證券投資人及期貨交易人保護機構管理規則

These Rules are promulgated pursuant to Article 8, paragraph 2, of the Securities Investor and Futures Trader Protection Act ("the Act").

1Before a protection institution applies to a court for registration as a foundation, its prospective directors shall file with the Financial Supervisory Commission (FSC) by letter for recordation, attaching each of the following documents in triplicate:

21. An application form stating the purpose of the foundation's establishment, its name, the location of the principle office, its total assets, scope of operations, and other required matters.

32. The articles of incorporation.

43. A list of contributed assets.

54. A roster of directors and supervisors, with copies of national identification cards and a diagram of any kinship relations among them.

65. Consent statements from those agreeing to serve as a director or supervisor.

76. A list of sample specimens of directors' and supervisors' signatures or seals.

87. Minutes of the meeting of contributors.

98. Minutes of the founding meeting of directors.

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When there are changes in the particulars of the protection institution's registration, within 15 days of the date of the change it shall fill out an application form and all required documents in triplicate and report to the FSC for review and recordation, and thereafter apply to the court for amendment registration.

1The protection institution shall report the following particulars, and any amendments thereto, to the FSC for review and recordation:

21. Its articles of incorporation.

32. Procedures for acquiring or disposing of fixed assets.

43. Its internal control system.

54. Appointments and dismissals of personnel at the level of deputy department supervisor and above.

65. Other changes in rules or regulations.

76. Other particulars to be reported for review and recordation pursuant to FSC regulations.

1In any of the following events, the protection institution shall take immediate measures appropriate to the circumstances, and report by letter to the FSC for recordation:

21. Utilization of the protection fund for payment in accordance with Article 21 of the Act.

32. The conclusion of any case in which the protection fund has been utilized for payment in accordance with Article 21 of the Act.

43. Receipt of assigned assets over NT$50 million resulting from the assumption of rights of a securities investor or futures trader against a securities firm or futures commission merchant in breach of contract under Article 21, paragraph 3 of the Act.

54. Institution of group arbitration or a class action suit.

65. Any legal action taken pursuant to Article 10-1 or 10-2 of the Act.

76. Minutes of board of directors meetings.

87. Any litigation, non-litigation matter, administrative disposition, administrative dispute, commercial arbitration, or settlement having a material effect on finances or operations.

When a supervisor of the protection institution notifies the board of directors to cease unlawful activity in accordance with Article 15, paragraph 3 of the Act, the supervisor shall also give secondary notice to the FSC and report to the FSC by letter within three days, with a written explanation of related matters.

Pursuant to Article 10 of the Act, the protection institution shall adopt operating rules in regard to its scope of business under the Act and submit them, and any subsequent amendments thereto, to the FSC for approval.

The protection institution shall adopt procedural rules for group arbitration and class actions involving securities investors and futures traders undertaken pursuant to Article 28 of the Act, setting out the types of cases, their scope, operational procedures, methods of execution, and other matters to be observed. The procedural rules, and any amendments thereto, shall be submitted to the FSC for approval.

The protection institution shall adopt procedural rules for the taking of legal actions pursuant to Articles 10-1 and 10-2 of the Act, setting out the requisites, procedures, and scope for execution, operational procedures, and other matters to be observed. The procedural rules, and any amendments thereto, shall be submitted to the FSC for approval.

For the purpose of investor protection, the protection institution shall hold stock in listed, OTC-listed, or emerging stock companies in accordance with Article 19 of the Act, in order to exercise shareholder rights.

The protection institution shall retain all documents relating to finances and operations at its offices for audit by the FSC.

The protection institution shall send a letter of report to the FSC by the 20th of each month, including a statement of changes in the protection fund for the previous month, a monthly accounting summary, and the funds contributed by the various entities as well as the status of any contribution payments in arrears.

1When the net worth of the protection fund reaches NT$5 billion, the protection institution shall immediately report to the FSC by letter, including a list of the securities firms and futures commission merchants who have allocated funds for a period of more than ten years and a statement of the amounts allocated yearly by each.

2After making a report as referred to in the preceding paragraph, if the net worth of the protection fund falls below NT$5 billion due to any circumstance under Article 21 of the Act or other circumstance having a material impact, the protection institution shall immediately notify the FSC by letter.

The protection institution may not provide guarantees, endorse negotiable instruments, or provide assets for use as collateral by others except with the permission of the FSC.

1Two months prior to the beginning of a new fiscal year, the protection institution shall draft a yearly budget and operations plan for ratification by the FSC; any amendments thereto shall also require ratification. Within 15 days of the conclusion of each quarter, it shall produce a report on the execution of the plan and the budget, up to and including that quarter, for submission to and recordation by the FSC.

2The protection institution shall execute the yearly budget and operations plan as they are ratified by the FSC.

Within three months from the end of any fiscal year, the protection institution shall submit to the FSC an operations report and a financial report audited and attested by a certified public accountant, passed by the board of directors, and recognized by the supervisors.

The protection institution shall formulate rules governing organization, staffing, and job titles for its internal units. The organizational rules and any amendments thereto shall be submitted to the FSC for review and recordation.

1The protection institution shall formulate human resource management rules with regard to hiring, compensation, employee performance, incentives and reprimands, training, retirement, advanced study, severance, and retirement pensions. The human resource management rules and any amendments thereto shall be submitted to the FSC for approval and recordation.

2The protection institution may make no additional payments to personnel under categories other than those listed in the human resource management rules formulated pursuant to the preceding paragraph.

Under any of the circumstances set out in Article 30 of the Company Act, Articles 53 and 54 of the Securities and Exchange Act, Article 28 of the Futures Trading Act, or Article 68 of the Securities Investment Trust and Consulting Act, the person in question may not serve as a director, supervisor, manager, or employee of the protection institution, and shall be dismissed in the event they already hold such a position.

1In addition to compliance with the previous article, directors and supervisors of the protection institution appointed by the competent authority in accordance with Article 11 of the Act who are not contributor's representatives shall possess one of the following qualifications:

21. A combined total of not less than five years of experience in securities, futures, or financial institutions, and having held a managerial sales position in a securities, futures, or financial institution.

32. A combined total of not less than five years of experience in administrative management in securities, futures, or finance, and having held a position equal to or higher than an intermediate civil service rank.

43. Be a judge, prosecutor, attorney, or CPA with not less than five years experience in business, law, or financial operations, or a lecturer in a related department at a public or private tertiary educational institution.

1In addition to compliance with Article 18, managers of the protection institution shall possess one of the following qualifications:

21. A combined total of not less than three years of experience in securities, futures, or financial institutions, and having held a managerial sales position in a securities, futures, or financial institution.

32. A combined total of not less than five years of experience in administrative management work in securities, futures, or finance, and having held a position of deputy manager in a securities, futures, or financial institution.

43. A combined total of not less than three years of experience in administrative management work in securities, futures, or finance, and having held a position equal to or higher than an intermediate civil service rank.

54. Be a judge, prosecutor, attorney, or CPA with not less than three years experience in business, law, or financial operations, or a lecturer in a related department at a public or private tertiary educational institution.

1Within one month of assuming their posts, the directors, supervisors, and managers of the protection institution shall report to the protection institution the types and amounts of their holdings of publicly-issued companies and non-publicly-issued stock in securities firms and futures commission merchants.

2The holders of stock referred to in the preceding paragraph shall report to the protection institution, prior to the end of January each year, on their shareholdings as of the end of the previous year.

3Holdings of stock by persons referred to in paragraph 1 include holdings by their spouses and minor children as well holdings under any other person's name.

4The information reported pursuant to paragraphs 1 and 2 may be inspected at any time by the FSC.

Managers and employees at the protection institution shall hold their positions on a full-time basis, and may not in any manner concurrently hold a position at a listed, OTC-listed, or emerging stock company, a securities firm, or a futures commission merchant, or hold any position or titular position at any other enterprise concurrently engaged in securities or futures operations.

When a manager or employee of the protection institution delays or fails in the execution of required tasks, the protection institution shall dismiss them or take appropriate disciplinary action.

In the course of carrying out their duties, directors, supervisors, managers, or employees of the protection institution shall recuse themselves from participation in any matter with a bearing on their personal interests.

1Directors, supervisors, managers, and employees of the protection institution may not engage in any of the following acts:

21. Using information gained through their position at the protection institution to directly or indirectly engage in securities or futures trading.

32. Disclosing a secret they have learned through their position at the protection institution in response to any inquiry other than those duly made in accordance with acts and regulations.

43. Engaging in borrowing or lending of funds or securities with anyone in a sales-related position.

54. Accepting or agreeing to accept improper benefits in connection with the performance of their duties, or in violation of their duties.

65. Any other conduct in violation of securities or futures acts or regulations, securities investment trust and consulting acts or regulations,or conduct not complying with prohibitions or requirements of FSC regulations.

These Rules shall be enforced from the date of promulgation.