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Order of the Financial Supervisory Commission
Issue date: 18 July 2025
Issue no.: Financial-Supervisory-Securities-Firms-1140383122
- Pursuant to the proviso of Article 45, paragraph 1 of the Securities and Exchange Act, approval is granted that securities firms may operate the following business:
- A securities firm may accept engagement to manage a private equity fund. A securities firm's operation of this business may not involve the operation of securities investment trust business, and shall comply with the following provisions:
- A securities firm conducting the business of managing a private equity fund under engagement shall set up a dedicated department and allocate sufficient and qualified personnel.
- With respect to the business mentioned above, a securities firm shall adopt and scrupulously implement comprehensive internal control systems and risk control and management mechanisms regarding operating principles, operational procedures, division of authorities and responsibilities, anti-money laundering and counter-terrorism financing operations, handling of business disputes, personnel education, training and management, segregation from existing business, prevention of conflicts of interest, and other relevant matters.
- A securities firm engaged to manage a private equity fund, when investing in securities on a centralized exchange market or over-the-counter market, shall appoint another securities broker to do so.
- A securities firm engaged to manage a private equity fund shall not engage in trading of securities or securities-related products between that fund and any discretionary investment account, self-owned funds account, wealth management trust assets account, or proprietary trading account under its management. This restriction shall not apply, however, to cross trades that unintentionally result from orders placed and transacted through a centralized exchange market or in over-the-counter trading.
- If any investment target enterprise of a private equity fund that a securities firm is engaged to manage has an interest relationship with the securities firm, the customer's written consent shall be obtained, or special stipulations set out in the management engagement contract, in advance.
- The reference in the preceding item to an enterprise having an interest relationship with the securities firm means any of the following:
- Having a relationship as defined in Chapter 6-1 of the Company Act with the securities firm.
- Being a director or supervisor of the securities firm or a shareholder with total combined shareholdings of five percent or more of the securities firm. The term "total combined shareholdings" means the total shareholdings of an enterprise in the securities firm, plus the shareholdings of the enterprise's directors, supervisors, and managerial officers in the securities firm, plus any shares of the securities firm held by any other enterprise(s) directly or indirectly controlled by the enterprise.
- Any personnel under point II above or managerial officer of the securities firm being the same person as, or having a spousal relationship with, a director, supervisor, managerial officer, or 10 percent or greater shareholder of the enterprise.
- If a director or supervisor is a juristic person, the provisions of points II and III above apply mutatis mutandis to its representative or designated representative performing duties on its behalf.
- A securities firm may accept a mandate by a relevant institution of a private equity fund, with respect to a private equity fund in which a subsidiary of the securities firm serves as a general partner or a private equity fund that the securities firm is engaged to manage under the preceding subparagraph, to introduce professional institutional investors and high-asset customers to participate in investment and provide related services, and the following requirements shall be met:
- The term "professional institutional investor" means a professional institutional investor conforming to Article 4 of the Financial Consumer Protection Act.
- The term "high-asset customer" means a high-asset customer as defined in Article 3-1, paragraphs 1 and 3 of the Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities, and having done as specified in paragraphs 4 to 7 of the same article.
- When a securities firm conducts the business under this subparagraph, the total number of high-asset customers introduced for investment for each private equity fund shall not exceed 99 persons, and the business shall not involve New Taiwan Dollar foreign exchange settlement.
- With respect to the above business, a securities firm shall adopt and scrupulously implement comprehensive internal control systems and risk control and management mechanisms regarding Know Your Product (KYP), Know Your Customer (KYC), anti-money laundering and counter-terrorism financing operations, dispute handling, segregation from existing business, prevention of conflicts of interest, and other relevant matters.
- A securities firm's introduction of professional institutional investors and high-asset customers to participate in investment in private equity funds and provision of related services, shall not involve any act of general advertising or public solicitation.
- A securities firm applying to conduct the business under the preceding point shall meet the following conditions:
- Limited to an integrated securities firm that conducts securities brokerage, underwriting, and dealing business.
- Has net worth per share not less than par value as stated in the CPA audited and attested financial report for the most recent period, and its financial condition meets the provisions of Articles 13, 14, 16, 18, 18-1 and 19 of the Regulations Governing Securities Firms.
- Regulatory capital adequacy ratio reported for the most recent period prior to the application reaches 200 percent.
- Has not, within the past three months, been sanctioned under Article 66, subparagraph 1 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 1 of the Futures Trading Act.
- Has not, within the past six months, been sanctioned under Article 66, subparagraph 2 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 2 of the Futures Trading Act.
- Has not, within the past one year, had a sanction imposed by the FSC to suspend its business.
- Has not, within the past two years, had a sanction imposed by the FSC to void any part of its business permit.
- Has not, within the past one year, had a sanction of suspended or restricted trading imposed by the Taiwan Stock Exchange Corporation (TWSE), Taipei Exchange (TPEx), or Taiwan Futures Exchange (TAIFEX) under the operating rules or bylaws thereof.
- Has not, within the past three years, had a sanction imposed by the FSC for conduct in violation of securities laws or regulations in connection with equity investment in any invested venture capital enterprise or private equity fund.
- There are no material deficiencies or anomalies in its internal control system that have not yet been corrected.
- In the case of a securities firm that does not meet provisions of subparagraph D to subparagraph H, the provisions of those subparagraphs shall not apply if the circumstances of the violation have been specifically corrected and the correction has been recognized by the FSC.
- A securities firm shall submit the following documents in an application to the FSC for approval to conduct the business under Point 1:
- Documentation of meeting the qualifying conditions under the preceding point (documentation regarding FSC sanctions is not required where no sanction has been imposed).
- The minutes of the board of directors meeting approving the operation of the business hereunder.
- Business plan: shall specify the operational items and content of the services to be provided.
- The internal control systems for engaging in the relevant business.
- Other documents as required by the FSC.
- The personnel of the dedicated department under Point 1, subparagraph A, item a shall comply with the following provisions:
- Before the personnel begin performing their duties, they shall be registered with the Taiwan Securities Association (TWSA) by the employing securities firm, and none may engage in business unless they have been registered. Anyone under any circumstance set out in Article 53 or Article 54 of the Securities and Exchange Act shall not be registered; if already registered, the registration shall be voided.
- A securities firm shall register any change in the personnel of the dedicated department with the TWSA within 5 business days from the day following the change. Before completing registration of the change, the securities firm shall remain liable for the acts of such personnel.
- They shall not handle business beyond the scope of the dedicated department, nor shall their functions be performed by any person who is not a registered personnel member of the dedicated department.
- A securities firm engaged to manage a private equity fund shall be subject to the restrictions set out in Article 11-1 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms, and furthermore no responsible person or employee of the securities firm may serve as a managerial officer of any enterprise invested in by that private equity fund.
- If a securities firm assigns a personnel member of the dedicated department to take up concurrent duties in a private equity fund it manages or in a related institution such as an investment target enterprise of the fund, it shall carry out registration and filing with the TWSA; if the concurrent assignment ceases, it shall carry out cancellation with the TWSA within 5 business days from the day following the date of occurrence of the fact. The securities firm furthermore shall establish internal audit and control mechanisms, to ensure the effective execution of its personnel's principal duties and concurrently held duties, and to maintain the normal business operations of the securities firm. Concurrent assigned duties may not involve any conflict of interest or any violation of applicable securities regulations or internal control system provisions, and the rights and interests of customers and shareholders shall be protected.
- A securities firm conducting the business under Point 1, subparagraph B shall comply with the following provisions:
- It shall sign a mandate contract with the relevant institution of the private equity fund regarding the matters for which the securities firm is mandated with respect to the specific private equity fund, and the contract shall specify that no other institution may be mandated in Taiwan to handle the matters for that private equity fund.
- It may sign a mandate contract with a trust enterprise to introduce participation in investment in the private equity fund by means of a trust of money, and shall comply with the following matters:
- The trust enterprise shall meet the qualifications for a fund distributor as set out in Article 20 of the Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises.
- The securities firm shall enter into a written contract with the trust enterprise specifying the rights and obligations of both parties.
- The securities firm remains ultimately responsible for confirming investor qualifications, and shall, in its internal control system, establish risk control and management measures for the relevant operations.
- Except as provided in the preceding subparagraph, a securities firm shall not sub-mandate any other institution to handle introductions for participation in investment in a private equity fund.
- A securities firm engaged to manage a private equity fund should refer to stewardship principles and assist in the sustainable development of invested businesses and promote related measures, and regularly report the implementation results to the board of directors.
- A securities firm that has been approved to engage in business under Point 1 shall, by the 10th business day of each month, perform information reporting in accordance with the rules of the TWSA.
- Under any of the following circumstances with respect to a securities firm that has been approved to engage in business under Point 1, the FSC may void the approval for that business.
- Falsehood or misrepresentation in a document under Point 3.
- Material violation of a requirement under Point 1, Point 4, or Point 5.
- Violation of a restriction or prohibition imposed by the FSC at the time of approval of the application.
- Material violation of a mandatory or prohibitive provision of other laws or regulations that would affect the rights and interests of investors.
- This Order is effective from this day forward.
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