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Title: Regulations Governing Responsible Persons and Associated Persons of Securities Firms
Date: 2003.02.21 ( Announced )
Date: 2015.08.28 ( Amended )

Article Content

 
Article 1     These Regulations are adopted pursuant to Article 54, paragraph 2 and Article 70 of the Securities and Exchange Act ("the Act").
Article 2     The term "responsible person" as used in these Regulations shall be defined in accordance with Article 8 of the Company Act.
    The term "associated persons" as used in these Regulations means persons who engage in the following businesses for a securities firm:
  1. Securities investment analysis, internal auditing, self-auditing, legal compliance, or in-charge accountant.
  2. Liaison or execution of securities underwriting and trading.
  3. Proprietary securities trading, clearing and settlement, or agency for shareholder services.
  4. Account opening, credit searches, solicitation, recommendation, brokerage order taking, filing, clearing, settlement, or receipt, payment, and safekeeping of cash and stocks, in connection with securities trading.
  5. Margin purchases or short sales in securities trading.
  6. Derivatives trading.
  7. Risk management.
  8. Conducting other approved business.
    Responsible persons and associated persons of the overseas branch of a securities firm shall abide by the local laws and regulations governing securities in the country where they conduct business. With the exception of Article 12, Article 13, and Article 18, paragraph 1, these Regulations shall not apply.
Article 3     Associated persons of securities firms are classified into the following two categories in accordance with the complexity and degree of responsibility of their duties:
  1. Senior agent: A person who supervises a department or who is a responsible person of a securities firm's branch unit, or is engaged in investment analysis or internal auditing, as described in Article 8, paragraph 1.
  2. Agent: A person who engages in underwriting, proprietary trading, or brokerage trading of securities, or who is an internal auditor or an in-charge accountant, as described in the subparagraphs of paragraph 2 of the preceding article.
    Only a person who is trained and certified by the internal auditor training program of an institution accredited by the Financial Supervisory Commission (FSC) may engage in internal auditing as provided in subparagraph 2 of the preceding paragraph.
Article 4     Associated persons of a securities firm may not concurrently hold any position at another securities firm either domestically or in a foreign country. This, however, does not apply to legal compliance, internal auditors, risk management personnel, or in-charge accountant of the securities firm concurrently holding a position of the same nature at a securities affiliate enterprise in a foreign country.
    An affiliate enterprise as referred to in the preceding paragraph shall be governed by the Affiliated Enterprises chapter of the Company Act.
    The following associated persons of a securities firm may not engage in business beyond the scope for which they are registered, nor may their business be concurrently performed by associated persons, unless so prescribed in other laws or regulations:
  1. Associated persons engaged in proprietary trading of securities.
  2. Internal auditors.
  3. Risk management personnel.
     Persons engaged in the business of brokerage trading of securities, and persons charged with consulting in connection with asset allocation or financial planning or services in connection with the sale of financial products, may not concurrently handle services that involve account opening for securities trading, clearing and settlement, receipt, payment, and safekeeping of cash and stocks, margin purchases or short sales, underwriting, serving as in-charge accountant, or agency for shareholder services.
    In the case of a futures commission merchant that concurrently operates securities business, if any of its associated persons possesses the qualifications for both securities and futures business, then those an associated person, when engaging in the business of account opening, brokerage trading, proprietary trading, clearing and settlement, legal compliance, internal auditing, self-audit, risk management, and in-charge accountant within the scope for which the person is registered, may concurrently handle securities business and futures business of the same nature.
    In the case of a futures commission merchant that concurrently operates securities business, a managerial officer of the department that handles brokerage trading, proprietary trading, or clearing and settlement business, who furthermore meets the qualifications set out in Articles 8 and 10 herein, may concurrently serve as a managerial officer of the futures department that handles business of the same nature.
    Except as otherwise provided by law or regulation, the provisions of paragraph 3 and the preceding paragraph shall apply mutatis mutandis to financial institutions other than futures commission merchants that concurrently operate securities business.
    An agent of a securities firm shall neither execute nor concurrently engage in the business of a senior agent.
    A securities firm shall establish internal audit and control mechanisms for any concurrent holding of positions and concurrent handling of services by its associated persons, to ensure the effective execution of the associated person's principal duties and concurrently held duties or concurrently handled services, and for maintaining the normal business operations of the securities firm. The concurrent holding of positions and concurrent handling of services 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.
Article 5     A senior agent of a securities firm shall have one of the following qualifications:
  1. Graduation from a college or university or above, and having been an agent of a securities institution for 3 years or more.
  2. Qualification as a securities investment analyst as prescribed in the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises.
  3. Having passed the securities firm senior agent exam held by the Securities and Futures Institute (hereinafter "SFI") at the request of the Taiwan Securities Association.
  4. Being registered as a securities firm senior agent in accordance with these Regulations, or having obtained a certificate of qualification as a securities firm senior agent issued by the FSC.
  5. Currently serving as an agent of a securities institution, and having served 1 year or more as an agent before the June 18, 1991 amendment to these Regulations came into force, and further, after that amendment came into force, having served as an agent, cumulatively, for 5 years.
Article 6     An agent of a securities firm shall have one of the following qualifications:
  1. Qualification as a securities investment analyst as prescribed in the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises.
  2. Having passed the securities firm agent exam held by the SFI at the request of the Taiwan Securities Association.
  3. Being registered as a securities firm agent in accordance with these Regulations, or having obtained a certificate of qualification as a securities firm agent issued by the FSC.
Article 7     Any person who has obtained a certificate of qualification as a securities firm associated person issued by the FSC and requires re-issuance or replacement of the certificate shall file an application with the SFI.
    The preceding paragraph shall come into force from January 1, 1999.
Article 8     In a securities firm, qualification as a senior agent shall be required for the supervisory personnel of departments engaged in underwriting, proprietary trading, brokerage trading, clearing and settlement, internal auditing, shareholder services, and financial affairs. a branch unit of a securities firm, qualification as a senior agent shall be required for its responsible persons and the supervisory personnel of the brokerage trading and clearing and settlement departments. a securities firm concurrently operated by a financial institution, however, separate provisions of the FSC may be followed with respect to the supervisory personnel of internal auditing departments and financial affairs departments.
    In a foreign securities firm's branch unit within the ROC, with the exception of its responsible persons and the supervisory personnel of its financial affairs and shareholder services departments, qualification as a senior agent shall be required for the supervisory personnel of departments engaged in underwriting, proprietary trading, brokerage trading, clearing and settlement, and internal auditing.
Article 9     A securities firm shall have one general manager, who shall be responsible for the overall administration of the business operations of the entire company. The securities firm may not have any other person in a position with equivalent responsibilities.
    The general managers of securities firms shall be of upstanding character and possess the ability to effectively lead and manage a securities firm; with the exception of general managers of securities firms concurrently operated by financial institutions, to whom the provisions of other acts and regulations may apply, general managers shall possess at least one of the following qualifications:
  1. Graduation from a local or foreign junior college recognized by the Ministry of Education, or an equivalent or higher degree, with 5 or more years of sales experience in securities, futures, finance, or insurance, and having held the position of assistant general manager or an equivalent position for 1 year or more at a securities or futures institution, or the position of manager or an equivalent position at a securities or futures institution for 3 years or more, with a good performance record.
  2. Six years or more of work experience at a securities institution, and having served in the position of assistant general manager or an equivalent position at a securities or futures institution for 1 year or more or in the position of manager or an equivalent position at a securities or futures institution for 3 years or more, with a good performance record.
  3. Other academic or work qualifications demonstrating possession of professional knowledge of securities and operations and management experience that would enable sound and effective management of securities firm business.
    When hiring a general manager, a securities firm shall first submit documents verifying that its candidate meets the qualifications of the preceding paragraph to the stock exchange, the ROC Securities Dealers Association, or the Taipei Exchange (TPEx) for their review and approval, after which they shall be forwarded to the FSC for its review and approval, before the candidate may fill that position.
    The provisions of the preceding two paragraphs apply mutatis mutandis to the responsible persons of a foreign securities firm's branch unit within the ROC.
    The chairman of a securities firm may not concurrently serve as its general manager. This restriction, however, does not apply under any of the following circumstances if approval is obtained from the FSC:
  1. The securities firm does not concurrently operate any other enterprise, operates only one line of business, and has only one business location; or it operates only one line of business, concurrently operates only futures introducing broker business, and has only one business location.
  2. The securities firm will cease to exist as a result of a merger or dissolution, and its chairman or general manager has resigned or otherwise been unable to continue the performance of duties.
  3. The securities firm's business permission was voided by the FSC, and its chairman or general manager has resigned or otherwise been unable to continue the performance of duties.
  4. Any other special cause.
Article 9-1     If a securities firm does not meet the requirements under paragraph 1 of the preceding article before the 11 October 2010 amendment to these Regulations enters into force, it shall make the adjustments within 6 months after the date the amendment enters into force, and if it does not meet the requirements under paragraph 5 of the preceding article, it shall make the adjustments within 1 year after the date the amendment enters into force.
Article 10     The supervisory personnel of the departments set forth in Article 8, paragraph 1, and the assistant general managers, deputy assistant general managers, and managers of those departments, or those who oversee those departments, and the responsible persons of securities firms' branch units, shall possess one of the following qualifications:
  1. Graduation from a local or foreign junior college recognized by the Ministry of Education, or an equivalent or higher degree, with 3 years or more of business work experience and a good performance record in a securities, futures, finance, or insurance institution.
  2. Four years or more of work experience and a good performance record at a securities institution.
  3. Other academic or work qualifications demonstrating possession of professional knowledge of securities and operations and management experience that would enable sound and effective management of securities firm business.
    The chief internal auditor of an exchange-listed or OTC-listed securities firm or a securities subsidiary of a financial holding company, in addition to possessing one of the qualifications in the preceding paragraph, shall have an occupational rank equal to an assistant general manager or a position with equivalent duties, and may assume their position only after the candidate is reported to the FSC for review and found to be qualified.
    For a branch unit of a foreign securities firm within the ROC, the supervisory personnel of departments that engage in underwriting, proprietary trading, brokerage trading, clearing and settlement, and internal auditing shall possess the qualifications of the paragraph 1.
    The provisions of paragraph 1 shall apply mutatis mutandis to positions equivalent to assistant general manager, deputy assistant general manager, or manager under other laws or under the articles of incorporation of the securities firm.
Article 11     For those who, prior to the 21 February 2003 amendment of these Regulations, were already serving as the general manager of a securities firm or as department manager or responsible person of the branch unit of a securities firm as set forth under Article 8, paragraph 1, may continue to serve in their original position or for the duration of their original term, and will not be subject to the restrictions of Article 9, paragraphs 2 to 4 and the preceding article.
    When a person is promoted or assigned to one of the positions named in the preceding paragraph after the amendment of these Regulations, they shall possess or be in conformance with the qualifications set forth in these Regulations; those who do not meet those qualifications shall be dismissed.
Article 11-1     A responsible person of a securities firm may not serve as a responsible person of a bank, financial holding company, trust company, credit cooperative, credit department of a farmers' (fishermen's) association, bills finance company, futures enterprise, insurance enterprise, or another securities enterprise. However, this restriction shall not apply in the following circumstances:
  1. When it serves the purposes of an investment relationship between the securities firm and such an institution, there is no overlapping of the chairmen and managerial officers between the two, and the FSC has granted approval.
  2. When there is a special need and the FSC has granted approval, a responsible person of a securities firm may serve as the chairman of such entities.
  3. When a securities firm is a subsidiary of a financial holding company, a responsible person of the securities firm may serve as a responsible person of such financial holding company or of another of its subsidiaries, provided that there is no overlapping of managerial officers between the subsidiaries.
  4. When a securities firm is a juristic-person director or supervisor of a financial holding company, the responsible person of the securities firm, in order to serve as a responsible person of the holding company, may concurrently serve as a director or supervisor of a subsidiary of that holding company.
    When there is an investment relationship between a securities firm and a non-financial institution that is a public issuer, no responsible person of the securities firm may concurrently serve as the chairman or a managerial officer of such an investee company.
     A securities firm shall establish internal audit and control mechanisms for any concurrent holding of positions by a responsible person of a securities firm to ensure effective execution of the responsible person's principal duties and concurrently held duties, and for maintaining the normal business operations of the securities firm; it may not involve conflicts of interest or violation of securities regulations or the internal control system, and the rights and interests of shareholders shall be protected.
Article 11-2     A responsible person of a securities firm or their spouse who serves as a director, supervisor, or managerial officer or who holds 5 percent or more of the total issued shares of a public company may not participate in the policy decision-making of the securities firm in any business relating to that public company.
    The calculation of shares held by a person referred to in the preceding paragraph shall include shares held under the names of the person's spouse and minor children, and those held under the names of any other persons.
Article 12     The responsible persons and associated persons of a securities firm shall be registered by their firm with the stock exchange, securities dealers association, or over-the-counter stock exchange before performing their duties, and may not perform their duties without such registration.
    A securities firm that employs any person to engage in business other than the business under the subparagraphs of Article 2, paragraph 2, when that person has been dismissed from his or her position within the past 3 years by an order of the FSC pursuant to the Act, shall file with the stock exchange for registration of that person before their employment may effect.
    Under any of the following circumstances, the stock exchange, securities dealers association, or over-the-counter stock exchange shall refuse to grant a registration, and shall void a registration that has already been made:
  1. A responsible person of a securities firm conforms to any circumstance in Article 30 of the Company Act or Article 53 of the Act.
  2. An associated person of a securities firm conforms to any circumstance in paragraph 1 of Article 54 of the Act or fails to meet the qualifications in Articles 5 and 6.
    By the 15th day of each month, the stock exchange, securities dealers association or over-the-counter stock exchange shall report the status for the previous month of the registrations under the preceding three paragraphs for recordation by the FSC.
Article 13     In the event of any change of responsible person or associated person, the securities firm shall file a registration with the stock exchange, securities dealers association, or over-the-counter stock exchange within 5 days after the change, as specified below. The securities firm shall not be released from liability for the actions of such persons before completion of the registration.
  1. For the purpose of an amendment registration due to job transfer or promotion of a responsible person or associated person of a securities firm.
  2. For the purpose of canceling a registration in the event of the death, resignation, layoff, dismissal, severance, or retirement of a responsible person or associated person of a securities firm, or a circumstance set out in Article 17.
  3. For the purpose of voiding a registration when the dismissal of a responsible person or associated person is ordered by the FSC in accordance with the Act, or the registration of said person conforms to any circumstance under paragraph 3 of the preceding article.
    Registration of any change in a responsible person or associated person of the overseas branch of a securities firm shall be performed within 10 days after the change.
    By the 15th day of each month, the stock exchange, securities dealers association or over-the counter stock exchange shall compile the particulars of changes to registrations as referred to in the preceding paragraph for the previous month and report them to the FSC for recordation.
    A securities firm shall file with the stock exchange, securities dealers association, or over-the-counter stock exchange for approval and recordation before any change of an internal auditing associated person of the securities firm described in paragraph 1 may take effect.
Article 14     In the event of leave, suspension of work duties, or other cause of absence of a responsible person or associated person of a securities firm, the securities firm shall appoint a person with equivalent qualifications to act as a deputy.
    With regard to deputies referred to in the preceding paragraph, the securities firm shall record the reason, period, name of the acting deputy, and his or her duties in a special-purpose book for reference.
Article 15     Associated persons of a securities firm shall participate in pre-service and in-service training offered by the FSC or by an institution appointed by the FSC.
    An associated person of a securities firm who is assuming the job for the first time, or who has resumed the job after an absence of 3 years, shall participate in pre-service training within 6 months after reporting for work. Currently employed personnel shall participate in in-service training once every 3 years.
    The FSC may specify the content and periods for the training described in the preceding paragraph according to actual needs.
Article 16     The FSC or the training institution shall issue a training certificate to associated persons who participate in and pass the pre-service or in-service training, and shall submit the training performance evaluation to the employer institution for reference regarding the evaluation, promotion, and assignment of work. The FSC or training institution may reward those who are outstanding in performance.
Article 17     The FSC or training institution shall cancel the registration of an associated person who fails to participate in pre-service or in-service training, or who fails the training and furthermore fails to pass retraining within 1 year.
Article 18     Responsible persons and associated persons of a securities firm shall conduct business in accordance with the principles of honesty and good faith.
    Except where otherwise provided by law or regulation, responsible persons and associated persons of a securities firm may not engage in the following conduct:
  1. Engaging in the trading of exchange-listed or OTC-listed stocks with information learned on the job for the purpose of obtaining speculative profit.
  2. Disclosing information regarding a customer order or other secrets learned as a result of the job, other than in response to inquiries made in accordance with laws or regulations.
  3. Accepting a customer's trading order with discretionary authority over the type, quantity, price, or purchase or sale of the securities.
  4. Trading securities with a guarantee to the customer of earning profits or with a promise of sharing profits.
  5. Trading securities under an agreement with the customer to jointly assume the losses or profits of the transaction.
  6. Accepting orders from customers to buy or sell securities and concurrently buying or selling the same securities for his or her own account on the opposite side of the trade.
  7. Subscribing or trading securities in the name of the customer or by using the customer's account.
  8. Subscribing or trading securities for the customer in the names of other persons or relatives.
  9. Borrowing or lending of money or securities to or from a customer, or acting as an intermediary for the borrowing or lending of money or securities to or from a customer.
  10. Fraud, deception, or other misleading behavior when engaging in underwriting, proprietary trading, or brokerage trading of securities.
  11. Safekeeping securities, cash, chops, or deposit books of customers, or misappropriating any of those things.
  12. Trading securities for a customer that has not entered into a brokerage contract;
  13. Trading securities other than in accordance with the particulars and instructions of the order placed by the customer.
  14. Providing a customer or unspecified persons with information indicating that the price of certain securities will rise or fall in order to solicit the trading of securities;
  15. Recommending trades in specific stocks to unspecified persons, except as necessary for purposes of securities underwriting.
  16. Accepting customer settlement by means of offsetting a purchase or sale of securities with a sale or purchase of securities of the same type through the same or a different account. However, this restriction shall not apply to settlement by mutually offsetting margin purchases and short sales in margin trading, nor shall it apply to accepting customer settlement by means of mutually offsetting an equal quantity of cash purchases and spot sales of the same security that have been executed through the same account on the same business day, when done in accordance with laws and regulations.
  17. Opening an account, or subscribing, trading, or settling securities as agent on behalf of another person, provided that this restriction does not apply if the responsible person or associated person is the statutory representative of the principal.
  18. Processing the opening of an account, or the subscription, trading, or settlement of securities, for a director, supervisor, or employee of the company on behalf of another person.
  19. Processing the opening of an account for a person other than the principal for whom the account is being opened. However, this rule does not apply if the FSC has provided otherwise.
  20. Processing an application for subscription, trading, or settlement of securities from a person who is not the customer or not an agent with a power of attorney from the customer.
  21. Accepting a trading order despite being aware that the customer is using undisclosed information of a public company that will have a material impact on the stock price of the company or being aware that the customer intends to manipulate the market.
  22. Any agreement between persons engaging in securities underwriting business and an issuing company or its relevant personnel for purposes of obtaining improper profit.
  23. Soliciting, acting as an intermediary for, or promoting unapproved securities or derivative products thereof.
  24. Other conduct in violation of securities laws or regulations or conduct prohibited by the rules prescribed by the FSC.
    Persons referred to in the preceding paragraph also may not engage in any conduct prohibited by securities laws and regulations when conducting their duties.
    The provisions of the two preceding paragraphs shall apply mutatis mutandis to other employees of a securities firm.
Article 18-1     In supervising internal audit work, the chief internal auditor of a securities firm may not do any of the following:
  1. Disclose, deliver, or make known the content of the financial examination report, in whole or in any part, to personnel not related to the performance of occupational duties, without FSC approval.
  2. Issue an untrue internal audit report in connection with internal audit work.
  3. Fail to discover a serious deficiency in financial or business operations due to the securities firm's deployment of an obviously insufficient number of, or incompetent, internal auditors.
  4. Fail to follow the FSC's instructions in conducting audit work or providing relevant information.
Article 19     If a responsible person or associated person of a securities firm is alleged to have violated a securities law or regulation or there is an inquiry regarding the performance of the person's duties, then that person shall appear before the FSC to explain, or submit to it a written report, within a period set by the FSC.
Article 20     The associated person of a securities firm shall be deemed to be acting under the authorization of the securities firm when engaging in the business under any subparagraph of Article 2, paragraph 2,.
Article 21     The FSC will reward or commend a responsible person or associated person of a securities firm for any of the following:
  1. Contribution of intellect and effort toward building securities market mechanisms, with distinguished results.
  2. Research or writing that contributes creative ideas to the development of the securities market or the implementation of securities business, when the ideas have been adopted and implemented.
  3. Reporting any illegal matter that is confirmed to be true.
  4. Service in the same securities firm for 15 consecutive years or longer with devotion to the job.
  5. Zealous work on behalf of the public interest and the exercise of team spirit, as proven through concrete achievements.
  6. Other achievements deserving of commendation.
Article 21-1      Associated persons of a securities firm who engage in equity crowdfunding business shall follow applicable rules adopted by the TPEx.
     Responsible persons and associated persons of a securities firm who engage in only equity crowdfunding business are not subject to the provisions of Articles 8 to 11-2 and Articles 15 to 17.
Article 22     These Regulations shall enter into force from the date of issuance, with the exception of Article 18, paragraph 2, subparagraph 16 amended and issued on 30 December 2013, which shall enter into force from 6 January 2014, and of Article 18, paragraph 2, subparagraph 16 amended and issued on 27 June 2014, which shall enter into force from 30 June 2014.