx Rules for Audit, Follow-up, and Assistance of Securities Firms, or, subsequent to assistance, correction cannot be made, the TPEx may lower the ratio referred to in paragraph 8. Where correction has been made, the original ratio may be restored.
Article 35-1     Where any overseas Chinese or foreign national who/which has been approved or registered in accordance with the Regulations Governing Securities Investment by Overseas Chinese and Foreign Nationals trades any TPEx listed company's stock, convertible corporate bonds, exchangeable corporate bonds, corporate bonds with warrants, preferred shares with warrants, detached company warrants, or certificates of entitlement to convert bonds into shares, if any such securities are subject to any ceiling on investment ratio ceiling set by the respective competent authorities for the relevant industries, they shall be traded through the TPEx automated trade matching system, block trading system, after-hours fixed-price trading system, and odd-lot trading system.
    In the event that the total amount of stocks of a TPEx listed company, and securities convertible or exchangeable into such stocks, invested by overseas Chinese and foreign investors, after being approved or registered in accordance with the Regulations Governing Securities Investment by Overseas Chinese and Foreign Nationals, exceeds the percentage under the Regulations Governing Securities Investment by Overseas Chinese and Foreign Nationals and Procedures for Remittance, the TPEx shall suspend the purchase of such securities by the overseas Chinese and foreign investors.
Article 35-2     (deleted)
Article 35-3     When a securities broker accepts a customer's order for purchase of TPEx traded managed stock through the TPEx automated trade matching system, it shall collect in advance the full amount of the purchase price or the securities to be sold.
    For TPEx traded managed stocks, the periodic trading method shall be imposed, with matching conducted once every 45 minutes.
Article 35-4     When a securities broker trades securities on behalf of a principal or a securities dealer trades securities for its own account by a method other than price negotiation, where any of the circumstances listed below is present in a single buy quote or sell quote, the trade shall be conducted by the method of a block trade:
  1. Where a quote is entered for a block trade of a single security, reaching 500 or more trading units; provided, however, that if the foregoing quantity is not met but the total amount of a single buy or sell quote reaches NT$15 million or more, the trade may also be treated as a block trade of a single security.
  2. Where a quote is entered for a block trade of a basket of stocks, consisting of five or more stocks with a total amount of NT$15 million or more.
    Regulations regarding block trades shall be separately adopted by the TPEx and implemented after being approved by the competent authority.
Article 35-5     The time for entering quotes for after-hours fixed-price trading on the TPEx shall be 2:00 p.m. to 2:30 p.m., and price-match trades shall be made at the closing price of the price-match system on the same business day; the method for the said after-hours trades shall be prescribed by the TPEx and implemented after being approved by the competent authority.
Article 35-6     The rules for securities brokers accepting orders from principals to trade securities which require collection in advance of payment and securities shall be separately prescribed by the TPEx.
Article 35-7     The performance of obligations relating to call (put) warrants shall be done through orders placed with securities firms that have entered into, with the TPEx, a Contract for Trading of Securities on the TPEx by a Securities Firm; provided, holders or issuers who have entered into such contract with the TPEx may process matters on their own.
    Upon receiving an order referred to in the preceding paragraph, or when requesting performance of obligations on its own behalf, a securities firm shall confirm the related details of the performance of obligations on the following business day, and complete the transfer of the funds/certificates by 10 a.m. of the second following business day.
    The processing of the performance of obligations relating to call (put) warrants, confirmation of related details of the performance of obligations, and the process of transferring the money/certificate shall be performed by the TPEx and the securities central depositary enterprise.
    The performance of obligations and transfer of funds/certificates relating to TPEx contract-based call (put) warrants shall be handled in accordance with the TPEx Rules Governing Trading of Call (Put) Warrants and the TPEx Guidelines for Handling the Performance of Obligations Relating to Call (Put) Warrants; the provisions set out hereinabove shall not apply.
Article 35-8     The TPEx shall stop accepting orders and trades 1 business day prior to the maturity date of the call (put) warrant.
Article 35-9     After the cause of a halt of trading of TPEx listed securities ceases to exist, the TPEx may resume trading through the automated trade matching system and other trading such as block, odd-lot, after-hours fixed-price, and ordinary reverse auction trading. But if the cause of the halt of trading ceases to exist during a certain period of time prior to, or after the close of, market trading hours, trading will not in any event be resumed on that day.
Article 35-10     The time of commencement of a halt of trading or resumption of trading of TPEx listed securities shall be determined by the time of execution by the TPEx computer.
    During a period of halted trading of listed securities, the TPEx will cease accepting trading quotes. However, for any trading quote that is unexecuted prior to the halt of trading, the securities firm may apply to cancel or reduce the quantity of the quote.
    When the trading of TPEx listed securities is resumed during the period from 30 minutes prior to the commencement of market trading hours to a certain period of time prior to the close of market trading hours, the first matching of the securities will be done a period of time after the resumption of acceptance of trading quotes.
    The periods of time referred to in the preceding paragraph and the preceding article will be set by the TPEx and publicly announced and implemented after approval and recordation by the competent authority.
Article 35-11     With the exceptions of newly TPEx listed common stocks during the period in which no price limit is imposed, managed stocks, securities for which trade matching at extended intervals is implemented pursuant to TPEx bylaws, securities for which the basis price at opening of trade on the given day is less than 1 NTD, call (put) warrants, and company warrants, when securities are traded through the automated trade matching system, during the period from after the first matching of the current trading session until a certain period of time prior to market close, when the upward or downward movement of any trade price during price calculation prior to matching of each trade exceeds 3.5 percent of reference price specified in paragraph 2, the TPEx will take the following measures:
  1. If the currently entered trading quote is a limit order and furthermore a rest-of-day order, then—unless the calculated trade price does not exceed the price range, in which case the trade will immediately be executed—the TPEx simultaneously will postpone matching of the security for 2 minutes, and continue to accept entries, cancellations, and changes of buy and sell quotes, and after the end of the period of postponement of trade matching it will use call auction trading for the matching and execution of those quotes.
  2. If the currently entered trading quote is a limit order and furthermore an immediate-or-cancel order, or is a market order and furthermore a rest-of-day order, or is a market order and furthermore an immediate-or-cancel order, then—unless the calculated trade price does not exceed the price range, in which case the trade will immediately be executed—the remaining quantity of the currently entered trading quote will be canceled.
  3. If the currently entered trading quote is a limit order and furthermore a fill-or-kill order, or is a market order and furthermore a fill-or-kill order, the currently entered trading quote will be canceled in full.
    The reference price referred to in the preceding paragraph shall be determined by the following principles:
  1. Within the 5 minutes following the first matching of the current session, the reference price is the first matched trade price. If the first matching yields no trade price, the basis price of the opening of trading is taken as the reference price.
  2. Once 5 minutes have elapsed following the first matching of the current session, the reference price is the weighted average trade price over the 5 minutes preceding the time that the trading quote currently being matched was entered, calculated from all prices and quantities traded during that period. If there is no trade price during those 5 minutes, the last trade price is taken as the reference price. If no last trade price is available, the basis price of the opening of trading is taken as the reference price.
  3. After the first matching of the current session, if any postponement of matching occurs as referred to in subparagraph 1 of the preceding paragraph, then within the 5 minutes after the end of that postponement of matching, the trade price from that call auction trading is the reference price. If there is no trade price from that call auction trading, the provisions of the preceding subparagraph will be applied to the calculation of the reference price.
    When managed stock and securities for which extended matching intervals have been implemented under rules or regulations of the TPEx are traded through the automated trade matching system, during the period from the first matched and executed trade of the current trading session until a certain period of time prior to market close, if the upward or downward movement of the trade price during price calculation prior to each matching exceeds 3.5 percent of the previous executed trade price, the TPEx will immediately postpone the current matching for two minutes and continue to accept entries, cancellations, and changes of trading quotes for that managed stock or security until the end of that matching postponement period, and then proceed with matching and execution sequentially.
Article 35-12     Trading quotes in the automated trade matching system are divided into limit orders and market orders:
  1. A limit order means the quoter sets a limit on the price. A buy limit order may be executed at the limit price or lower; a sell limit order may be executed at the limit price or higher.
  2. A market order means the quoter does not set a limit on the price, and the order may be executed at any price within the limits imposed on that security on the current day. However, a market order may not be used for a quote for newly TPEx listed common stocks during the period in which no price limit is imposed, for securities on which no price limit is imposed, for managed stocks, for securities for which trade matching at extended intervals is implemented pursuant to TPEx bylaws, or where otherwise provided by the TPEx.
    Before each matching, for a trading quote that is entered as a market order, a conversion reference price will be set based on the following principles, and will be deemed to be the quoted price:
  1. For a buy order, the highest of the following for that security in the current session will be taken as the conversion reference price: the last trade price (or if no last trade price is available, the basis price of the opening of trading), the highest buy limit order, the highest sell limit order. If the conversion reference price is the same as the highest buy limit order, it has higher priority in matching than the limit order.
  2. For a sell order, the lowest of the following for that security in the current session will be taken as the conversion reference price: the last trade price (or if no last trade price is available, the basis price of the opening of trading), the lowest buy limit order, the lowest sell limit order. If the conversion reference price is the same as the lowest sell limit order, it has higher priority in matching than the limit order.
    The times in force of trading quotes in the automated trade matching system are divided into rest-of-day, immediate-or-cancel, and fill-or-kill:
  1. Rest-of-day: means that if the trading quote cannot be executed in full at one time, it remains in force during the current session for the remaining quantity.
  2. Immediate-or-cancel: means that when the trading quote is entered, if it cannot be executed in full in the current matching, the remaining quantity is canceled.
  3. Fill-or-kill: means that when the trading quote is entered, if it cannot be executed in full in the current matching, the quote is canceled.
    If a trading quote is entered as a market order, or its time in force is immediate-or-cancel or fill-or-kill, it may be entered only during a period when continuous trading is used as set out in Article 35, paragraph 2. If there then occurs a period when call auction trading is used, any previously entered trading quotes that are market orders and furthermore are rest-of-day orders shall lose their force.
Article 36     When a securities firm engaging in TPEx trading conducts trades on the TPEx through the Electronic Bond Trading System, if the quoted trading volume cannot be executed in one trade, partial satisfaction of the quote shall be allowed. The remaining trading volume shall be executed through electronic bond trading based on the originally quoted yield.
    When a securities firm engaging in TPEx trading applies to make a change to a rest-of-day trading quote in the automated trade matching system, it shall first cancel the original trading quote, and then enter a new quote, except in the following circumstances:
  1. A reduction in the quoted quantity.
  2. A change to the price of a limit order, in which case the chronological order of the changed trading order shall be the chronological order of the time the change is entered. This shall not apply, however, where the TPEx provides otherwise.
Article 37     (deleted)
Article 38     After the end of daily trading hours, the TPEx shall produce a computer file of the names, volumes, and prices of the securities traded on the TPEx, and the codes of the purchasing and selling securities firms for review by the public through the Internet or terminals provided.
    After the end of daily trading hours, the TPEx shall prepare and publicly announce a list of prices of all securities.
Article 39     If due to special situation, it is improper to purchase or sell TPEx traded securities in the manners provided in these Rules, the trading method shall be separately prescribed by the TPEx and reported to the competent authority for approval before it is publicly announced and implemented.
Article 39-1     A securities firm shall use the information and facilities provided by the TPEx in accordance with its rules. If due to causes attributable to the securities firm, the TPEx sustains any damage, the securities firm shall be liable for compensation.
    In providing the information and facilities referred to in the preceding paragraph, the TPEx may collect a rental or fee from the securities firms, information companies, and users of information companies. The relevant rules shall be separately prescribed and publicly announced by the TPEx.
    If interruption of transmission occurs to the information and facilities provided by the TPEx or if the information and/or facilities cannot operate normally due to malfunction, the securities firms and their principals shall not claim for damages against the TPEx.
Article 39-2     Rules governing trading of common stock registered for trading in accordance with the TPEx Rules Governing the Review of Emerging Stocks for Trading on the TPEx shall be separately prescribed by the TPEx, and shall be promulgated for implementation after ratification by the competent authority.
Article 39-3     If beneficial securities or asset-backed securities for which TPEx trading is applied for under the TPEx Rules Governing the Review of Securities for Trading on the TPEx are debt-type financial asset securities, the trading method thereof shall be subject, mutatis mutandis, to the rules governing TPEx trading of corporate bonds and financial bonds.
Article 39-4     Rules governing trading of REIT beneficial securities for which TPEx trading is applied for under the TPEx Rules Governing the Review of Securities for Trading on the TPEx shall be separately prescribed by the TPEx and promulgated for implementation after ratification by the competent authority.
    Trading of REAT beneficial securities for which TPEx trading is applied for under the TPEx Rules Governing the Review of Securities for Trading on the TPEx shall be subject, mutatis mutandis, to the rules governing TPEx listed corporate bonds and financial bonds.
Article 39-5     (deleted)
Article 39-6     NT dollar denominated foreign bonds that are traded on the TPEx by application and approval under the TPEx Rules Governing the Review of Foreign Securities for Trading on the TPEx refers to foreign straight bonds, foreign convertible corporate bonds, and foreign corporate bonds with warrants that are issued by an international organization, foreign government, or foreign public or private enterprise and that have been approved by the competent authority for TPEx trading, or NT dollar denominated foreign straight bonds that are sold only to professional investors and are publicly offered and issued by a TPEx (or TWSE) primary listed company or a foreign emerging stock company or by a foreign issuer with approval by the competent authority of exemption from the requirement of effective registration under Article 22, paragraph 1 of the Securities and Exchange Act.
    The trading of foreign straight bonds referred to in the preceding paragraph shall be subject, mutatis mutandis, to the rules governing TPEx listed corporate bonds and financial bonds; the trading of foreign convertible corporate bonds shall be subject, mutatis mutandis, to the rules governing TPEx listed convertible corporate bonds; the trading of foreign corporate bonds with warrants shall be subject, mutatis mutandis, to the rules governing TPEx listed corporate bonds with warrants.
Article 39-7     Beneficial certificates for which an application for TPEx trading is made under the TPEx Rules Governing the Review of Passive Exchange-Traded Fund and Active Exchange-Traded Fund Beneficial Certificates for Trading on the TPEx, shall be subject to separate trading rules adopted by the TPEx and implemented through public announcement after submission to and ratification by the competent authority.
Article 39-8     Securities with warrants for which an application for TPEx trading is made under the TPEx Rules Governing the Review of Securities for Trading on the TPEx, shall be subject to separate trading rules adopted by the TPEx and implemented through public announcement after submission to and ratification by the competent authority.
Article 39-9     ETNs for which an application for TPEx trading is made under the TPEx Rules Governing the Review of Exchange-Traded Notes for Trading on the TPEx, shall be subject to separate trading rules adopted by the TPEx and implemented through public announcement after submission to and ratification by the competent authority.
Section II Trading Hours
Article 40     The trading hours of the TPEx, unless otherwise provided, are as follows:
  1. 9:00 a.m. to 1:30 p.m. for securities traded through the automated trade matching system; 9:00 a.m. to 3:00 p.m. for price negotiation on the TPEx.
  2. 9:00 a.m. to 1:30 p.m. for outright purchases/sales of bonds through the Electronic Bond Trading System; 9:00 a.m. to 1:30 p.m. and 2:00 p.m. to 3:00 p.m. for RP/RS bond trades through the Electronic Bond Trading System; 9:00 a.m. to 3:00 p.m. for bonds traded on the TPEx through price negotiation.
    Where the TPEx feels it is necessary or upon the recommendation of the securities dealers association, the trading hours referred to in the preceding paragraph may be changed upon application to and approval by the competent authority.
Article 41     The holidays for TPEx trading are the same as those of the banks; provided that if it deems necessary, the TPEx may change the holidays and report the same to the competent authority before implementation.
Article 42     In the event of force majeure, the TPEx may announce the halting of TPEx trading and report the same to the competent authority, and it may do the same for the resumption of halted trading.
Section III Account Opening
Article 43     When a customer initially conducts TPEx trading of securities through a securities firm, he/she shall enter into an account opening contract with the securities firm for opening the account; provided where the securities firm negotiates price on the TPEx for trading bonds or participates in bond trading through the TPEx Electronic Bond Trading System, it is necessary only to require the customer to provide a photocopy of the identification card or registration certificate, and account opening may be exempted.
    When a securities firm enters into an account opening contract with a customer, it shall explain the nature of the TPEx trading to the customer and request the customer to sign a confirmation for TPEx trading and, for customers other than institutional investors, also to sign a TPEx primary listed securities risk disclosure statement, to confirm that the TPEx trading is conducted based on the customer's judgment and responsibility.
    When a customer initially conducts TPEx trading through the automated trade matching system, he/she shall establish an account for securities under centralized custody and a book-entry transfer account for funds. This rule shall also apply if the customer trades securities through price negotiation with the securities dealer and agrees to effect clearing and settlement through book-entry transfer.
    When the subject matter of a trade through price negotiation referred to in the preceding paragraph is a convertible corporate bond, exchangeable corporate bond, or corporate bond with warrants, the central securities depository account and fund transfer account opened by the customer are not restricted to the securities firm of that trade and its designated financial institution.
    The forms for the account opening contract referred to in paragraph 1 and the confirmation for TPEx trading and the TPEx primary listed securities risk disclosure statement referred to in paragraph 2 above shall be separately prescribed by the TPEx.
    The term "institutional investors" in paragraph 2 mean foreign and domestic banks, insurance companies, bills finance companies, securities firms, fund management companies, government investment institutions, government funds, pension funds, mutual funds, unit trusts, securities investment trust companies, securities investment consulting companies, trust enterprises, futures commission merchants, futures service enterprises, and other institutions approved by the competent authority.
Article 44     When a securities firm conducts TPEx trading for a customer, it shall confirm that such customer satisfies both of the following conditions before accepting the account opening:
  1. The customer has substantial knowledge and experience in securities investment.
  2. Based on the judgment from the status of assets, it is proper for the customers to conduct TPEx trading.
Article 45     A securities firm shall accept account opening in the following manners:
  1. Where the customer is a natural person, except in the following conditions, they shall bring their original National Identity Card in person and sign on the spot:
    1. Where the customer is of no legal capacity or limited legal capacity, or has been declared by a court to be placed under assistance, his statutory representative, guardian, or assistant shall supply the original National Identity Cards of the statutory representative, guardian, or assistant and the customer and the signature must be given personally while the relationship between the statutory representative, guardian, or assistant and the customer must be specified; where the customer does not have a National Identity Card, his household certificate may be used in substitution. The guardian or assistant shall also supply documents evidencing the guardianship or the assistance. The business documents for brokerage trading shall be signed/sealed by the statutory representative, guardian, or assistant. If a person with no legal capacity has been declared by a court to be placed under guardianship, the person's account is permitted to be used only for brokered selling, and brokered buying is prohibited.
    2. Where the customer is an expatriate of a juristic person, they may designate an agent to process account opening procedures; where the customer appoints an agent to open an account, the agent shall supply the original National Identity Cards of the agent and the customer, the power of attorney notarized or certified by an ROC Representative Office abroad or designated institution, and documents issued by the said juristic person proving employment of the expatriate.
    3. Where the customer is an ROC national without household registration who is not an onshore overseas Chinese, the customer shall bring in person a Taiwan Area Residence Certificate sufficient to prove their status as an ROC national without household registration, and shall submit an ROC passport or other documentation sufficient to prove possession of ROC nationality, as well as other identity document sufficient to identify the person (e.g., National Health Insurance Card, driver's license, or student ID) to complete account opening procedures and sign on the spot.
    4. Where the customer applies for account opening by letter or electronically, the account opening shall be handled pursuant to the TPEx Standards Governing Principal Identification and Management of Credit Line Categorization in the Processing by Securities Firms of Account Opening
  2. Where the customer is a juristic person:
    1. The contract for account opening shall be signed/sealed by the juristic person and its representative, and a power of attorney shall be presented. The business documents for brokerage trading of securities shall be signed/sealed by its authorized representative. The authorized representative shall also provide a copy of the registration document of the juristic person, a copy of the notice of issuance of uniform number for taxable entities issued by the tax authorities (a profit-seeking enterprise may be exempt from submitting such copy of notice), the power of attorney, and copies of the National Identity Cards of the responsible person of the juristic entity and that of the authorized representative for processing. The securities firm shall by using mail confirm the validity of the power of attorney. However, if the customer has engaged a custodian institution to open the account on its behalf, or submits proof that settlement is to be handled on its behalf by a custodian institution, it is not necessary to give confirmation by mail of the validity of the power of attorney.
    2. If it is a company registered under Taiwan's Company Act with 3 or less shareholders, and its responsible person and shareholders all are adult natural persons of Taiwan nationality, the provisions of item C of the preceding subparagraph may be applied mutatis mutandis.
  3. Where the customer is an organization that is not incorporated as a juristic person, it shall open the account in the individual name of its responsible person, and include the group name side-by-side therewith in the account name. To open the account, the responsible person shall submit a photocopy of certification that the group has been registered with the competent authority (or of its approval for establishment, recordation, or other evidentiary document of its registration), photocopy of the notice of issuance of a uniform number for tax withholding entities issued by the tax authorities (if exempt from income tax withholding, one copy of the Certificate of Exemption from Tax Withholding must also be submitted), and a photocopy of the National Identity Card of the responsible person.
  4. Except that certain account numbers may be handled as an account without a number under exceptional circumstances for which reasons have been noted, an account number shall be assigned sequentially to each account; provided that numbers canceled in the preceding years (calendar year) may be used sequentially.
    A securities broker shall ensure that the items supplied on the applications are error free and complete. It shall not accept any order to trade in or subscribe to securities from the customer unless it completes the account opening process and the written confirmation procedures referred to in subparagraph 2 of the preceding paragraph and keys-in the account information and account number into the computer system of the TPEx.
    When a securities firm handles an application for account closing, it may do so by letter or electronically in such a manner that it can sufficiently confirm that the applicant is the principal him/her/itself and his/her/its expression of intent.
Article 45-1     Except in the capacity of the statutory representative or guardian of the customer, the directors, supervisors and employees of a securities firm shall not act as an agent for a customer to open account, place trading orders, subscribe for securities, or handle procedures related to clearing and settlement.
    When signing the account opening contract, the customer, or his/her statutory representative or authorized representative shall supply a specimen copy of his/her chop or signature, and the identical chop or signature will be required to process face-to-face placing or orders or subscriptions, or trading orders, subscriptions for securities, or clearing and settlement related procedures handled through an authorized representative. However, if the Taiwan agent of an overseas Chinese or foreign national is the same person as the custodian institution, the chop used exclusively by that custodian institution as agent for the purposes of account opening and settlement may serve as the specimen chop for the account. When the principal withdraws his/her/its authorization, the withdrawal may be handled by letter or electronically in such a manner that the securities firm can sufficiently confirm that the applicant is the principal him/her/itself and his/her/its expression of intent.
    When an agent is retained by a customer or his/her statutory representative to conduct trading orders, subscribe for securities, or handle procedures related to clearing and settlement, a power of attorney shall be issued for that purpose, and a specimen copy bearing the chop and/or signature of the agent shall be kept on file and an identical chop or signature shall be required to carry out those matters in the future. However, when the principal withdraws his/her/its authorization, the withdrawal may be handled in accordance with the proviso of the preceding paragraph.
Article 45-2     When a securities firm accepts an application to open an account on behalf of a custodian institution representing a principal for discretionary investment and trading purposes, the names of both the principal and the authorized discretionary trader shall be specified in the account name, an Account Opening and Brokerage Contract for Discretionary Investment Trading of Securities shall be signed, agreement shall be made for the custodian institution to be the agent for the clearing and settlement of funds and securities, information required for account opening shall be entered into the computer file of the TPEx as instructed online, and the following documents shall be submitted:
  1. A photocopy of the written agreement signed by the principal, the authorized discretionary trader, and the custodian institution regarding respective rights and obligations. However, if a Chinese-language legal opinion issued by a lawyer is substituted for the written agreement detailing the rights and obligations of the three parties pursuant to Article 17, paragraph 7 of the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises of the Securities Investment Trust and Consulting Association of the ROC (the "Discretionary Investment Business Regulations"), then those provisions shall be followed.
  2. Except in the case of persons who have been declared by a court to be placed under assistance, who are prohibited from opening of accounts, if the principal is a natural person, a photocopy of his/her National Identity Card shall be submitted; provided that where the said principal is of no legal capacity or with limited legal capacity, or has been declared by a court to be placed assistance, photocopy of the National Identity Card of his/her statutory representative, guardian, or assistant shall also be submitted. Where the principal is a juristic person or other institution, photocopy of the registration document of the juristic entity, photocopy of the notice of issuance of uniform number for taxable entities issued by the tax authorities (a profit-seeking enterprise may be exempt from submitting such copy of notice), and photocopy of the National Identity Card of the responsible person of the juristic entity shall be submitted.
  3. A photocopy of the registration document of the authorized discretionary trader as a company, and photocopy of the National Identity Card of the responsible person of such company.
  4. A photocopy of the National Identity Card of the investment manager (including deputy) or any other person authorized to execute trades, and original copy of power of attorney issued by the authorized discretionary trader to the aforesaid personnel.
  5. The letter containing instructions from a foreign professional institutional investor, when that investor, pursuant to Article 17, paragraph 10 of the Discretionary Investment Business Regulations, applies to convert a futures trading account originally used for its own trades to a discretionary futures trading account, or when the investor, after converting the account from one for its own use to a discretionary futures trading account, reverts to a futures trading account for its own trading.
    A securities broker shall accept orders to trade securities only after the discretionary investment account opening procedures prescribed in preceding paragraph have been completed and the required information has been entered into the computer files of the TPEx. In case of change, after account-opening, of investment manager (including deputy) or another person authorized to execute trades, orders for trading securities shall not be accepted unless and until the required documents prescribed in preceding subparagraph 1 of paragraph 4 have been replaced.
Article 45-3     When a securities firm accepts an application to open an account on behalf of a trustee of trust property, the account name shall indicate that it is a segregated trust account, and the following documents shall be submitted:
  1. Where the trustee is a trust enterprise:
    1. Photocopy of the juristic person registration documentation of the trust enterprise and photocopy of the notice of issuance of uniform number for taxable entities issued by the tax authorities.
    2. Power of attorney and photocopies of the National Identity Cards of the representative of the juristic person and the attorney in fact.
    3. Where the settlor is a natural person, a photocopy of the person's National Identity Card; where it is a juristic person, a photocopy of the documentation of its juristic person registration.
    4. Summary terms and conditions contract for the trust.
  2. Where the trustee is not a trust enterprise:
    1. Where the settlor and trustee are natural persons, photocopies of their National Identity Cards; where they are juristic persons, photocopies of their juristic person registration documentation, and the power of attorney and photocopies of the National Identity Cards of the representative of the juristic person and the attorney in fact.
    2. Photocopy of the notice of issuance of uniform number for taxable entities issued by the tax authorities.
    3. Photocopy of the trust deed or the original notarized will. If the notarization is done by a civil notary public, relevant proof that the notary public has the authority to notarize shall also be submitted.
    Where a trading account under the preceding paragraph belongs to a charitable trust, a photocopy of the approval document by the competent authority for the target industry shall also be submitted.
    A securities broker shall make a detailed check of the documents related to opening of the segregated trust account, and shall accept orders to trade securities only after completing the account opening procedures and entering the account opening information into the computer files of the TPEx.
    In the case of a principal engaging a securities broker to conduct systematic (fixed-interval, fixed-amount) trading of TPEx listed securities by means of a trust, the provisions of paragraph 1, subparagraph 1, and of the paragraph here preceding, shall not apply.
Article 45-4     If the accounts that a customer opens are of any of the following natures, any business premise of the securities firm may accept such customer's application to open two or more trading accounts:
  1. Discretionary investment account.
  2. Trading account opened by an offshore foreign institutional investor.
  3. Trading account opened by a Mainland institutional investor pursuant to Point 6 of the Operation Directions for Applications by Overseas Chinese, Foreign Nationals, and Mainland Area Investors for Registration to Invest in Domestic Securities or Trade Domestic Futures.
  4. Trading account opened by a domestic professional institutional investor as defined in Article 19-7, paragraph 4 of the Regulations Governing Securities Firms.
  5. Segregated trust accounts opened based on the different types of contract for the respective trust accounts.
    When a securities firm processes an application from a customer to open two or more trading accounts, it shall add notes following the name of the customer specifying the reasons for opening the accounts, in order to clearly segregate the authorities and duties of each such account.
Article 45-5     When a securities firm accepts account opening, the customer shall submit the documents necessary for verifying its identity as provided in the Regulations Governing Anti-Money Laundering of Financial Institutions.
Article 46     A securities firm that accepts the account opening of an overseas Chinese or foreign national shall comply with applicable laws and regulations and open the account pursuant to the following provisions:
  1. If the principal is specifically approved by the Ministry of Economic Affairs Department of Investment Review or Bureau of Industrial Parks or any of the National Science and Technology Council Science Park Bureaus, it shall retain a photocopy of the approval to sell document, and the power of attorney for filing income tax returns required by the tax authority. The account may only accept sell orders and only for the type and amount of securities in its originally approved investment plan. If non-TPEx-listed shares held prior to the 19 November 1997 amendment of the Act Governing Investment by Foreign Nationals and the Act Governing Investment in Taiwan by Overseas Chinese by a principal not specifically approved by the Ministry of Economic Affairs Department of Investment Review or Bureau of Industrial Parks or a National Science and Technology Council Science Park Bureau are subsequently approved for TPEx listing, the principal may commence placing sell orders only after it reports to the TPEx by designated letter, submitting the relevant information regarding the original investment such as transaction statements, remittance statements, and tax payment certificates, and the TPEx responds by letter approving the account opening.
  2. Where the securities and the resulting rights for subscription of capitalization increase or stock divided are obtained due to gift, succession, pursuant to Article 167-1, paragraph 2; Article 167-2; Article 235-1; or Article 267 of the Company Act or Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act, or prior to relinquishing one's original nationality or prior to the implementation of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals and Procedures for Remittance on 28 December 1990, a copy of the passport or company registration certificate (or document of equivalent validity), the power of attorney for filing income tax returns required by the tax authority, and the following documents shall be submitted to a securities firm for account opening. Furthermore, the trading shall be limited to the sale of the aforesaid securities.
    1. Where the securities and the said entitlements are obtained through gift, transfer procedure shall be completed and the paper of tax-payment or tax-exemption for gift issued per Article 41 of the Estate and Gift Taxes Act shall be submitted.
    2. Where the securities and the said entitlements are obtained through succession, transfer procedure shall be completed and the paper of tax-payment or tax-exemption for legacy issued per Article 41 of the Estate and Gift Taxes Act shall be submitted.
    3. Where the securities and the said entitlements are obtained pursuant to Article 167-1, paragraph 2; Article 167-2; Article 235-1; or Article 267 of the Company Act or Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act, a certificate of employment valid at the time of subscription, issuance of bonus shares, or taking assignment of shares and documents evidencing the subscription, issuance of bonus shares, or assignment of shares shall be submitted.
    4. Where the securities are obtained prior to relinquishing one's original nationality or prior to the implementation of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals and Procedures for Remittance on 28 December 1990, document proving the source of the securities or other relevant documents shall be submitted.
  3. If a principal held the securities of a foreign enterprise before that company became a TPEx primary listed company in Taiwan, the principal shall submit documentary evidence of securities holding issued by the professional shareholder services agent in the ROC engaged by the issuer of those securities or documentary evidence of the employee having subscribed to or been allotted shares in accordance with the laws and regulations of the country of registration of the company, a power of attorney for filing income tax returns required by the tax authority, and documentary proof of the principal's identity or the principal's company registration certificate (or document of equivalent validity) to the securities firm to conduct account opening. That account may only accept sell orders and only within the amount of the holdings. If the holder of those securities, after opening the present account, subsequently opens an account with a TPEx securities firm for securities trading under Article 46-5, the present account for sell-only trades shall be canceled.
  4. An overseas Chinese or foreign national of the preceding 3 subparagraphs that obtains shares of another TWSE or TPEx listed company, emerging stock company, TWSE or TPEx primary listed company, or foreign emerging stock company by duly participating in a public tender offer through an offer to sell or by the issuer's participation in a merger or acquisition, or that obtains shares as the result of a new share distribution, subscription, or transfer based on the aforesaid shares may sell those shares through the account opened in accordance with the provisions of the 3 preceding subparagraphs.
    If the principal under the preceding paragraph is an offshore overseas Chinese or foreign natural person, they may mandate a Republic of China lawyer, CPA, custodian bank, or securities firm as his or her agent to open a New Taiwan Dollar account at a financial institution to be used solely for purposes of securities settlement, and shall submit the documents listed below:
  1. Documentary proof of identity of the principal: certificate of nationality or photocopy of a valid passport, which shall be legalized by an overseas representative office or authorized entity of the Republic of China.
  2. Photocopy of the contract for opening of the TPEx securities trading account, and submit for inspection the original of the central depository account passbook.
  3. Power of attorney for the agent, which must be legalized by an overseas representative office or authorized entity of the Republic of China.
  4. Record of ID Number in the Republic of China issued by the National Immigration Agency of the Ministry of the Interior.
  5. A lawyer or CPA mandated as agent must have obtained a license to practice as a lawyer or CPA in the Republic of China, and shall submit for inspection the original of his or her documentary proof of identity and lawyer or CPA license; a custodian bank or securities firm mandated as agent shall provide the original of its business license, the original of which shall be returned after it has been inspected and a photocopy made and retained on file.
    Foreign banks with branch offices in the Republic of China may use the name of the branch office to open the account in accordance with Article 45 of these Rules. Such account shall only accept sales orders, and purchase orders shall not be accepted.
Article 46-1     When any individual, juristic person, organization, or other institution of the Mainland Area opens an account with a securities broker because of acquiring TPEx listed securities due to inheritance or gift shall open an account in accordance the following requirements, the following documents shall be submitted:
  1. Certificate of payment of estate tax or gift tax issued by the tax authority, or other supporting documents, and the power of attorney for filing income tax returns required by the tax authority.
  2. Documentation of the natural person's identity and permission to enter Taiwan.
  3. Documentation of the registration of the juristic person, organization, or other institution, which means certification or documentation of its status as a justice person or an organization issued by the government of the place where it is registered.
    When any individual, juristic person, organization, or other institution of the Mainland Area, or any company invested in any third jurisdiction by any of the above, opens an account with a securities broker after having received specific approval by the Department of Investment Review, Ministry of Economic Affairs for investment in a TPEx listed company, the following documents shall be submitted:
  1. Photocopy of the approval to sell document, and the power of attorney for filing income tax returns required by the tax authority.
  2. Documentary proof of the natural person's identity and permission to enter Taiwan.
  3. Documentary proof of the status of the juristic person, organization, or other institution, or the company invested in a third jurisdiction by any of the above (which must be notarized, authenticated, legalized as required by the provisions of the Department of Investment Review, Ministry of Economic Affairs regarding the documents required to be submitted with applications for investment in Taiwan by persons of the Mainland Area).
    If the principal of the preceding two paragraphs mandates an agent to open the account, the following provisions shall be complied with:
  1. If the principal is a natural person, the agent shall bring in person the proof of identify of the agent and the principal, and the power of attorney (which must be notarized by a notary public office in the Mainland Area and legalized by the Straits Exchange Foundation), and the relevant documents under the preceding two paragraphs.
  2. If the principal is a juristic person, organization, or other institution, or a company invested in a third jurisdiction by any of the above, the agent shall bring in person the documentary proof of identify of the agent, and the power of attorney (which must be notarized, authenticated, legalized as required by the provisions of the Department of Investment Review, Ministry of Economic Affairs regarding the documents required to be submitted with applications for investment in Taiwan by persons of the Mainland Area), and the relevant documents under the preceding two paragraphs.
    The provisions of Article 46, paragraph 2 are applicable mutatis mutandis to a person from the Mainland Area applying to open a New Taiwan Dollar account pursuant to subparagraph 1 of the preceding paragraph, provided that the identification certificate and power of attorney must be notarized by a notary public office in the Mainland Area and legalized by the Straits Exchange Foundation.
    The account referred to in paragraphs 1 and 2 shall be used for sales orders and no purchase orders shall be allowed.
Article 46-2     (deleted)
Article 46-3     When a securities brokerage firm accepts the account opening by domestic agent of a depository of overseas depositary receipts, the account name shall reflect the rights and obligations of the TPEx traded securities, and the following documents shall be presented:
  1. Photocopy of approval letter by the competent authority for issue of overseas depositary receipt.
  2. Photocopy of power of attorney by the depository institution appointing its domestic agent.
  3. Photocopy of the national identity card, alien resident certificate, or company registration (or amendment registration) certification of the domestic agent or representative of the depositary institution. Provided, if such documentation for the same domestic agent or representative has already been submitted to and placed on file by the broker, it need not be resubmitted.
    The aforesaid account shall be used only for sale orders. However, if the plan for issuing overseas depositary receipt, deposit agreement and custodian agreement provide that the depository may buy back securities from the TPEx for re-issuance and if the depositary has submitted an application thereof together with photocopy of the aforesaid documents (including summary translation) to the TPEx for recordation, the securities brokerage firm may accept orders to purchase the underlying securities represented by depositary certificates.
    When holders of overseas depositary receipts acquires shares of a TPEx listed company as a result of a demerger and capital reduction conducted by a company that has sponsored the issuance of overseas depositary receipts, the depositary institution shall designate a domestic agent to submit the documents listed below to open a collective custody account on behalf of the holders of the overseas depositary receipts at a securities firm engaged in TPEx trading:
  1. Photocopy of the previous letter of approval to issue overseas depositary receipts issued by the competent authority.
  2. Photocopy of the meeting minutes of the demerged company's shareholders meeting that approved the demerger.
  3. Photocopy of the power of attorney executed by the depositary institution appointing the domestic agent.
  4. Photocopy of the national identity card, alien resident certificate, or company registration (or amendment registration) certification of the domestic agent or representative of the depositary institution. However, if such documentation for the same domestic agent or representative has already been submitted to and placed on file by the broker, it need not be resubmitted.
    The trading account referred to in the preceding paragraph may not be used for any securities trading except the brokered sale of the TPEx listed company's stock obtained as a result of a demerger and capital reduction.
    Domestic agents applying for account opening on behalf of overseas Chinese or foreign nationals that have invested in overseas depositary receipts and desired to redeem such depositary receipts into the underlying securities, shall carry out registration and account opening in accordance with Article 46-5; provided, if approval has been obtained and an account opened prior to redemption of the overseas depositary receipts, it need not be done anew.
Article 46-4     Where a foreign national or overseas Chinese investing in overseas convertible corporate bond and applying for converting such into the represented securities retains a domestic agent to open account, the TPEx approval letter and photocopy of documents referred to in paragraph 2 shall be presented to a securities brokerage firm. A securities brokerage firm shall handle the account opening in the account holder name as specified in the TPEx approval letter and, after completion of account opening, report in writing to the TPEx for record-keeping; the said account shall be used only for sale orders and not for purchase orders.
    Application form and the following documents shall be submitted to apply for the said approval provided in the preceding paragraph:
  1. Certification document(s) from issuer for a holder of the overseas convertible corporate bond to convert such and become a shareholder.
  2. The original copy of power of attorney in connection with authorization to its domestic agent, who meets qualification of the competent authority, for application for conversion, domestic custody of securities, account opening for trading, confirmation of trades, trade settlement, application for foreign exchange settlements, tax payments, and proxy for exercising shareholder rights, and photocopies of the company license of the said domestic agent and identification document of its representative.
Article 46-5     Overseas Chinese and foreign nationals applying to invest directly in domestic securities shall comply with the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals.
    To invest in domestic securities, onshore overseas Chinese and foreign nationals shall submit the relevant documents to a TPEx securities firm to carry out registration with the Taiwan Stock Exchange Corporation and obtain an identification number and submit the below-listed documents to the TPEx securities firm for purposes of opening an account for TPEx securities trading.
  1. Overseas Chinese: overseas Chinese identity certificate or ROC passport with an overseas compatriot identity endorsement, and also submit the Resident Certificate and other identity document sufficient to identify the person (e.g., National Health Insurance Card, passport, driver's license, or student ID).
  2. Foreign natural person: alien resident certificate or the identification card issued pursuant to the Directions for Issuing Identification Cards to the Staff of Diplomatic Missions in the Republic of China (Taiwan) and Their Family Members, and also submit other identity document sufficient to identify the person (e.g., National Health Insurance Card, passport, driver's license, or student ID).
  3. Foreign institutional investor: photocopy of documentation of company registration (or of documentation following amendment registration) filed with the competent authority of its home country, a photocopy of the notice of issuance of the uniform serial number for a tax withholding entity issued by the tax authorities (a profit-seeking enterprise may be exempt from submitting such photocopy of such notice), and the National Identity Card (or Alien Resident Certificate or passport) of the responsible person.
    Offshore overseas Chinese and foreign nationals shall carry out registration with the Taiwan Stock Exchange Corporation through their designated domestic agent/representative and obtain an identification number and submit to the TPEx securities firm for purposes of opening an account for TPEx securities trading a photocopy of the National Identity Card or Alien Resident Certificate, or a photocopy of the company registration (or post amendment registration) certification document, of the domestic agent or representative (provided, if such documents, for the same domestic agent/representative and having identical content, have already been submitted to and placed on file by the TPEx securities firm, they need not be resubmitted).
    If a TPEx listed or emerging stock company, pursuant to Article 28-2, paragraph 1, subparagraph 1, or Article 28-3 of the Securities and Exchange Act or Article 167-1, 167-2, 235-1, or 267 of the Company Act, awards securities to overseas foreign-national employees, its overseas parent or subsidiary, branch office, or representative office, when handling on behalf of overseas foreign-national employees any securities of which the employees receive assignment, to which they subscribe, or which are distributed to them, shall perform registration of a Segregated Collective Investment Account for Overseas Foreign-National Employees in compliance with the applicable registration procedures prescribed by the Taiwan Stock Exchange Corporation; in addition, it shall authorize its agent in Taiwan to open an account with the TPEx securities firm, and shall annex the original undertaking stating that the overseas parent or subsidiary, branch office, or representative office has actually been authorized by the overseas foreign-national employees, as well as the account opening documents specified in paragraph 3 of this article. Securities trading through that segregated account will be restricted to the sale of the following stocks; no other securities trading may be engaged in.
  1. Stocks that those employees have obtained through the exercise of securities subscription rights, as permitted under the above-cited laws and regulations, or through assignment or distribution.
  2. Stocks of another TWSE or TPEx listed company, emerging stock company, TWSE or TPEx primary listed company, or foreign emerging stock company that those employees have obtained by duly participating in a public tender offer through an offer to sell or by the issuer's participation in a merger or acquisition, or as the result of a new share distribution, subscription, or transfer based on the aforesaid stocks.
    A TPEx primary listed company or foreign emerging stock company that issues securities to its foreign national employee or employees pursuant to the laws and regulations of the country where it is registered may, for purposes of disposing those securities on behalf of its employees, carry out registration of a Segregated Collective Investment Account for Foreign National Employees pursuant to the TWSE regulations applicable to registration procedures. Additionally, when it engages its domestic agent to open an account with a TPEx securities firm, it shall, in addition to the account opening documents specified in paragraph 3, affix an original copy of the undertaking by the TPEx primary listed company or emerging stock company stating that it has actually obtained the authorization of the foreign national employees, to apply to the TPEx securities firm for account opening. Such account may not be used for any securities trading other than the sale of stocks obtained by the employees through the exercise of securities warrants or through transfer or distribution, or of stocks of another TWSE or TPEx listed company, emerging stock company, TWSE or TPEx primary listed company, or foreign emerging stock company that those employees have obtained by duly participating in a public tender offer through an offer to sell or by the issuer's participation in a merger or acquisition, or as the result of a new share distribution, subscription, or transfer based on the aforesaid stocks.
    If the agent in this article is a custodian institution approved by the Financial Supervisory Commission, and the custodian institution and the TPEx securities firms handling account opening all have network authentication mechanisms, the documents for account opening may be transmitted electronically to open the account.
    If, after the registration by the overseas Chinese or foreign national is complete, any of the situations under Article 11 of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals exists, and the registration is canceled by the TWSE, the securities broker may not accept any further buy orders therefrom, provided that this restriction shall not apply to a purchase made to return securities borrowed in a securities borrowing and lending transaction. After the balance of the account has been liquidated, the securities broker shall cancel the account.
Article 46-6     Each headquarters and branch of a securities firm may open two omnibus trading accounts in its own name, for purposes of accepting securities trading orders from domestic and foreign principals (including overseas Chinese and foreign nationals) respectively, provided that omnibus trading accounts may not be used by principals from the Mainland Area.
    A principal may use an omnibus trading account only after opening a securities trading account; the omnibus trading account may be used to participate in trading through the TPEx's automated trade matching system, after-hours fixed-price trading, odd-lot trading, block trades that are cleared and settled on the second business day following the trade date, and trading through the Emerging Stock Computerized Price Negotiation and Click System. With the exception of emerging stocks, the principal may also, after carrying out a securities borrowing trade through a securities firm under the Securities Lending and Borrowing Rules of the Taiwan Stock Exchange Corporation, trade the borrowed securities through the omnibus trading account. A principal that is allowed by regulations to engage in margin trading may engage in margin trading through the omnibus trading account.
    If a principal has authorized a trader to conduct trades and handle allocation of trade prices and volumes, it shall provide a power of attorney and specify the allocation of trade price and volume and relevant authorized matters. However, where a same authorized trader is engaged by offshore overseas Chinese or foreign nationals, domestic funds, or units of a same group, the authorized trader may refrain from providing a power of attorney and shall provide a statement specifying the principals' ID numbers or uniform invoice numbers, names, and other relevant information. The TPEx may, in accordance with operational needs, require securities firms to provide certifying documents relating to the aforesaid authorizations.
Article 46-7     When a securities firm accepts orders to trade securities through an omnibus trading account, it shall make trading quotes corresponding to the orders placed by the principals or the authorized traders respectively, and shall note the name or symbol of the principal or the authorized trader on the order ticket or the trading order record.
    The securities firm shall transmit the itemized allocations of trade prices and volumes as instructed by the authorized traders to the TPEx by 6 p.m. on the trade date, and the itemized orders of the principals and authorized traders to the TPEx by 6 p.m. on the first business day following the trade date. However, this restriction shall not apply to emerging stocks, nor shall it apply in circumstances where the TPEx has expressly provided otherwise.
    Operational directions related to omnibus trading accounts will be separately prescribed by the TPEx.
Article 46-8     A Mainland Area investor shall designate a domestic agent or representative to carry out registration with the Taiwan Stock Exchange Corporation to obtain an ID number, and shall submit a photocopy of the domestic agent's or representative's ID card or ARC or a photocopy of documents evidencing its corporate registration (or amendment registration) (if the content of the abovementioned documents submitted by the same domestic agent or representative is the same, and such documents have been retained on file by the securities firm engaging in TPEx trading, the submission may be exempted) to open an account for TPEx securities trading at a securities firm that engages in TPEx trading.
    When the domestic agent for a Mainland Area qualified institutional investor opens an account at a securities broker, the domestic agent shall, in addition to the documents as mentioned in the preceding paragraph, submit documentary proof of the identity of the Mainland Area qualified institutional investor, documentation of the overseas investment limit approved by the competent authority for foreign exchange business in the Mainland Area, and a photocopy of the letter of approval issued by the TWSE for the inward remittance amount of the Mainland Area qualified institutional investor, to open the account for securities trading.
    The meaning of "Mainland Area qualified institutional investor" shall be defined in accordance with Article 3 of the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors.
    Article 46-5, paragraph 6 hereof shall apply mutatis mutandis to Mainland Area investors opening an account.
    If, after the registration is completed, any of the circumstances under Article 8 of the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors occurs to a Mainland Area investor and the registration is thus canceled by the Taiwan Stock Exchange Corporation, the securities broker may not accept any further buy orders, and shall cancel the account after the balance in the account has been liquidated.
Article 46-9     The domestic agent or representative of a Mainland Area nationality shareholder of a TPEx primary listed company shall, when opening an account at a TPEx securities firm, submit, in addition to the documents for account opening as mentioned in paragraph 1 of the preceding Article, the documentary proof issued by the shareholder services agent of such foreign issuer that such Mainland Area nationality shareholders have held the stock (or certificates representing the stock) prior to the TPEx listing of the foreign issuer's stock in Taiwan, or the documentary proof that Mainland Area nationality employees have obtained the stock through distribution, subscription, or transfer in accordance with the laws and regulations of the country of registration.
    The domestic agent or representative of a Mainland Area nationality shareholder of a TPEx primary listed company, or of a TPEx primary listed company's shareholder that is a company in a third jurisdiction invested by a Mainland Area individual, juristic person, organization, or other institution, when opening an account at a securities broker, shall submit, in addition to the documents for account opening as mentioned in paragraph 1 of the preceding Article, the documentary proof that the stock issued by that foreign issuer is obtained by the shareholder because of direct-investment participation in a private placement, cash capital increase, merger, acquisition, or share exchange.
    Accounts referred to in the preceding two paragraphs are permitted to handle only the sale of stock issued by such a foreign issuer and the stocks of another TWSE or TPEx listed company or TWSE or TPEx primary listed company that have been obtained by duly participating in a public tender offer through an offer to sell or by the issuer's participation in a merger or acquisition, or as the result of a new share distribution, subscription, or transfer based on the aforesaid stocks, and may not be used for other securities trading.
    If a TPEx listed company issues securities to Mainland Area nationality employees pursuant to Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act, or Article 235-1 or 267 of the Company Act, its overseas subsidiary or branch office, when handling the assignment, subscription, or distribution of securities for Mainland Area nationality employees, shall carry out registration of a Mainland Area nationality employee collective investment account pursuant to relevant TWSE operation directions regarding registration; when engaging the domestic agent to open an account at a TPEx securities firm, in addition to the documents for account opening specified in paragraph 1, it also shall submit the original copy of the undertaking by the overseas subsidiary or branch office stating that it has duly obtained the authorization from the Mainland Area nationality employees to open the account at the TPEx securities firm. Such account shall only be used for the sale of stock that such employees have obtained through the exercise of securities subscription rights under the above-mentioned laws, or through assignment or distribution, or the stocks of another TWSE or TPEx listed company or TWSE or TPEx primary listed company that those employees have obtained by duly participating in a public tender offer through an offer to sell or by the issuer's participation in a merger or acquisition, or as the result of a new share distribution, subscription, or transfer based on the aforesaid stocks, and may not be used for any other securities trading.
    A TPEx primary listed company that issues securities to its employee or employees who are Mainland Area nationals pursuant to the laws and regulations of the country where it is registered shall, where for purposes of disposing those securities on behalf of its employees, carry out registration of a Segregated Collective Investment Account for Mainland Area Nationality Employees pursuant to the TWSE regulations applicable to registration procedures. Additionally, when it engages its domestic agent to open an account with a TPEx securities firm, it shall, in addition to the account opening documents specified in paragraph 1, affix an original copy of the undertaking by the TPEx primary listed company stating that it has actually obtained the authorization of the Mainland area nationality employees, to apply to the TPEx securities firm for account opening. Such account may not be used for any securities trading other than the sale of stocks obtained by the employees through the exercise of securities warrants or through transfer or distribution or the stocks of another TWSE or TPEx listed company or TWSE or TPEx primary listed company that those employees have obtained by duly participating in a public tender offer through an offer to sell or by the issuer's participation in a merger or acquisition, or as the result of a new share distribution, subscription, or transfer based on the aforesaid stocks.
    Paragraphs 4 and 5 of the preceding article shall apply mutatis mutandis to the opening, registration, and cancellation of accounts by Mainland Area nationality shareholders and of Segregated Collective Investment Accounts for Mainland Area Nationality Employees.
Article 46-10     When a securities firm accepts account opening, if the customer is an overseas Chinese, foreign national, or Mainland Area investor, the customer shall submit the documents necessary for verifying its identity as provided in the Regulations Governing Anti-Money Laundering of Financial Institutions.
Article 47     Upon discovering that the customer meets any of the following circumstances, a securities firm shall refuse to open the account and for those that have opened an account, the firm shall refuse to accept trading orders:
  1. Where the customer is a minor and not represented by his/her statutory representative, provided that this restriction does not apply if the minor is married.
  2. Where the customer is a staff member or employee of the competent authority's Securities and Futures Bureau and fails to submit a letter of consent from the authority.
  3. Where the customer is an employee of the TPEx and fails to submit a letter of consent from the TPEx.
  4. Where the customer has been adjudicated bankrupt and his/her rights have not be reinstated.
  5. Where the customer has been declared by a court to be placed under guardianship where such declaration has not yet been voided, provided that this restriction shall not apply when a guardian disposes of securities for purposes of the interest of the ward.
  6. Where the customer has been declared by a court to be placed under assistance, and has not obtained the consent of the assistant or permission from a court.
  7. Where the account is being opened by a juristic person and a certificate of authorization for account opening is not provided.
  8. Where the securities firm is not permitted by the competent authority or approved by the TPEx.
  9. A director, supervisor, or employee of a securities firm has been engaged as the agent to open an account with the securities firm.
  10. Where a principal of discretionary investment has been declared by a court to be placed under assistance and such declaration has not been voided.
  11. A principal that applies to convert an account it originally opened as a discretionary futures trading account to a futures trading account for its own use.
    In the event that a customer has any of the following conditions, the securities firm shall refuse the account opening, and if an account has been opened, the securities firm shall refuse the securities trade, trading order, or subscription:
  1. Where the customer has breached a contract by failing to perform clearing and settlement obligations on schedule, and the case has not been closed and 5 years have not elapsed since the TPEx or Taiwan Stock Exchange sent notification by circular letter to all the securities firms. However, this provision does not apply to brokerage trades that are made for purposes of offsetting margin purchases or short sales that were already executed for the same customer on the same day, and are of the same type and same quantity of securities, nor does it apply to opposite offsetting trades made on the same day in brokerage day trading under the Operational Rules Governing Day Trades of Securities.
  2. Where the customer has violated the Securities and Exchange Act, or is involved in forging (altering) TWSE listed or TPEx listed stocks and 5 years have not elapsed since a final criminal judgment was rendered by the judicial agency or since a notice of suspension of securities trading was given by the competent authority.
  3. Where the customer has breached a futures trading contract and the case has not been closed and 5 years have not elapsed, or where the customer has been convicted of violating any law or regulation governing futures trading as confirmed by a final criminal judgment of a judicial agency and less than 5 years has elapsed since such judgment.
    If the case has been closed since the TPEx sent a circular letter to all the securities firms in connection with the breach of contract of a customer, the securities firm shall report to the TPEx in writing, and the TPEx shall relay such information to all the securities firms.
    Internal personnel of a securities firm opening accounts for the trading of securities shall process such matters in accordance with Article 28-1 of these Rules and supplementary rules thereto.
    If a customer has breached the account opening contract by failing to perform clearing and settlement obligations on schedule and the customer commits another breach within a period of 1 year thereafter, then for 10 consecutive business days beginning from the day the securities firm accepts the customer's first trade during the 3-month period beginning from the date of public announcement of closure of the case, the securities firm shall collect from the customer in advance and in full the securities or funds for all orders placed by the customer.
Article 48     After a customer has completed the account opening procedures, the securities firm shall immediately use computer linkage operation to key-in the following information of the customer regarding account opening into the computer of the TPEx:
  1. Account number.
  2. Name.
  3. Date of birth or establishment.
  4. Identification card number or uniform number of profit-seeking-enterprise or withholding unit.
  5. Name of statutory representative.
  6. An annotation that an account for book-entry transfer of securities under centralized custody has been opened.
  7. Other necessary information.
    When a customer's information of account opening changes, a securities firm shall immediately use the computer linkage operation to enter such change after receipt of the customer's notice of change.
Article 49     (deleted)
Section IV Reference Yield, Reference Price, Fluctuation and Fluctuation Range
Article 50     The minimum trading unit of government bonds, financial bonds, or corporate bonds is the denomination of NT$10,000. The trading quote shall be made based on the yield, units of 100 dollars, or the RP/RS rates. The fluctuation shall be 0.01 percent or 0.0001 dollar.
    The term "yield" referred to in these Rules means the value of principal and interests on the bond on each payment date up to the maturity date (excluding the trading date) and that the interest-on-interest method is used to arrive at the corresponding value of the bond on the trade date.
    The formula for converting the yields of TPEx traded bonds and their prices shall be separately prescribed by the TPEx.
Article 51     All outright trading of bonds shall be ex-interest. The interest accrued by the seller as of the clearing and settlement day shall be paid to the seller by the buyer together with the transaction price.
    The interest referred to in the preceding paragraph shall be calculated, based on the bond coupon rate, from (and inclusive of) the date on which interest accrues to (and exclusive of) the date of clearing and settlement based on the actual number of days.
    In the event that the clearing and settlement of a bond trade is delayed due to natural disaster or other events of force majeure, interest for the period of delay shall be calculated.
Article 52     The dollar amount at maturity of a repo-style bond transaction shall be calculated as the initial dollar amount plus the repo interest.
    The interest referred to in the preceding paragraph, except that for foreign government bonds to be separately announced by the TPEx, shall be calculated, at repo interest rate, commencing on the date of the operation to (and exclusive of) the date of maturity, and based on the actual number of days, with 1 year being equal to 365 days.
Article 53     (deleted)
Article 54     (deleted)
Article 55     The unit for quoting stock price is 1 share. The minimum trading unit is 1,000 shares. Trading quotes shall be based on a trading unit or integral multiples thereof.
    The minimum price unit for trading quotes referred to in the preceding paragraph shall be 1 cent for the market value of each share less than NT$10; 5 cents for NT$10 to less than NT$50; 10 cents for NT$50 to less than NT$100; 50 cents for NT$100 to less than NT$500; NT$1 dollar for NT$500 to less than NT$1,000; NT$5 for NT$1,000 and above.
    Unless otherwise approved by the competent authority or otherwise provided by the TPEx, the range of daily fluctuation of the trading price of a stock shall be limited to 10 percent above or below the reference price of that day; provided that the fluctuation range of less than the minimum tick shall be calculated as the minimum tick, and the price may not fall lower than the minimum tick.
    For newly TPEx listed stocks, with the exception of a stock that is already listed for trading on the TWSE pursuant to the Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings at the time of the application for listing of the stock on the TPEx (hereinafter, a "TWSE to TPEx listing transfer"), and of managed stocks, the restrictions set out in the preceding paragraph concerning the daily price limit shall not apply for the 5 consecutive business days beginning from the date of commencement of TPEx trading.
Article 56     The calculation of the reference price and the price limit of a stock on the commencement date of TPEx trading, unless otherwise provided, shall be based on the public sale price before the TPEx listing date. However, this does not apply in the following circumstances:
  1. In the case of a TWSE to TPEx listing transfer, the calculation shall be based on the stock's closing price on the last trading day before its delisting from the Taiwan Stock Exchange Corporation.
  2. In the case of a TPEx traded managed stock, the calculation shall be based on the stock's closing price on the last trading day before its delisting from the TPEx or delisting from the Taiwan Stock Exchange Corporation.
    With respect to the calculation basis of the reference price and the price limit on the commencement date of TPEx trading under the proviso of the preceding paragraph, in the event there was no closing price for a TWSE or TPEx listed stock on the last trading day, the following provisions shall apply:
  1. In the case of a TWSE to TPEx listing transfer, the calculation shall be based on the price determined by the principles set out in Article 58-3, paragraph 4, subparagraph 2 of the Operating Rules of the Taiwan Stock Exchange Corporation.
  2. In the case of a TPEx traded managed stock, the calculation shall be based on the price determined by the principles set out in Article 57, paragraph 1 herein or in Article 58-3, paragraph 4, subparagraph 2 of the Operating Rules of the Taiwan Stock Exchange Corporation.
Article 56-1     Where a company limited by shares or a foreign company converts its shares to another newly incorporated company or an existing TPEx listed or TPEx primary listed pursuant to Chapter II-1, Sections III and V herein, the calculation of the reference price and the price limit on the commencement date of TPEx trading of the common stock of such newly incorporated company shall be based on the price arrived at by multiplying (the closing price on the last trading day of the common shares of the TPEx (or TWSE) listed company or TPEx (or TWSE) primary listed company whose converted common shares are anticipated to account for the greatest proportion of the anticipated issued common shares of the newly incorporated company) by (the number of shares required for replacement with one new share). For securities of the newly incorporated company or existing TPEx listed or TPEx primary listed company other than common shares, the calculation shall be based on the price arrived at by multiplying (the closing price on the last trading day of the TPEx (or TWSE) listed security that is anticipated to account for the highest proportion among the various securities converted into such new security) by (the number of trading units required for replacement with one trading unit of the new security).
    In the calculation of the price referred to in the preceding paragraph, in the event there was no closing price for a TPEx listed security on the last trading day, the calculation shall be based on the price determined by the principles set out in Article 57, paragraph 1. In the event there was no closing price for a TWSE listed security on the last trading day, the calculation shall be based on the price determined by the principles set out in Article 58-3, paragraph 4, subparagraph 2 of the Operating Rules of the Taiwan Stock Exchange Corporation.
Article 56-2     When trading of TPEx listed securities is resumed after a halt or suspension of trading, the calculation of the reference price and the price limit of the securities on the first day of resumed trading shall, unless otherwise provided, be based on the closing price of the last trading day prior to the halt or suspension of trading. In the event there was no closing price on the last trading day, the calculation shall be based on the price determined by the principles set out in Article 57, paragraph 1.
Article 57     The reference prices of stocks, unless otherwise provided, shall be determined in the following order:
  1. The closing price through the automated trading system on the preceding business day.
  2. If for the preceding business day there is no record of a trade through the automated trading system, but there is a record of a buy quote(s) or sell quote(s) at the close of trading hours, if the highest quoted buy price is higher than the basis price of the opening of trading that day, then that highest quoted buy price will be taken as the reference price for the current day; if the lowest quoted sell price is lower than the basis price of the opening of trading that day, then that lowest quoted sell price will be taken as the reference price for the current day.
  3. The basis price of the opening of trading through the automated trade matching system the preceding business day.
    The TPEx shall calculate and publicly announce the reference prices on a daily basis.
Article 58     Before the commencement of operation on each day, a securities firm shall display at its business premises the high, low, and last trade price and trading volume of each security on the preceding business day.
Article 59     If a stock trade on the TPEx is cleared and settled after the date of suspension of changes to entries in the shareholders' register of the issuing company in accordance with paragraph 2 of Article 165 of the Company Act, the trade shall be an ex-dividend or ex-rights trade.
    The calculation method for the reference price on the commencement date of ex-dividend or ex-rights trading shall be separately prescribed by the TPEx.
    The handling of ex dividend and ex right matters of the stocks involved in margin purchases and short sales shall be done in accordance with the Operating Rules for Securities Firms Handling Margin Purchases and Short Sales or the operating rules adopted by securities finance enterprises for handling margin purchases and short sales.
Article 60     For a TPEx listed company duly carrying out procedures for issuance of new replacement shares due to capital reduction, the reference price of the stock on the commencement date of the TPEx trading after the capital reduction shall be calculated based on the closing price on the last trading day before the issuance of the new replacement shares divided by the ratio of the number of issued shares after capital reduction to the original number of issued shares. Provided, where, because of a demerger, a consolidated filing is submitted for the demerger and capital reduction and issuance of new replacement securities, the calculation of the reference price of the stock on the commencement date of the TPEx trading after the capital reduction shall be based upon the closing price on the last trading day before the issuance of the new replacement shares.
    If under circumstances in the preceding paragraph share money is refunded to shareholders in the form of cash, the reference price of the stock on the commencement date of the TPEx trading after the capital reduction shall be calculated based on the closing price on the last trading day before the issuance of the new replacement shares minus the amount of the cash refund per share divided by the ratio of the number of issued shares after capital reduction to the original number of issued shares.
    In the calculation of the price referred to in the preceding two paragraphs, in the event there was no closing price for a TPEx listed stock on the last trading day, the calculation shall be based on the price determined by the principles set out in Article 57, paragraph 1.
Article 60-1     A stock's basis price at the opening of trading is the reference price of that stock as determined by the principles set out in Article 57, paragraph 1, provide that under the following circumstances the basis price will be determined by the following principles:
  1. On the commencement date of TPEx trading, the basis price for the opening of trading is the price for that stock as calculated according to Article 56 or 56-1, and in compliance with Article 55, paragraph 2.
  2. On the first day of resumption of suspended trading, the basis price for the opening of trading is the price for that stock as calculated according to Article 56-2, 60, or 60-2 and in compliance with Article 55, paragraph 2.
  3. On the commencement date of ex-dividend or ex-rights trading, the basis price for the opening of trading is the price for that stock as calculated according to Article 59, and in compliance with Article 55, paragraph 2. However, in the event of a TPEx listed company conducting a cash capital increase, it is the price calculated by that stock's ex-rights reference price on the current day plus the cash capital increase rights value, and in compliance with Article 55, paragraph 2.
Article 60-2     For a TPEx listed company carrying out procedures for issuance of new replacement shares due to a change of par value, the reference price of the stock on the commencement date of TPEx trading after the change of par value shall be calculated based on the closing price on the last trading day before the issuance of the new shares divided by the ratio of the number of issued shares after the change of par value to the original number of issued shares.
    In the calculation of the price under the preceding paragraph, in the event there was no closing price for a TPEx listed security on the last trading day, the calculation shall be based on the price determined by the principles set out in Article 57, paragraph 1.
Article 61     A stock trade of less than one trading unit shall be an odd-lot trade. The trading method for odd-lot trades shall be separately prescribed by the TPEx.
Chapter V Brokerage Trading by Securities Firms
Article 62     A securities broker may accept brokerage trading orders in the following manners:
  1. Orders placed face-to-face.
  2. Orders placed by telephone, letter, telegram, or another method agreed to by the TPEx.
  3. Orders placed by electronic trading methods such as voice mail, the Internet, dedicated line, or closed private network.
    A securities broker may not use computer-set groups in handling securities brokerage trading, and shall comply with the following provisions in brokerage trading:
  1. In the case of face-to-face orders, the customer, agent, or the authorized representative shall fill in and sign/seal the order ticket.
  2. In the case of orders placed by telephone, letter, telegraph, or another method agreed to by the TPEx, the associated person of the securities firm who takes the trading order shall prepare the order ticket in writing or electronically and print a record of the order, and comply with paragraphs 2 and 3 of Article 45-1 and paragraph 3 of this Article; except in the case of orders placed by telephone, the letter, telegram, or applicable documents shall be attached with the order ticket. Where the securities broker completes the order electronically, if hierarchical delegation of responsibility for brokerage trading can be implemented and the brokerage trading personnel by whom an order was processed can be confirmed, it is not necessary to print the orders one by one; however, records of the trading orders shall be printed in chronological order, and upon closing of the market, the processing person shall sign the records.
  3. In the case of orders placed by electronic trading methods such as voice mail, the Internet, dedicated line, or closed private network, the securities broker need not prepare and complete the order ticket; provided that it shall print records of the orders in the sequence that they were received, and upon the closing of the market, the processing person and the department chief shall sign the records. The order records shall contain the name or account number of the principal, the time the order was placed, the type of securities, the number of shares or par value, the price (limit or market), the time in force (rest-of-day, immediate-or-cancel, fill-or-kill), the name or number of the associated person, and the order method. Records of orders placed through the Internet shall contain the IP (Internet Protocol) address and electronic signature. Where an order is placed through voice-mail, the caller's telephone number shall be recorded in conjunction with the caller-end number display function offered by a telecommunications institute.
    If the principal placing an order referred to in the preceding paragraph performs clearing and settlement through book-entry transfer and signs a letter of consent, and the order is not placed face-to-face, the signature/seal on the order ticket may be exempted; provided that the securities firm shall promptly notify the principal of trade-related information after the trade and keep a confirmation record.
    Order tickets referred to in paragraph 2 above shall be serially numbered in accordance with the sequence in which the orders are placed. The form and particulars to be stated shall be in accordance with relevant rules of the competent authority. The order tickets of executed trades shall be kept with other business vouchers. The order tickets of unexecuted trades shall be affixed with a stamp indicating the unexecuted trade and destroyed after a week if no dispute is raised. The records of trading orders printed for trades made via electronic trading methods such as voice mail, the Internet, dedicated line, or closed private network, or printed for orders completed by a securities broker electronically, and order records in the form of computer files, shall be safekept for at least 5 years if there are not disputes, and in case of disputes, such records shall be safekept until the dispute has been resolved. Where orders are completed electronically and are not printed out one by one, they shall be stored using an electronic medium that cannot be altered or deleted.
    The securities broker shall record orders placed by telephone, and safekeep the telephone recordings at its place of business.
    The telephone recordings referred to in the preceding paragraph shall be preserved for a period of at least 1 year by the securities broker. In case of disputes, such recordings shall be safekept until the dispute has been resolved. In case the recording equipment malfunctions and there is negligence in operational procedures, within 2 days counting inclusively from the occurrence of the event, the securities broker shall report to the TPEx the cause, factual circumstances, and status of correction.
    Telephone recordings referred to in the preceding paragraph shall be regarded as a type of trading voucher. In case the securities firm avoids or refuses inspection, processing shall be made in accordance with paragraph 3 of Article 24 and the provision of the TPEx Handling Procedures for Inspection of Securities Firms and the Tracing and Review of Delinquencies and the Offering of Assistance Thereto.
    When a securities broker accepts trading orders made by non-electronic methods such as by telephone, in writing, or by telegraph, and uses an electronic method to fill out the order ticket, or accepts trading orders made by electronic trading methods such as voice mail, the Internet, dedicated line, or closed private network, it need not print out trading order records if its trading order record storage operations comply with the following provisions:
  1. Records are kept using a non-revisable, non-erasable electronic storage medium, and are completed on the same day the trade is executed.
  2. Comprehensive indexing and management procedures are instituted.
  3. Dedicated personnel are placed in charge of administering the records, and the electronic data files can be converted to printed format at any time.
    When a securities broker accepts trading orders from a principal for trades within 30 minutes prior to the commencement of trading of the current session or within a certain period of time prior to the close of trading, if after the quotes have been placed with the TPEx any large cancellation or change to the quotes occurs, the TPEx may notify the securities broker to require it, upon accepting any order from the principal, to collect in advance the funds or securities, the margin for margin purchase, or the margin for short sale.
Article 62-1     Securities brokers conducting securities trading margin purchases or short sales business or engaging such business on behalf of others shall do so in compliance with the Regulations Governing the Conduct of Securities Trading Margin Purchase and Short Sale Operations by Securities Firms, the Regulations Governing Securities Finance Enterprises, and the Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities, adopted by the competent authority, or the operating rules adopted by securities finance enterprises for handling margin purchases and short sales.
    If, after execution of a trading quote through a securities firm conducting, or engaging on behalf of another, in business under the preceding paragraph, there is any change in the trading order category, such change shall be handled in accordance with the TPEx Directions for Securities Firms Handling Changes to Trading Category.
Article 62-2     Trading orders for securities and order confirmations and execution reports between a securities broker and its principals shall be handled in accordance with the following provisions:
  1. For trades conducted through a non-electronic trading method, the execution report may be provided by electronic mail, telephone, facsimile, text message, voice message, or the Internet.
  2. For trades conducted through an electronic trading method other than voice message, the transmission of trading orders, order confirmations, and execution reports shall bear electronic signatures certified by a certification authority for identification and verification; however, this restriction shall not apply in the following circumstances:
    1. When order confirmations and execution reports are carried out through telephone, facsimile, text message, voice menu system, or the Internet.
    2. When the conditions are met for exemption as set out in the TPEx Operation Directions for Direct Market Access by Securities Brokers.
Article 62-3     A securities firm handling, or acting as an agent for, securities lending and borrowing business shall do so in compliance with the Regulations Governing Securities Borrowing and Lending by Securities Firms, Regulations Governing Securities Finance Enterprises, Operating Rules for Securities Lending by Securities Firms, Rules Governing the Lending of Book-Entry Central Government Bonds by Securities Firms, or Operating Rules for Securities Finance Enterprises Offering Refinancing to Securities Firms.
Article 63     A securities broker may accept authorization by a juristic person or a specified natural person for the securities broker to decide on that customer's behalf the price and time of placement of an order within a price interval of which the upward and downward limits are specified by that customer; when placing quotes for trades, the securities broker shall consider the market conditions and the supply-demand relationship, and take care not to damage the formation of fair prices in the market and the sound development of the market, and the securities broker shall retain the records of discretionary orders by customers in accordance with regulations.
    "Specified natural person" in the preceding paragraph means a natural person who simultaneously meets all of the following conditions:
  1. Provides proof of financial capacity of NT$50 million or more.
  2. Possesses adequate professional knowledge or trading experience with respect to financial products.
  3. Issues a signed statement specifying that a registered qualified associated person of the securities firm has explained in detail to him/her the rights, obligations, and risks requiring attention in connection with discretionary orders, and confirming that he/she has been fully advised of and understood the same and agrees to sign as a specified natural person.
    "Possesses adequate professional knowledge or trading experience with respect to financial products" in subparagraph 2 of the preceding paragraph means that the person meets one of the following conditions:
  1. The person has in the past held a position at a securities, futures, financial, or insurance institution, or has other academic qualifications or work experience sufficient to prove possession of professional knowledge of securities.
  2. The person simultaneously meets all of the following conditions:
    1. At least six months have elapsed since the person opened the account.
    2. The person provides proof of the number of his/her trades on the securities market for the most recent year having reached 20; the same shall apply in the case where 1 year has not elapsed since the person opened the account.
    3. The person has never had any record of default in securities trading.
    When conducting brokerage trading, a securities broker shall make its best efforts for the interest of the customer.
    A securities broker may accept orders with a predetermined time in force. When a securities broker accepts trading orders to be conducted electronically through the Internet, agreement shall be made on the time in force of the order; for orders through the Internet, the time in force shall be shown on the web page space designated for in-put of time in force.
    After a securities broker accepts a trading order, it shall not cancel or change any particulars of the order unless a notice is received from the customer; provided that this shall be limited to order particulars which have not yet been executed.
Article 63-1     When accepting a brokerage sell order, a securities broker shall confirm that the quantity of the order does not exceed the principal's custodial book-entry account balance, provided that this restriction shall not apply in any of the circumstances listed below:
  1. A custodian institution has been engaged to handle clearing and settlement on behalf of the securities broker.
  2. Brokerage orders to sell securities short.
  3. Brokerage orders to sell securities to settle a margin purchase.
  4. Brokerage orders to sell securities that had been deposited as collateral for a margin trade that has already been liquidated.
  5. Brokerage orders to sell collateral that had been provided for borrowing of funds or for settlement financing.
  6. Brokerage orders to sell collateral that is eligible to be withdrawn in securities borrowing and lending.
  7. Brokerage orders to sell securities in special accounts set up for the handling of events of default.
  8. Brokerage orders to sell securities that were lent on the previous business day pursuant to the TPEx Securities Borrowing and Lending Rules to meet settlement needs of a securities firm or securities finance enterprise.
  9. Brokerage orders to sell securities that were lent pursuant to Chapter II of the TWSE Securities Borrowing and Lending Rules and for which the borrower has been notified to return the securities by the settlement date for the sale.
  10. Brokerage orders to sell securities the borrowing of which has been confirmed but that have not yet been remitted in.
  11. Brokerage orders to sell securities under pledge that are being disposed by the pledgee.
  12. Brokerage orders to sell securities for which applications for exercise of call warrants were made on the previous business day, and for which the issuer has confirmed that the exercise will be implemented by means of delivery of the securities.
  13. Brokerage orders to sell passive ETF beneficial certificates, active ETF beneficial certificates, or baskets of component securities of beneficial certificates, pursuant to Article 13 of the TPEx Rules Governing Trading of Passive Exchange-Traded Fund and Active Exchange-Traded Fund Beneficial Certificates.
  14. Brokerage orders to sell securities bought on the previous business day.
  15. Brokerage orders to sell securities pursuant to the Operational Rules Governing Day Trades of Securities.
  16. Brokerage orders to sell securities that are loaned and returned prior to the settlement date of their sale pursuant to the Operational Rules Governing Day Trades of Securities.
  17. Other exempted circumstances as announced by the TPEx.
Article 64     A securities broker engaging in TPEx trading shall charge a transaction fee for each transaction executed.
    The rate of the transaction fee referred to in the preceding paragraph shall be decided by the TPEx and reported to the competent authority for approval.
    The securities broker may at its sole discretion fix a rate schedule, based on customer transaction amount, for securities transaction fees to be charged, as well as any discounts and single-order minimum fees, and shall report such schedule, discounts, and fees, and any amendments thereto, through the One-Stop Window for Securities Firm Filings to the TPEx for recordation before their adoption. When the transaction fees are collected, the securities broker may make settle accounts at regular intervals (e.g. monthly, weekly, etc.). Any amount refundable or deductible shall be transferred to the settlement account of the original customer, and shall be stated in the monthly reconciliation statement for that customer. If the fee rate fixed by the securities broker exceeds 0.1425 percent of the amount of transaction, the securities broker shall notify its customers of this fact by an appropriate method before adopting the rate, and retain a record of that notification, provided that offshore overseas Chinese and foreign nationals may be notified before clearing and settlement.
    When engaging in TPEx trading, a securities broker shall not pay, in whole or in part, any transaction fee receivable by it to any introducing person related to the trading as their remuneration; provided, this restriction shall not apply under any of the following circumstances:
  1. where it is paid under a contract to a foreign financial institution that is registered and permitted by the competent authority of the local country to operate securities business;
  2. where, under a contract entered into for cross-selling, it is paid to a subsidiary of a financial holding company.
    The term "local country" in subparagraph 1 of the preceding paragraph shall be separately defined by the TPEx.
Article 65     When conducting brokerage trading, a securities broker shall enter the types, prices or yields, and quantities of the securities purchased or sold in brokerage trades into the information system of the TPEx.
Article 65-1     (deleted)
Article 65-2     (deleted)
Article 65-3     (deleted)
Article 66     A securities broker shall not engage in the following activities:
  1. Accept full discretionary authorization that allows it to determine the type, quantity, price, sale or purchase of securities on customer's behalf.
  2. Guarantee profit to customers, share profit, or accept trading orders by installment payments.
  3. Make inquiries not required by laws and regulations, disclose particulars of customers' orders, and other secret obtained in the course of business.
  4. Keep custody of price money or securities for a customer.
  5. Conduct other acts in violation of securities and exchange laws and regulations.
Article 66-1     A securities broker accepting orders of persons of the Mainland Area for sale of securities acquired due to inheritance or legacy shall check if the balance in the account for centralized custody of securities is sufficient before the sale.
    A securities broker shall not accept orders of persons of the Mainland Area for purchase of securities; provided that this restriction shall not apply to qualified institutional investors approved by the competent authority for the securities industry in the Mainland Area and other entities approved by the competent authority.
Article 66-2     (deleted)
Article 67     (deleted)
Article 68     A securities broker who simultaneously conducts brokerage purchases or sales of the same securities in the same quantity and at the same price two times or more shall make a record for each individual trade.
Article 69     A securities broker who makes a mistake in executing a trading order and needs to buy back, re-sell, or correct the account number shall report to the TPEx at the time and in the manner provided under the TPEx Directions for Reporting and Handling of Out-Trades and Account Number Corrections by Securities Brokers, and shall, on the same day or the following business day, buy back or re-sell the same number of securities required to be offset by buying back or re-selling in the separate account for handling out-trade.
    The separate account for handling out-trade referred to in the preceding paragraph shall be opened by the securities broker in its own name. The securities broker shall designate an agent, enumerate account numbers, enter its profit-seeking-enterprise uniform number, and enter the same into the sub-account of the customer. At the end of each month, the securities broker shall prepare a separate account for handling out-trade monthly statement and submit the same to the TPEx for recordation by the seventh day of the following month. Trades in the separate account for handling out-trades shall be deemed normal trades, and securities transaction tax shall be paid as required. The account handling of the loss or gains in the above-said separate account shall conform to the provisions under the Guidelines for Preparation of Financial Reports by Securities Firms.
    The Directions for Reporting and Handling of Out-Trades and Account Number Corrections by Securities Brokers shall be separately prescribed by the TPEx.
Article 69-1     (deleted)
Article 69-2     A securities broker accepting orders from customers for public subscription to securities shall do so in accordance with the Taiwan Securities Association Rules Governing Underwriting and Resale of Securities by Securities Firms.
Chapter VI Proprietary Dealing of Securities Firms
Article 70     A securities dealer while trading shall make sure not to damage the formation of fair prices and the soundness of the operation.
Article 70-1     Except in the case of government bond and international bond trading or where otherwise provided by law, regulation, or these Rules, a securities dealer shall not place quotes for sale of securities that it does not own.
Article 70-2     A securities dealer trading bonds by price negotiation over the counter, when clearing and settling trades conducted with the same customer, may not use netting to offset outright purchases/sales against repo trades or outright purchases against outright sales, except in trades with a financial institution.
    “Financial institution” in the preceding paragraph means a financial institution as defined in Article 4 of the Financial Institutions Merger Act.
Article 71     A securities dealer may trade for its own account in the following manners:
  1. Using the automated trade matching system or Electronic Bond Trading System of the TPEx.
  2. Price negotiation over the counter; in the case of trading of bonds, including outright purchase and sale and repo trades.
  3. Other trading methods approved by the TPEx.
    Before the trading referred to in subparagraph 1 above is executed, the securities dealer may cancel or change the trading information. If trading referred to in subparagraph 2 above is outright purchase and sale of book-entry central government bonds between securities dealers, the purchasing and selling parties shall input the details of the trade negotiated between them into the TPEx's Electronic Bond Trading System and carry out match confirmation procedures.
    A securities dealer may trade through price negotiation with its customer or other securities firm over the counter in the following manners:
  1. Face-to-face price negotiation.
  2. Price negotiation by telephone; Article 62, paragraphs 5 to 7 shall simultaneously apply mutatis mutandis to trades conducted in this manner.
  3. Price negotiation by letter or telegram.
  4. Through an electronic trading method such as voice mail, the Internet, dedicated line, or closed dedicated circuit; Article 62, paragraphs 2, 4, and 8, and Article 62-2 shall simultaneously apply mutatis mutandis to trades conducted in this manner.
  5. Other methods approved by the TPEx.
    The securities traded through price negotiation by a securities dealer over the counter shall be limited to the following:
  1. Trades with other securities dealers.
  2. Individual trades of 100 or more trading units with customers.
  3. Trading through price negotiation between a securities broker and other securities dealers, when the securities broker participates in the automated trade matching system of the TPEx but out-trade or default occurs, and such securities broker is unable to cover securities from the system.
    For outright purchase and sale between securities dealers of the book-entry central government bonds designated by the TPEx, the purchasing and selling parties shall conduct the trade through the computer price negotiation system of the Electronic Bond Trading System of the TPEx. However, disposal of the book-entry central government bonds obtained through bidding at face value of less than NT$50 million may be handled pursuant to paragraph 1, subparagraph 2 herein.
    The book-entry central government bonds referred to in the preceding paragraph shall be selected and publicly announced by the TPEx on a quarterly basis.
Article 71-1     A securities dealer may engage in when-issued trading of central government bonds in the following manners:
  1. Trading by price negotiation at its place of business. This is not applicable to securities firms.
  2. By using the TPEx's computerized bond price quotation system.
    When-issued trading of central book-entry bonds among dealers shall be handled in accordance with subparagraph 2 of the preceding paragraph.
    For the purposes of paragraph 1, when-issued trading of central government bonds refers to outright purchase/sale of the underlying government bonds from the business day next following the public announcement by the Ministry of Finance of the quarterly plan for bond issuance or of follow-on issuance until 1 business day prior to the date of issuance; provided, if TPEx Electronic Bond Trading System bond trading is suspended under applicable regulations on the business day prior to the originally scheduled date of issue of the government bonds because of a natural disaster or force majeure, the when-issued trading period will be extended to the date of issue of the bonds.
    Rules governing when-issued trading of central government bonds under subparagraph 1 of paragraph 1 shall be separately promulgated by the TPEx.
Article 71-2     If financial bonds are subject to restrictions on the parties to which they may be sold and to which they may be transferred after sale pursuant to Article 2, paragraph 2 of the Regulations Governing Issuance of Bank Debentures by Banks, then when a securities dealer conducts trading of such financial bonds by price negotiation at its place of business, the trading counterparty shall also meet the requirements of those provisions.
    Article 2-1 and Article 16, paragraph 2 of the TPEx Rules Governing Management of Foreign Currency Denominated International Bonds shall apply mutatis mutandis when a securities firm conducts trading of corporate bonds and financial bonds that may be sold to professional investors only.
Article 71-3     If a securities dealer is engaged by an issuer to provide quotes for corporate bonds or financial bonds, then during the period for which it is engaged, it shall continuously provide trading quotes on each business day through the TPEx-designated quotation system, provided that the securities dealer is exempt from making sell quotes if it does not hold such bonds.
Article 72     Securities dealers entering proprietary trading quotes through the information system of the TPEx shall enter trade-by-trade into the TPEx information system the information including the securities firm code, proprietary trading quote serial number, dealer account number, securities code, price (limit or market), volume, trade type, and time in force (rest-of-day, immediate-or-cancel, fill-or-kill), and then print the order confirmation. After a proprietary trading order has been matched, the execution report form will be printed through the printers of the participating securities firms.
    The serial numbers of proprietary trading quotes entered by securities dealers shall be numbered in the sequence that the quotes were entered.
Article 73     As soon as a trade is confirmed, a securities firm trading securities over the counter shall promptly enter the trade information, at the time and in the form prescribed by the TPEx, into the information system of the TPEx and display the same at its business premises.
    If a trade referred to in the preceding paragraph is conducted between securities firms, the selling securities firm shall promptly enter the trade information as soon as the trade is executed; the buying securities firm shall promptly enter the dealing slip number for confirmation as soon as the trade is executed.
    When a securities firm conducts trading of local government bonds, corporate bonds and financial bonds at its place of business, then within 60 minutes from the confirmation of an outright purchase or sale transaction, it shall enter the information on the trade, in the format prescribed by the TPEx, into the TPEx information system.
Article 74     When a securities dealer engages in over the counter trading at its business premises, it may not collect a transaction fee.
Article 75     Where a competent authority for a relevant industry has placed a ceiling on the foreign investment ratio in underlyings into which exchangeable government bonds are exchangeable, securities dealers shall apply to the TPEx for a trading quota before commencing to engage in trading such exchangeable government bonds by price negotiation on the TPEx.
Article 76     (deleted)
Article 77     A securities dealer who simultaneously purchases or sells, for proprietary dealing, the same securities with the same quantity and at the same price two or more times shall make a record for each trade.
Article 77-1     When the TPEx discovers that the securities trading of a securities dealer may affect the normal market condition, it may report to the competent authority to limit the trading volume of part of or all the securities traded by it.
    A securities dealer shall, at the times and in the format prescribed by the TPEx, report on a daily basis the volume of its holdings of book-entry central government bonds through the TPEx information system.
Article 78     By the seventh day of each month, the securities dealers shall submit to the TPEx a monthly statement of inventory of TPEx traded securities for the previous month.
    The form of the monthly statement of inventory of securities shall be separately prescribed by the TPEx.
Article 78-1     The physical bonds acquired by a securities firm shall be deposited in the custodian institution designated by it.
    The custodian institution designated by the securities firm under the preceding paragraph shall be a custodian institution meeting the requirements set by the TPEx.
    The securities firm shall sign respectively with the custodian institution under paragraph 1 and with the clearing bank(s) for book-entry central government bonds, a securities custody contract and an agreement governing the procedures for use of RP/RS trade certificates for book-entry central government bonds. It shall do the same in the event of any change in custodian institution or clearing bank.
    The TPEx shall separately prescribe the particulars required to be specified in the securities custody contract and in the agreement governing the procedures for use of RP/RS trade certificates for book-entry central government bonds referred to in the preceding paragraph.
Article 79     A securities dealer conducting RP/RS trade at its place of business shall set forth the agreed buy-back or sell-back date and the price in the dealing slip. Except the financial institutions concurrently dealing with securities business which shall be subject to the relevant provisions of the Banking Act, the outstanding balances of RP and RS trades respectively (including the outstanding balance in New Taiwan dollars and the outstanding balance in foreign currencies as converted into New Taiwan dollars at the spot exchange rate) each may not exceed 6 times the net worth of the securities firm, wherein the total respective balances of RP and RS trades in which the underlyings are bonds other than government bonds and other than bonds issued by international organizations and foreign issuers and approved by the competent authority under Article 22, paragraph 1, of the Securities and Exchange Act each may not exceed four times the net worth; provided, this restriction shall not apply to open market operation positions undertaken with the Central Bank of China.
    Where the regulatory capital adequacy ratio of a securities firm conforms to Article 66 of the Regulations Governing Securities Firms, the outstanding balance of the RP/RS trade may be lowered to 3.5 times its net worth. Where the regulatory capital adequacy ratio of a securities firm conforms to Article 66 of the Regulations Governing Securities Firms, the TPEx may, depending on the seriousness of the situation, further lower the multiple of the above-said outstanding balance of the RP/RS; provided that if the monthly statements provided by securities firm shows that the reason of adjustment has extinguished, the TPEx may, depending on the extent of extinction, adjust the multiple.
    If, according to the Rules Governing Early Warnings for Overall Operational Risk of Securities Firms, the bond business ratio of a securities firm has reached the early warning standard and there are early warning indicators, and if the verification of the TPEx shows that there exist matters to be improved but such securities firm fails to make correction or provide explanation within a specified time limit, the TPEx may lower the multiple referred to in paragraph 1 above.
    The agreed period for RP/RS referred to in paragraph 1 above shall not be more than 1 year.
    Rules governing RP/RS trades under paragraph 1 shall be separately prescribed by the TPEx.
Article 79-1     A securities dealer engaging in when-issued trading of any central government bond may not have a cumulative net trading position in that bond exceeding one-third of the total issued amount of that bond as publicly announced in the quarterly plan for bond issuance.
    A securities dealer that trades any 5-year or 10-year central government bond announced by the TPEx pursuant to Article 71, paragraph 6 may not have a cumulative net trading position in that bond, within the period from the date of its when-issued trading to 6 months after the bond issuance or reopening, that exceeds one-third of the publicly announced projected issuance volume of that bond series.
    The cumulative net trading positions in bonds under the preceding 2 paragraphs shall comprise positions arising from trading by price negotiation at the business places of securities dealers and through the computerized bond price negotiation system, calculated in aggregate with positions arising from the tender sale of government bonds.
Article 79-2     When a securities dealer engages in RP/RS trades of foreign bonds in a foreign country and at its place of business, neither the outstanding balance of its RP nor its RS transactions may exceed the securities firm's net worth.
    The scope of the foreign bonds of the preceding paragraph is determined pursuant to the relevant orders issued pursuant to Article 31-1 of the Regulations Governing Securities Firms.
Article 80     If the trading of the bonds delivered to the central securities depository for centralized custody by a securities dealer is from RP/RS trade, such bonds may be allocated to the buyer's account through book-entry transfer, or a bond passbook may be issued in accordance with the rules of the central securities depository in lieu of delivery.
Article 81     (deleted)
Chapter VII Clearing and Settlement
Article 82     After execution of a trading quote, a securities broker shall prepare a trade report and deliver the same to its customers to sign/seal. However, in the case of a financial institution concurrently operating securities business, if the customer has a separate deposit account and the receipt and payment of securities price can be verified, the trade report may be waived.
    The securities broker shall collect from the customer the price payable for the securities bought, or collect the securities sold, pursuant to Article 5 of the TPEx Account Opening Agreement for Securities Trading on the TPEx, or collect the price difference after offsetting purchases and sales pursuant to the Operational Rules Governing Day Trades of Securities. With respect to trading orders in margin trading, the securities broker shall obtain the margin for a margin purchase or short sale from the customer pursuant to Article 5 of the Account Opening Agreement for Securities Trading on the TPEx.
    A securities broker engaged by a customer to trade securities shall promptly deliver to the customer the securities purchased or the price of the securities sold following the execution of a trade and completion of clearing and settlement, or, when a trade was not executed, return the collected securities or price to the customer. The securities broker may agree with the custodian institution to use netting in the fund collection or payment of securities trades of the same day. However, the securities broker may, with the consent of the customer, retain the customer's settlement funds in the securities firm's settlement account, in which case the securities firm also shall comply with the Guidelines Governing the Creation of Customer Ledgers of Securities Firms' Settlement Accounts.
    Where settlement of the principal's payment and securities is to be made by the book entry method, and where a letter of consent is signed, signature/seal of the clearing and settlement vouchers (order tickets, trade reports, etc. for non face-to-face orders) may be waived; provided that before clearing and settlement, the securities firm shall inform the principal who is placing the order of the relevant particulars of the trading order and keep a confirmation record. Where, pursuant to law or regulation, the principal may effect receipt or payment of the purchase price by account transfer (or remittance), signature/seal of the clearing and settlement vouchers (order tickets, trade reports, etc. for non face-to-face orders) may be waived; provided that before clearing and settlement, the securities firm shall inform the principal who is placing the order, and the custodian institution to be the agent for trade settlement, of the relevant particulars of the trading order, and keep a confirmation record.
    A securities broker conducting brokerage trades shall collect and deliver the price and securities by book-entry transfer through the price/securities book-entry and custody account. However, if the principal agrees to keep his/her/its settlement funds in the securities firm's settlement account, the principal may agree with the securities firm to use his/her/its own deposit account to effect receipt or payment of the purchase price by account transfer (or remittance).
    Offshore overseas Chinese and foreign investors, Mainland Area investors, securities investment trust funds, venture capital enterprises invested by the National Development Fund of the Executive Yuan, insurance enterprises, principals of discretionary investment trading accounts, as well as depositary institutions of overseas depositary receipts when handling requests to redeem depositary receipts and sell the corresponding shares held, may establish a deposit account at a custodian institution of its own choice, with which to receive and transmit payments through transfer or remittance.
    Fund collection or payment operations of centralized segregated trust asset accounts under the management of a trust enterprise that has the status of a central depository participant may be carried out by means of transfer (remittance).
    Funds/certificates may not be transferred between different discretionary investment trading accounts of a single principal when carrying out clearing and settlement.
    If a domestic bank or insurance company is rated by Taiwan Ratings Corporation (TRC) at a level of twA- or higher, or at a level the same as or higher than TRC's twA- by another credit rating agency approved or recognized by the competent authority, then during the period in which such rating is valid, it may receive and transmit payments through transfer or remittance.
    If government agencies conduct monetary settlement of securities trades through deposit accounts of the agencies in accordance with laws and regulations, the receipt and payment of the prices may be through account transfer (or remittance).
    The format, particulars to be specified in, and method for preservation of, the trade report in paragraph 1 shall be as prescribed by the competent authority.
Article 82-1     Securities firms and securities finance enterprises shall separately print the List for Clearing and Settlement and complete the clearing and settlement in accordance with the Directions Governing Clearing and Settlement Operations for Securities Traded on the TPEx prescribed by the TPEx.
    Securities firms handling margin purchase and short sale trades that are made through the automated trade matching system of the TPEx shall complete settlement in accordance with the Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities or the operating rules adopted by securities finance enterprises for handling margin purchases and short sales.
    Where settlement information for margin purchases and short sales referred to in the preceding Paragraph is to be reconciled against that of securities finance enterprises, upon confirmation of the information, such information shall be entered into the computer of the central securities depository with other relevant information, and a consolidated report shall be prepared and entered into the computer of the TPEx. Such entry shall be completed by no later than 9 p.m.
    The format of the List for Clearing and Settlement shall be separately prescribed by the TPEx.
Article 83     Where securities are traded on the TPEx through proprietary dealing, a securities firm shall process clearing and settlement in the following manners:
  1. Where the trade matching system of the TPEx is used, the securities firm shall print out Lists for Clearing and Settlement, itemized by currency, on the trade date and complete clearing and settlement by 11:00 a.m. of the second business day following the trade date in accordance, respectively, with the TPEx Directions Governing Clearing and Settlement Operations for Securities Traded on the TPEx.
  2. Where the Electronic Bond Trading System of the TPEx is used, the securities firm shall print out the List for Clearing and Settlement on the trade date and complete clearing and settlement by 1:30 p.m. of the clearing and settlement day in accordance with the Rules Governing the Electronic Bond Trading System prescribed by the TPEx.
  3. Where trading of stocks is consummated through price negotiation at the business premises of the securities firm, the securities firm shall prepare a trading slip, delivery list, and clearing and settlement slip at the time of the trade and deliver, by 10:00 a.m. of the second business day following the trade date, the same to the customer or the securities firm of the trade counterparty for signing/sealing and directly complete the receipt/delivery of the price/securities with such customer or securities dealer of the trade counterparty, or deliver securities in accordance with the Operating Rules for the Central Securities Depository.
  4. Where trading of bonds is consummated by price negotiation at the business premises of the securities firm, the securities firm shall prepare a trading slip, delivery list, and clearing and settlement slip at the time of the trade and deliver, by the second business day following the trade date, the same to the customer or the securities dealer of the trade counterparty for signing/sealing and directly complete the receipt/delivery of the price/securities with such counterparty customer or securities dealer of the trade, or deliver the securities in accordance with the provisions regarding transfer and registration under the Directions for the Operation of Book-Entry Central Government Securities. However, in when-issued trading of central government bonds, the receipt/delivery of the price/securities, and the delivery of the trading slip, delivery slip, and clearing and settlement slip to the customer or the securities dealer of the trade counterparty for signing/sealing, shall be completed in accordance with the above provisions by 3 p.m. on the issuance date of such government bonds; provided, if TPEx Electronic Bond Trading System bond trading is suspended under applicable regulations on the business day prior to the originally scheduled date of issue of the central government bonds because of a natural disaster or force majeure, the receipt/delivery of the price/securities for the when-issued trading of the central government bonds shall be completed by 3 p.m. on the first business day following the issuance date of the government bonds.
    Where a financial institution concurrently operating securities business handles the clearing and settlement referred to in subparagraphs 3 and 4 of the preceding paragraph, the clearing and settlement slip may be waived, if the customer has established a separate deposit account and receipt/payment of the price of securities can be verified.
    With the exception of convertible corporate bonds, exchangeable corporate bonds, and corporate bonds with warrants, if a trade under subparagraph 4 of paragraph 1 is for an RP/RS bond trade, the bond passbook issued by the custodian institution designated by the securities firm or the certificate for repo-style book-entry central government bond transaction issued by a central registration bond clearing bank may be delivered in lieu of the bonds.
    Where the trade through price negotiation as referred to in subparagraph 4 of paragraph 1 and paragraph 3 is for convertible corporate bonds, exchangeable corporate bonds, or corporate bonds with warrants, the clearing and settlement shall be effected through book-entry transfer in accordance with the Operating Rules of the Taiwan Depository and Clearing Corporation.
    Each day, a securities firm shall compile an Itemized Statement of Bonds under Custody of the Mandated Custodian for recordation, and on a monthly basis submit the aforesaid Statement from the last business day of each month to the TPEx by the seventh day of the following month.
    The forms of the trading slip, delivery list, clearing and settlement slip, list for clearing and settlement, bond passbook, certificate for repo-style book-entry central government bond transaction, and the itemized statement of bonds under custody of the mandated custodian institution referred to in the preceding paragraphs shall be separately prescribed by the TPEx.
    In negotiated trading conducted by a securities firm under paragraph 2 of Article 71, after match confirmation through the TPEx's Electronic Bond Trading System, clearing and settlement shall be completed in accordance with subparagraph 2 of paragraph 1 of this Article.
    If because of effects of a natural disaster on the Electronic Bond Trading System, clearing and settlement due on a given day by all securities firms is postponed, the securities firms' clearing and settlement price shall be calculated anew until the actual date of clearing and settlement. Once the securities firms have resumed normal work operations, they shall reprint the List for Clearing and Settlement by 9 a.m. and complete the clearing and settlement procedures according to schedule.
    With the exception of clearing and settlement through delivery of certificated bonds, when a securities firm engages in trading of bonds by price negotiation at its place of business, if the customer or the securities firm of the trade counterparty has signed a letter of consent and a record of receipt/payment of price is kept, then the trading slip, delivery list, and clearing and settlement slip shall be delivered by mail or by e-mail to the address designated by the customer or the securities firm of the trade counterparty by the deadline set out in paragraph 1, subparagraph 4, without the requirement of a signature/seal, provided that the delivery or e-mail record shall be kept. If the trading slip, delivery list, and clearing and settlement slip are to be delivered via e-mail, the customer's written consent shall be obtained, and appropriate measures shall be taken to ensure the correct and secure delivery of the information.
Article 84     (Deleted)
Article 85     (Deleted)
Article 86     (Deleted)
Article 86-1     If a securities firm sells securities through the automated trade matching system of the TPEx, and the balance of securities deposited in the custodial book-entry accounts is not sufficient to fulfill the clearing and settlement obligation, the securities firm may apply to borrow securities in accordance with the TPEx Securities Borrowing and Lending Rules, and shall deposit the collateral required for securities borrowing by 11 a.m. of the borrowing date. If the selling securities firm has not applied to borrow securities by 10 a.m. of the second business day following the trade date, and has not completed the clearing and settlement for the securities, the TPEx will borrow securities for the account of the securities firm after 11. a.m.
    If the amount of securities borrowed is insufficient, the TPEx will fill out and forward a TPEx Securities Delivery Voucher to the central securities depository for the portion falling short for safekeeping on behalf of the securities firm representing the purchaser. The borrowing securities firm shall, by 10 a.m. of the next business day, deliver the securities in exchange for the return of the aforesaid TPEx Securities Delivery Voucher and the refund of the collateral required for securities borrowing.
    If the borrowing securities firm fails to deposit securities borrowing collateral funds or provide offsetting collateral by 11 a.m. of the borrowing date, the TPEx may tentatively retain a portion of the proceeds and securities equivalent in value to the settlement price payable for that settlement period.
    Lending auctions, negotiated lending, and reverse auctions carried out to cover shortfalls experienced by securities finance enterprises in securities required for short sales, or lending auctions and negotiated lending carried out by securities finance enterprises that are engaged to do so on behalf of securities firms because of shortfalls in securities in day trading, shall be conducted in compliance with the TPEx Securities Borrowing and Lending Rules.
    The TPEx Securities Borrowing and Lending Rules and the Certificate of Payment of Securities Traded on the TPEx shall be separately prescribed by the TPEx.
Article 87     A customer who participates in the automated trade matching system and fails to perform a clearing and settlement obligation as scheduled is thereupon in default. The securities broker shall report to the TPEx, and simultaneously notify the customer in accordance with the TPEx Directions for Securities Brokers Reporting Delayed Settlement and Default by Customers.
    Where the customer is an offshore overseas Chinese or foreign national, and a report of delayed clearing and settlement has been filed in accordance with Point 2 of the TPEx Directions for Securities Brokers Reporting Delayed Settlement and Default by Customers, the securities broker shall notify the customer or the custodian institution; if the customer fails to complete clearing and settlement as required by regulations and it is not an out-trade, the customer is in default. The securities broker shall act in accordance with the preceding paragraph.
    Securities or price foreclosed by the securities broker in accordance with paragraphs 1 and 2 shall be handled in the separate account for events of default that such broker opened with another securities firm, at the latest, on the first business day following the day on which the customer defaults and the broker shall not offset such securities or price. However, the same type and same quantity of securities in the same account may be offset against each other, and processing shall be made in accordance with the TPEx Directions for Securities Brokers Reporting Delayed Settlement and Default by Customers.
    Where the aggregate number of shares of securities received by a securities broker under paragraphs 1 and 2 during the period of a single default reaches 5 percent or more of the number of shares or par value of the underlying securities already issued, and furthermore reaches or exceeds the average daily volume of the underlying securities during the 20 trading days prior to reporting of the default, the securities broker may adopt either of the following measures to handle the default:
  1. If handling of the default cannot be completed through reverse trades during the 3 consecutive business days from the first business day following the date of confirmation of the default by the customer, the securities broker, by reaching a mutual agreement with the customer or by notice to the customer, may, depending on market conditions, in accordance with the content of the agreement or the notice, complete handling of the default through reverse trades within 180 days, and report the agreement or notice to the TPEx via letter for recordation.
  2. The securities broker may reach an agreement with the customer setting a price(s) to serve as the basis for calculating profit/loss, and submit the written agreement reached between the parties to the TPEx via letter for recordation.
    Based on the report of the securities broker referred to in paragraphs 1 and 2, the TPEx shall notify all the securities brokers to process matters in accordance with paragraph 2 of Article 47.
    After the TPEx has notified all securities brokers of the event of default based on the letter report of the securities broker, if the rights and interest of customers are damaged or if other disputes arise, the securities broker reporting the default shall be responsible.
    If the securities broker, with a legitimate reason, fails to handle in a timely manner a matter under paragraph 3 or 4, the securities broker shall produce a record of the handling of the matter and keep it on file along with relevant documents.
Article 87-1     Securities firms and securities finance enterprises shall not default on the clearing and settlement obligation.
    If a securities firm or a securities finance enterprise fails to carry out clearing and settlement under the TPEx Directions Governing Clearing and Settlement Operations for Securities Traded on the TPEx, the TPEx shall impose a delinquency fine in accordance with Article 94-1.
    A selling securities firm borrowing securities in accordance with Article 86-1 shall deposit the collateral required for securities borrowing (including any shortfall of collateral required for securities borrowing that must be covered for renewal of a securities loan); if the selling securities firm fails to deposit the collateral, it is deemed to have failed to fulfill its obligation to deliver the securities deliverable.
    If a securities firm or a securities finance enterprise fails to deliver a price payable by the end of banking hours, it is in default of its clearing and settlement obligation.
    Where a securities firm participating in the automated trade matching system of the TPEx is unable to fulfill its clearing and settlement obligation, the TPEx may halt its TPEx trading and report to the competent authority, and appoint other securities firms to complete its clearing and settlement obligation. The TPEx may also follow the procedures provided in the Rules for Administration of the Joint Responsibility System Clearing and Settlement Fund. The purchased securities shall be transferred to the centralized depository account of the TPEx and the money shall be deposited into the dedicated bank account of the TPEx for further processing.
    Where a securities firm violates paragraph 1, the securities firm designated in accordance with the preceding paragraph shall transfer to the TPEx the securities and funds that should be transferred to the TPEx, and the TPEx may also retain securities and funds that are payable to the securities firm in default. However, the defaulting securities firm may engage the designated securities firm to, prior to the calculation of setoff referred to in paragraph 4, withdraw an equivalent amount of the retained securities or funds based on the actual number of securities or funds that it has already transferred.
    The designated securities firm shall calculate the amount of setoff that shall be made based on the securities and funds that have not be transferred by the defaulting securities firm and the amount of securities and funds that have been retained. Upon the balance being confirmed by the TPEx, the balance shall be sold or bought on the next business day through the automated trade matching system of the TPEx. In case the balance cannot be sold or bought, the TPEx may direct the designated securities firm to execute the trades on a set minimum price using auction, price negotiation, reverse auction, or other trading processes. Where auction or reverse auction are used, the limitations on the volume, price, announcement period, and transacted volume imposed under relevant laws and regulations shall not apply.
    The defaulting securities firm shall not object to the price obtained from the automated trade matching system of the TPEx, or the price obtained from auction, price negotiation, reverse auction or other trading processes.
    Subsequent to the securities firm designated in accordance with paragraph 4 completing settlement, the difference in price and all costs suffered as a result shall be borne by the securities firm defaulting on the obligation.
    Securities finance enterprises defaulting on the clearing and settlement obligation shall be specially referred by the TPEx to the competent authority for handling.
Article 87-2     A Securities firm may not default on its clearing and settlement obligations on grounds of any of the following circumstances:
  1. Default by its customer.
  2. Delayed clearing and settlement by its customer.
  3. Failure by the authorized trader of a discretionary account to perform on time obligations arising from a trade exceeding the scope of the discretionary trader's authorization.
  4. A shortfall in refinancing for a margin purchase or short sale.
Article 87-3     Where a securities firm is unable to fulfill its clearing and settlement obligation, the TPEx shall promptly conduct a targeted examination and furthermore supervise the designated securities firm in taking over the clearing and settlement matters.
    The management rules for the targeted examination under the preceding paragraph shall be separately prescribed by the TPEx.
Article 87-4     In the event that a securities firm fails to perform its clearing and settlement obligation and has reported to the TPEx the reason as default by the customer, the TPEx may notify other securities firms to suspend payment or delivery of the funds or securities receivable by the defaulting customer for clearing and settlement, and to reject request from the said customer to withdraw or remit securities placed under custody of the securities centralized depository enterprise. After the defaulting securities firm or defaulting customer has made up the payment or delivery of the funds or securities required for clearing and settlement, the TPEx may notify the other securities firms to proceed with the payment or delivery of securities or funds for clearing and settlement, and lift the restriction on request for withdrawal or remittance.
    In case where the relationship between the customer-in-question and other customers has been validated by the TPEx, based on the evidence provided by the securities firm that defaulted on the clearing and settlement obligation and inquiry made by the TPEx with the securities firms that the TPEx was contemplating to notify for tentative suspension of payment or delivery, the preceding paragraph shall apply mutatis mutandis.
    Upon receiving an execution order of suspension of payment or delivery of funds or securities from a court that has imposed attachment on the defaulting customer, the securities firm concerned shall promptly notify the TPEx.
Article 87-5     Except for the condition prescribed in subparagraph 2 below, a discretionary account failing to complete clearing and settlement in the prescribed time shall be handled by a securities firm in accordance with the general rules regarding customer default.
    A discretionary account failing to complete clearing and settlement in the prescribed time due to failure of the authorized discretionary trader to perform an obligation arising from an unauthorized trade shall be handled as follows:
  1. The securities broker shall act as an agent to complete clearing and settlement and notify the authorized trader, and by 6:00 p.m. of the business day following the date of the transaction, record relevant facts in writing and fix thereupon the stamp and chop of the company and its representative, together with the notification of unauthorized trade issued by the depositary institution, relevant trade vouchers and contract for account opening and brokerage (including documents submitted for account opening), fax the aforesaid to the TPEx as well as notify the TPEx by telephone, and subsequently submit the original copy of the aforesaid papers to the TPEx for submission to the competent authority for record. However, if the conditions of Article 42, paragraph 5 of the Discretionary Investment Business Regulations are met, a notice of unauthorized trade issued by a party authorized to do so under the relevant contract or legal opinion may be substituted for the notice of unauthorized trade issued by the custodian institution.
  2. In connection with the discretionary account in question, the securities broker shall, immediately on the same day, refuse to accept any orders to trade securities; provided that other accounts under the name of the principal shall be exempt from the restriction as prescribed in paragraph 2 of Article 47.
  3. The securities broker that acts as an agent to process the securities or price received for clearing and settlement shall, on the business day following the aforesaid report, engage another securities broker on the TPEx market to handle the said matter; provided that securities that are in the same account, of the same type, and of the same volume, may be offset against each other.
  4. After completing the aforesaid process, the securities broker shall promptly record the relevant process in writing and fix thereupon the stamp and chop of the company and its representative, prepare photocopy of the relevant trade vouchers, and submit the aforesaid to the TPEx for submission to the competent authority for record.
    Upon receiving the report as referred to in subparagraph 1 of paragraph 2 above, the TPEx shall promptly notify the securities firms.
Article 88     A securities dealer participating in the Electronic Bond Trading System and unable to perform its clearing and settlement obligations is thereupon in default. The TPEx may handle the default in accordance with the Rules Governing the Electronic Bond Trading System and halt participation of the securities dealer in the Electronic Bond Trading System.
    Where by calculation of the TPEx, the payment settlement reserve paid by the securities dealer that defaults is insufficient to pay for any loss in price and expense incurred from processing the aforesaid default, and the said securities dealer fails to supplement the shortfall on the same day upon notification of the TPEx, the TPEx may halt the TPEx trading business of the said securities dealer and report in writing to the competent authority.
Article 89     In the case of trading through price negotiation between a securities dealer and customer, if the customer defaults on the clearing and settlement obligation, the securities dealer shall report to the TPEx in writing the condition of default, with a copy to the customer, by 1:00 p.m. of the day of default, and demand for payment on its own behalf
Article 89-1     Those requiring the loan of central book-entry bonds may apply for loan in accordance with the TPEx Rules Governing Lending of Book-Entry Central Government Bonds by Securities Firms.
    The Rules Governing Lending of Book-Entry Central Government Bonds by Securities Firms under the preceding paragraph shall be separately prescribed by the TPEx.
Chapter VIII Surveillance and Processing of Disputes
Article 90     Any dispute arising out of trades on the TPEx shall be handled in accordance with the provisions regarding arbitration under Chapter 6 of the Securities and Exchange Act.
Article 91     Where information is laid against a securities firm or its employee for violation of laws and regulations or the rules and bylaws of the TPEx, the informant shall use true name and address and submit a written information to the TPEx. Information made using alias or anonymously shall not be accepted.
    To investigate the event of information referred to in the preceding paragraph, the TPEx may notify the person being informed against to provide full and accurate defense reasons in writing.
    If the investigation shows that the laws and regulations or the rules and bylaws of the TPEx are apparently violated, the TPEx shall report to the competent authority for handling or the TPEx shall handle the case in accordance with relevant rules and bylaws.
Article 92     To maintain fairness of TPEx trading and prevent illegal manipulation of stock price, the TPEx shall install a surveillance unit to take charge of the surveillance and investigation of trading in the market. The surveillance rules shall be separately prescribed by the TPEx.
    To conduct the surveillance of the TPEx trading referred to in the preceding paragraph, the TPEx may, when necessary, make inquiries to securities firms engaging in TPEx trading, TPEx listed companies, and issuers of emerging stocks and examine relevant documents or notify them to provide explanations, and such securities firms, TPEx listed companies, and issuers of emerging stocks shall not refuse.
Article 92-1     If the price or trading of a securities traded through the Automated Trade Matching System, or Electronic Bond Trading System of the TPEx are obviously abnormal and the normal order of TPEx trading and clearing and settlement is likely to be affected, the TPEx may restrict the volume of such securities traded by a portion or all of securities firms engaging in TPEx trading for customers' accounts or for their own accounts through the Automated Trade Matching System or Electronic Bond Trading System, or to take other measures as resolved by the Business Supervisory and Guidance Commission.
Article 92-2     Where the TPEx has taken measures against a security in accordance with Article 4 of the Regulations Governing Implementation of the Market Surveillance System for Securities Traded on the TPEx and relevant operation rules, when receiving a customer order to trade that security, a securities broker shall, based on the said provisions, collect a certain percentage of the purchase price or the security sold, or a margin for margin purchase or short sale, from the customer in advance on the day the trading order is received.
Article 92-3     If there is any abnormality in the price or trading of, or in a price quotation by a recommending securities firm for, an emerging stock traded through the Emerging Stock Computerized Price Negotiation and Click System of the TPEx, and the normal order of TPEx trading is likely to be affected, the TPEx may notify the recommending securities firm to pay attention to performing its obligation to make price quotations, or to adjust the volume of its price quotations, or make an announcement for notice of attention to trading information, or take dispositive measures. The related operation directions shall be separately prescribed by the TPEx.
Chapter IX Penal Provisions
Article 93     If a securities firm is in any of the following circumstances, the TPEx may notify it to make supplementation or correction within a time limit; in addition, the TPEx may impose a penalty of not more than NT$100,000:
  1. Where the securities firm violates Article 22; Article 23; Article 24, paragraph 1 or 2; Article 24-1; Article 24-2; Article 25, paragraph 1; Article 28-1; Article 28-2; Article 29; Article 30-1, paragraph 1; Article 35-3; Article 43, paragraph 1 or 2; Article 44; Article 45; Article 45-1, paragraph 3; Article 45-2, paragraph 1; Article 45-5; Article 46-10; Article 47; Article 48; Article 58; Article 62, paragraphs 1, 2 or 5; Article 62-1; Article 63-1; Article 68; Article 69, paragraph 1 or 2; Article 71-2; Article 71-3; Article 72, paragraph 1 or 2; Article 73, paragraph 3; Article 75; Article 77; Article 78, paragraph 1; Article 78-1; Article 83, paragraph 5; or Article 92-2 herein.
  2. Where the securities firm fails to follow the forms under Article 30, paragraph 2; Article 43, paragraph 5; ; Article 78, paragraph 2; Article 82, paragraph 11; Article 82-1, paragraph 4; or Article 83, paragraph 6 herein.
  3. Where the securities firm violates any other relevant provision of these Rules or other bylaws, rules, regulations, procedures, key points, public announcements, or circular letters of the TPEx or of the Establishing Information Security Inspection Mechanisms for Securities Firms.
Article 94     If a securities firm is in any of the following circumstances, the TPEx may issue a warning to the securities firm, or impose a penalty of not more than NT$300,000, and notify it to make supplementation or correction within a time limit
  1. Where the securities firm violates Article 45-2, paragraph 2; Article 46-5; Article 62, paragraph 3, 4 or 6; Article 62-2; Article 63, paragraph 2; Article 64, paragraph 1, 3, or 4; Article 65; Article 70-1; Article 70-2; Article 71, paragraph 1, 2 or 5; Article 71-1, paragraph 1 or 2; Article 73, paragraph 1 or 2; Article 74; Article 79; Article 79-1; Article 79-2; Article 82, paragraphs 1 through 4; Article 82-1, paragraph 1 or 2; Article 83, paragraph 1, 3, or 9; Article 87, paragraphs 1 through 3; Article 87-4; and Article 87-5, paragraph 2 herein.
  2. Where the securities firm fails to make supplementation or correction within the time limit specified by the TPEx pursuant to the preceding article.
  3. Where the securities firm commits a violation set forth in the preceding article and the violation is of material nature.
Article 94-1     Where a securities firm closes a trade through the automated trading matching system of the TPEx and fails to complete clearing and settlement with the TPEx within the time as prescribed by the TPEx Directions Governing Clearing and Settlement Operations for Securities Traded on the TPEx, the TPEx may impose a delinquency fine in accordance with the following standards, provided that this rule does not apply where a securities firm can provide proof that the delayed delivery of securities or price payable is not attributable to any intent or negligence of the securities firm.
  1. For delay of not more than one hour, under-delivered securities of 2,000 trading units or less, or delayed settlement amount of NT$20 million or less, a fine of NT$30,000 shall be imposed. NT$40,000 shall be imposed for more than 2,000 trading units of under-delivered securities or more than NT$20 million of delayed settlement amount.
  2. For delay of more than one hour, an NT$10,000 fine shall be imposed for each additional hour's delay.
    Where any securities firm fails to complete the reporting procedures by the deadline as required under Article 46-7, paragraph 2 herein, and Point 3, paragraph 4, and Point 4 of the TPEx Operational Guidelines for Omnibus Trading Accounts, the TPEx may impose a fine of NT$30,000 if the delay is one hour or less, or an additional fine of NT$10,000 for each additional hour's delay.
    Where a securities firm fails to enter the securities margin purchase or short sale settlement information by the time specified in paragraph 3 of Article 82-1, the TPEx may impose a delinquency fine. For delay of not more than one hour, a NT$30,000 fine shall be imposed, and for delay of more than one hour, a NT$10,000 fine shall be imposed for each hour.
    Where a securities firm closes a trade through the TPEx Electronic Bond Trading System and fails to replenish the shortfall in its payment settlement reserve within the required time period, the TPEx may impose a delinquency fine of 1 percent of the amount of the shortfall arising from the delay. Where a securities firm closes a trade through the TPEx Electronic Bond Trading System and is delinquent in completing clearing and settlement with the TPEx, the TPEx may order it to correct the situation by a certain deadline. If it is delinquent in clearing and settlement two or more times in 1 month, the TPEx may issue a warning. If it is delinquent in clearing and settlement three or more times in 1 month or has been issued an above-stated warning two or more times within the most recent 3 months, the TPEx may impose a delinquency fine of NT$30,000 successively for each time. Provided that, if a securities firm is able to provide evidence or reasons that the delinquent clearing and settlement was not attributable to it, it may be exempted from liability for the delinquency.
    The securities firm shall pay any delinquency fine as referred to in the preceding four paragraphs to the TPEx within 2 days counting inclusively from receipt of a notice from the TPEx.
Article 95     If a securities firm is in any of the following circumstances, the TPEx may impose a penalty of not more than NT$2 million and notify the securities firm to make supplementation or correction within a specified time limit; if the securities firm fails to make supplementation or correction within the specified time limit, the TPEx may continuously impose the penalty for each time until supplementation or correction is made:
  1. Where such securities firm has violated Article 27, Article 31, Article 35, paragraph 9, Article 46, and/or Article 47.
  2. Where such securities firm has failed to make supplementation or correction within the time limit under Article 94.
  3. Where such securities firm has failed to pay the delinquency fine under Article 94-1.
  4. Where such securities firm has been served with warning under Article 94 twice or more than twice in the past 6 months.
  5. Where such securities firm has committed a violation set forth in Article 93 or 94 hereof or set forth in the Establishing Information Security Inspection Mechanisms for Securities Firms and the violation is of a material nature such that it adversely affects market trading order or the interest of investors.
    In case where a securities firm has committed again any of the violations prescribed in the subparagraphs of the preceding paragraph within the past 6 months, the TPEx may impose a penalty of NT$4 million.
Article 96     If a securities firm is in any of the following circumstances, the TPEx may suspend its securities dealing or brokerage business or part or whole of trading in its business place for not more than 3 months:
  1. Where such securities firm has been imposed a penalty under Article 95 three or more times in any half fiscal year.
  2. Where such securities firm has failed to pay a penalty in accordance with Article 95.
  3. Where such securities firm has violated the TPEx's restriction on trading volume under Article 77-1.
  4. Where such securities firm has failed to fulfill the clearing and settlement obligation in accordance with Article 87-1 and Article 88.
Article 97     If a securities firm is in any of the following circumstances, the TPEx may restrict or suspend its trading or terminate the contract for TPEx trading of securities:
  1. Where such securities firm has made false statement to the TPEx in connection with matters to be reported to the TPEx, which is sufficient to cause damage to the TPEx or other persons.
  2. Where such securities firm has made untrue trading records and certificate of payment/delivery.
  3. Where a securities broker has traded for a customer's account in violation of paragraph 2 of Article 45-1, violated the account opening contract, or failed to promptly deliver to the customer the securities purchased or the price of securities sold following execution of a trade and completion of clearing and settlement by the customer, or failed to return the collected securities or price to the customer when a trade was not executed, which materially damaged the customer's rights and interests and was verified to be true by the TPEx.
  4. Where a disposition has been made under subparagraph 5 of paragraph 1 of Article 98, and corrections have not been made after 3 months.
  5. Where such securities firm has any of the situations under Article 7 of the Rules for Auditing, Following-up, and Assistance to Securities Firms of the TPEx and has failed to make correction despite repeated assistance and direction.
Article 98     If a securities firm is in any of the following circumstances, the TPEx may halt its trading and report to the competent authority in writing:
  1. Where such securities firm has failed to pay the clearing and settlement fund in accordance with Article 17.
  2. Where such securities firm has violated paragraph 3 of Article 24 or paragraph 2 of Article 92 and evaded or refused the inspection or inquiry of the personnel sent by the TPEx.
  3. Where such securities firm has violated the obligation of clearing and settlement under Article 87-1 and/or Article 88.
  4. Where the net worth of such securities firm is less than 50 percent of its paid-in capital for 3 consecutive months and no correction is made.
  5. Regulatory capital adequacy ratio lower than 50 percent, where corrections have not been made after 3 months.
  6. Where such securities firm has violated relevant provisions of these Rules or other bylaws, rules, regulations, procedures, key points, public announcements, or circular letters of the TPEx or of the Establishing Information Security Inspection Mechanisms for Securities Firms to the extent that the order of securities market trading and clearing and settlement might be affected.
    The TPEx may resume its trading by the securities firm if it subsequently accepts the inspection or inquiry of the personnel sent by the TPEx in connection with the situation referred to in subparagraph 2 above, and if the reason no longer exists in connection with subparagraphs 1, 4, 5, and 6 above.
    If trading by a securities firm is halted by the TPEx pursuant to subparagraph 3 of paragraph 1, the number of days for which it is halted may be offset against the number of days for which its trading is suspended by the TPEx in accordance with subparagraph 5 of Article 96.
Article 99     When the TPEx discovers that a securities firm has violated Article 66 or relevant provisions of the Securities and Exchange Act or other related laws or regulations, it shall report to the competent authority for handling.
    When the TPEx discovers that a securities underwriter has violated Article 32-2 or relevant securities and exchange laws and regulations, it shall report to the competent authority for handling.
    The TPEx shall, as required by resolutions adopted by the Management Committee formed in accordance with the Rules for Administration of the Joint Responsibility System Clearing and Settlement Fund, reduce the trading volume of securities by a securities firm for its own account or the accounts of its customers, or restrict or halt its trading, and shall report the matter to the competent authority.
Article 99-1     The TPEx may, on the grounds of a disposition by the Taiwan Stock Exchange Corporation to halt or suspend trading by a securities firm, render the same disposition with respect to the same securities firm.
    Any disposition under the preceding paragraph shall be submitted for recordation by the competent authority and post-approval by the TPEx's board of directors.
Article 100     In the event that the employees of a securities firm have violated relevant provisions of the TPEx's articles of association, these Rules, the account opening contract, or other bylaws, rules, regulations, public announcements, or circular letters of the TPEx or of the Establishing Information Security Inspection Mechanisms for Securities Firms, the TPEx may, depending on the seriousness of the violation, directly notify the securities firm to warn such employees or halt their execution of business for a period between 1 month to 6 months.
Article 101     Any disposition made by the TPEx in accordance with Article 94 or 95 shall be reported to the competent authority for review and recordation.
    Any disposition restricting or suspending trading pursuant to Article 96 or 97 shall be submitted to the Board of Directors of the TPEx for resolution and then submitted to the Competent Authority for review and recordation.
    Any disposition of termination of the contract for TPEx trading of securities pursuant to Article 97 shall be submitted to the Board of the Directors of the TPEx for resolution and then submitted to the Competent Authority for approval.
Article 101-1     The dispositions made by the TPEx in accordance with this Chapter shall be effective upon serving notice to the securities firm.
Chapter X Supplementary Provisions
Article 102     These Rules shall be promulgated and come into effect after passage by the directors meeting of the TPEx and reported to the competent authority for approval. This rule shall apply to the amendment of these Rules.
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