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Chapter 1 General Principles
Article 1     These Directions are adopted pursuant to Articles 46, 54, 61-9, 61-13, and 101 of the Operating Rules of the Taiwan Depository & Clearing Corporation (TDCC).
Chapter 2 Account Opening
Article 2     A securities investment trust fund (SITF), offshore overseas Chinese or offshore foreign national (individual or entity), insurance enterprise, or mainland area investor that invests in securities listed on the Taiwan Stock Exchange (TWSE), the Taipei Exchange (TPEx), or the TPEx Emerging Stock Board (ESB) shall appoint and authorize an institution approved for operating custody business ("custodian") to handle custody of securities or settlement of securities, and the relevant operations shall be handled in accordance with these Directions.
Article 3     The custodian shall purchase its own computer equipment and connect to TDCC's mainframe computer, so that it can carry out operations, account opening, securities withdrawal, transfer, information query, and trade information transmission, for the SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor.
Article 4     The custodian appointed and authorized by the SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor shall open a book-entry depository account ("depository account") with the TDCC to become a participant. The account opening procedure shall be subject to Article 10 of the TDCC Operating Rules.
    After the custodian opens the depository account with TDCC, the SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor shall open a customer depository account with the custodian.
Article 5     The depository account set up by the custodian with TDCC may be used only to carry out operations related to securities custody, withdrawal, and transfer.
    After the custodian completes the account opening procedure, TDCC shall immediately set up a participant account book for the custodian, and relevant operations shall proceed in accordance with the TDCC Operating Rules.
    TDCC will accept requests from the custodian for securities custody and book-entry for the SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor.
Article 6     The custodian shall perform an "Account Opening - Creation of Basic Information File" transaction (transaction code: 140) to open a customer depository account for the SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor. The first 3 digits of the account number will be the custodian's participant code assigned by TDCC, the fourth digit be "0," the fifth to tenth, an account serial number assigned by the custodian, and the eleventh, an account number check digit. The account type will be "30." However, for an insurance enterprise that performs payment settlement through a financial institution designated by its securities firm (broker), the depository account type will be "90" and for such account no physical passbook will be issued ("paperless account").
    When the custodian engages TDCC to distribute and transfer of stock dividends, it shall perform a "Depository Account Information Maintenance" transaction (transaction code: 338) to make a notation indicating that such account will be used for "Distribution Book-Entry Transfer."
Article 7     After the account opening procedure with the custodian for the SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor, the securities firm (broker) shall perform a "Custodian Transaction Relationship Registration" transaction (transaction code: 156) to open a customer depository account with the securities firm. For the customer depository account, the account number will be assigned by the securities firm, with the addition of the custodian account number. The account type will be "31." However, for an insurance enterprise that performs payment settlement through a financial institution designated by its securities firm, the account type will be "91" and such account will be a paperless account.
Article 8     The depository account of the SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor with the custodian may be used only to carry out operations related to securities custody, withdrawal, and transfer. The custodian will only produce a "Custodian Depository Account Trading Itemized Report" for account reconciliation and trade matching and will not issue a passbook.
Chapter 3 Clearing and Settlement
Article 9     The securities traded by an SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor shall be settled through a securities firm in accordance with applicable provisions.
Article 10     For an SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor account type "30", the custodian may perform a "Custodian Customer Trade Information Query" transaction (transaction code: 331) to query the details (for reference purposes) of its customer's trades executed through relevant securities firms on the trade date at a time after TDCC completes relevant pre-calculations, and on the first business day after the trade date.
Article 11     When a custodian provides securities firms with query access to their customers' depository account information on the trade date, the operation shall proceed in accordance with the following procedure:
  1. A customer shall submit a written statement of consent containing a covenant to allow the securities firm with which the customer opens a brokerage account to query whether the balance in the customer's account with the custodian is sufficient for a sell trade. After reviewing and verifying the accuracy of content, the custodian shall perform a "Depository Account Information Maintenance" transaction (transaction code: 338) to set the query settings for the customer's depository account information.
  2. After the custodian completes the depository account setup, the securities firm may perform a "Brokerage Sell and Custody Information Query/Electronic Transmission" transaction (transaction code: 332/332S) to query whether the balance in the customer's account is sufficient for a given sell trade. It may also perform a "Brokerage Sell and Custody Information Query Record/Download" transaction (transaction code: 334/334F) to print a "Brokerage Sell and Custody Information Query Record Itemized Report" and check the relevant information.
  3. Each day, the custodian shall perform a "Depository Account Sell Query Record/Download" transaction (transaction code: 333/333F) to print a "Depository Account Sell Query Record Itemized Report" and check the relevant securities firms' query records for their customers' depository account details.
Article 12     After settlement of securities traded by an SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor, TDCC will prepare and deliver a relevant report(s) to the custodian and the securities firm for retention and reference.
Article 13     After the TWSE, TPEx or ESB listed securities bought by an SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor are transferred to the customer account under the securities firm, the account transfer operation shall proceed according to the following procedures:
  1. On the second business day after the trade date, the securities firm shall perform a "Custodian Customer Buy/Transfer" transaction (transaction code: 134) to notify TDCC. After reviewing and verifying the accuracy of content, TDCC will immediately transfer the securities from the customer's depository account in the securities firm to the customer's depository account in the custodian. The securities firm and the custodian may perform a "Depository Account Buy/Transfer Query" transaction (transaction code: B99) to query the securities firm's account transfer details.
  2. If the securities firm has reported a delayed settlement (failed trade) or account number correction for the customer's trade or otherwise failed to perform the transaction within the timeframe set out in the preceding subparagraph, the securities firm shall perform a "Deposited Securities Transfer" transaction (transaction code: 130) to notify TDCC. After reviewing and verifying the accuracy of content, TDCC will immediately transfer the securities from the customer's depository account in the securities firm to the customer's depository accountin the custodian. The custodian may perform a "Transfer Transaction Detail Query" transaction (transaction code: 167) to query the securities firm's account transfer details.
    To withdraw securities, an SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor shall apply to the custodian. The custodian shall then proceed in accordance with Articles 32 and 33 of the TDCC Operating Rules.
    An SITF, offshore overseas Chinese or foreign national, insurance enterprise, or mainland area investor may apply to the custodian to transfer the balance of securities in their account with the custodian to their account with another participant.
Chapter 4 Shareholder Services
Article 14     When an issuer convenes a shareholders meeting or its stock goes ex-rights or ex-dividend, a relevant custodian shall proceed in accordance with Article 87 of the TDCC Operating Rules.
    TDCC will prepare a "securities ownership list" aggregating relevant accounts of a securities owner into one account (account aggregation) and make a notation of "Distribution Book-Entry Transfer" for an account if and as requested by the custodian.
Article 15     When a custodian entrusts TDCC to handle distribution and transfer of stock dividends, the operation shall proceed in accordance with the following procedure:
  1. Upon receiving the data media submitted by an issuer containing a list of securities for book-entry delivery, TDCC will transfer the distributed stock dividends to the customer depository accounts designated by the issuer. TDCC will then, based on the number of shares upon the book closure date and the stock dividend distribution ratio with respect to the customer depository accounts of offshore foreign institutional investors and mainland area institutional investors, calculate the number of distributable shares and separately transfer the stock dividends to those customer depository accounts. TDCC will also prepare and deliver a "securities distribution book-entry transfer report" to each participant.
  2. If the issuer does not provide a sufficient number of shares for book-entry delivery and transfer to each of the customer depository accounts of offshore foreign institutional investors and mainland area institutional investors, TDCC will not handle the transfer and will notify the issuer to address the issue. If there are any shares remaining after the book-entry delivery and transfer to each customer depository account, such remaining shares will be retained in the depository account designated by the issuer.
Article 16     TDCC will, based on an issuer's notification, deliver the issuer's new restricted employee shares by book-entry transfer to the depository accounts opened by the employees with a custodian, or collective investment account for overseas foreign employees, or collective investment account for mainland area employees, and make a notation of restriction thereon.
    When the custodian receives notification from the issuer to remove the notation of restriction for the shares described in the preceding paragraph, the operation shall proceed in accordance with the following procedure:
  1. The custodian shall perform a "Restriction-on-Transfer Distribution Information Maintenance" transaction (transaction code: 606) or a "Restriction-on-Transfer Distribution/Delivery Information Maintenance - Electronic Transmission" transaction (transaction code: 606S) to notify TDCC.
  2. Upon receiving the notification described in the preceding subparagraph, TDCC will proceed to remove the notation of restriction.
    When the issuer retires or purchases any shares described in paragraph 1 pursuant to its issuance rules and for that purpose the relevant customers (employees) apply to the custodian for transfer of shares, the operation shall proceed in accordance with the following procedure:
  1. A customer shall submit a "Deposited Securities Transfer Application" (affixed with the original seal/signature of record) to the custodian for review.
  2. After reviewing and verifying the accuracy of content, the custodian shall perform a "Controlled Securities - Deposited Securities Transfer" transaction (transaction code: A63) to notify TDCC.
  3. Upon receiving the notification described in the preceding subparagraph, TDCC, after verifying that the receiving account is a retirement/purchase account for new restricted employee shares, will transfer the shares from the customer's depository account to the issuer's retirement/purchase account for new restricted employee shares, while retaining the notation of restriction.
Article 17     After a custodian, in response to an issuer's notification, carries out the removal of the notation of restriction for new restricted employee shares, the maintenance operation for relevant tax-payment-deferred shares shall proceed in accordance with the following procedure:
  1. A customer shall submit a "Deposited Securities Transfer Application" (affixed with the original seal/signature of record) to the custodian for application and request the custodian to, based on the issuer's notification, remove the notation of restriction for new restricted employee shares and then transfer the shares to the general custody account opened by the employee under the issuer's depository account.
  2. After reviewing and verifying the accuracy of content, the custodian shall proceed to remove the notation of restriction for new restricted employee shares in accordance with paragraph 2 of the preceding Article and also submit a "Participant Restricted Online Transaction Operation Application" (affixed with the original seal/signature of record) and apply to TDCC for release of shares. It shall then execute a "Deposited Securities Transfer" transaction (transaction code: 130) to notify TDCC.
  3. Upon receiving the notification described in the preceding subparagraph, TDCC will transfer the shares from the customer's depository account to the employee's general custody account.
  4. The custodian shall notify the issuer to carry out the maintenance operation for relevant employee tax-payment-deferred shares in accordance with TDCC's Directions for the Handling by Issuers of Registration and Book-Entry Delivery Operations for Securities Issued in Dematerialized Form.
Chapter 5 Supplementary Provisions
Article 18     For the handling of custodians' central custody and book-entry operations for securities, TDCC will charge fees in accordance with its fee schedule.
Article 19     Any matters on which these Directions are silent shall be handled in accordance with the TDCC Operating Rules and other applicable provisions.