Taiwan

Disclosure Requirements
:
Shareholdings in this market may be required to be disclosed by the beneficial owner, particularly when such shareholdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organizations for this market, within the time-frame required. If you have any questions regarding this issue we encourage you to consult your legal counsel.

Failure to comply with the reporting requirements in this market may lead to penalties and / or other sanctions.

Any investor holding more than 10% of the total issued shares of a public issuing company becomes the major shareholder, and must file a report with the Securities and Futures Bureau within 10 days of taking possession, stating the purpose and the sources of financing for the purchase. Any subsequently accumulative purchase/sale of shares in the company exceeding 1% by the same investors must be announced publicly and reported to the SFB within two days.

In addition, if the major shareholder wants to sell stocks, they have to send a disclosure report to the company at least three days before the actual sales, unless the number of shares to be sold is less than 10,000 shares per day or sold to a designated person. The company will then post the details on the TSE’s Market Observation Post System and the SFB and TSE will closely monitor the information disclosed on the Post System.

In the event that the major shareholder sells the listed securities within six months after its acquisition, or repurchases the securities within six months after its sale, the company shall claim for the recovery of any profit realized from the sale and purchase

Buy-Ins
Buy-ins are rare as procedures are in place to ensure that trades settle on SD. Unsettled trades are reported to the TSE on T+1 and brokers are required to initiate buy-ins if the trades are failed or are reported as an error (broker’s or investor’s error).

The broker may pass the associated loss/cost to the investor subject to negotiations between the broker and the investor. The three-year suspension penalty has been removed. If an investor incurring a failed trade, he can resume trading as long as he has cleared the money owed to the broker. However, the fail record will be recorded in the TSE’s website and can be accessed by the local brokers and the investor has to re-open trading accounts with designated brokers prior to resuming trading.

Settlement risk derived form the non-DVP settlement cycle: Taiwan is not a true DVP market. Securities and cash are not settled simultaneously via the same clearing centre. Listed securities are settled on T+1 while the cash movement of the transaction is moved on T+2. Please refer to the below for settlement of RVP/DVP on T+1 and T+2 respectively:

T+1
Custodian must receive all settlement instructions by 11:00 Taiwan time at latest. By 12:00 T+1, local custodian confirms settlement with the brokers.

For RVP: the brokers report to the TSE confirming that settlements have been completed in the afternoon. Local custodian will generate settlement confirmation upon settlement.

For DVP: local custodian delivers the securities to the brokers’ TDCC accounts before 15:30 from Monday to Friday. Custodian will generate settlement confirmations upon settlement.

TDCC updates the transaction during its batch run on T+1 after settlement is complete.

T+2
For RVP: local custodian obtains the updated securities position in the morning through a terminal linked to the TDCC. Local custodian credits the purchase funds to brokers’ bank accounts by 09:00 -10:00 by interbank transfers via the Financial Information Services Co (FISC) system.

For DVP: the brokers credit the sales proceeds to client’s cash accounts by around 12:00 through FISC for same day value

Compensation Fund
* Business Guarantee Fund
* TSE Settlement and Clearing Fund
* GTSM Settlement and Clearing Fund
* Default Reserve Fund
* Securities and Futures Investor Protection Fund

These funds compensate investors in the event of broker default

Anti-Money Laundering
The following accounts are required for investment in the Taiwan securities market:

* A securities account for holding shares
* A TWD demand deposit account for settlement of securities transactions, collection of dividends, payment of charges and credit of interest income

Documents Required to Open Securities and Cash Accounts for Foreign Institutional Investors (FINIs):

Banks: Clients are required to sign, complete and forward the following documents to the sub-custodian. If these documents are already in place for accounts with other centres, the sub-custodian will provide certified copies of these documents to the branch.

* Custodian agreement.
* List of specimen signatures of authorized signatories and details of signing arrangements
* Fee agreement
* Securities and cash account opening forms or an authenticated SWIFT instruction (Note 1)
* Investment permit from Taiwan authorities *
* Contact person list for settlement, corporate actions, billing and statements matters
* If the end client is an individual introduced by a professional intermediary who is incorporated in a FATF equivalent jurisdictions and regulated by authorities performing functions equivalent to SFC, HKMA and insurance authority (both conditions have to be satisfied), the intermediary may provide the identification document copies of its end client to us for records by signing a copy of the Intermediary Certificate.

*As the custodian bank and local agent of foreign investors, the local sub-custodian will assist the foreign investors in applying and obtaining investment permits from Taiwan authorities.

Non-banks: Clients are required to sign, complete and forward the following documents to the sub-custodian. If these documents are already in place for accounts with other centres, the sub-custodian will provide certified copies of these documents to the branch.

* Custodian agreement
* List of specimen signatures of authorized signatories and details of signing arrangements (Note 2)
* Fee agreement
* Securities and cash account opening forms or an authenticated SWIFT instruction (Note 1)
* Mandate for account of a limited company duly signed by a quorum of directors
* Board resolution authorizing the opening of the account and identifying those who have authority to operate the account (Optional)
* Business registration license (or other business proof)
* Certificate of incorporation and Certificate of Incorporation of Change of Name (if applicable)
* Director declaration form or Certificate of Incumbency issued by registered agent
* ID/Passport copies of the Principal Shareholders (Note 3), Directors and Authorized Signatories, and the corresponding residential address proof (including permanent address if different). Address proof is required for all authorized signatories and beneficiary owners (if any).
* If there is any corporate director, please provide the Certificate of Incorporation of the corporate entity. If the corporate director’s representative also acts as the authorized signatory of the account at the sub-custodian, please provide a Board Resolution specifying the representatives who have the power to act for the corporate director, and name and identification of the underlying directors, authorized signatories and principal shareholders.
* If the end client is an individual introduced by a professional intermediary who is incorporated in a FATF equivalent jurisdictions and regulated by authorities performing functions equivalent to SFC, HKMA and insurance authority (both conditions have to be satisfied), the intermediary may provide the identification document copies of its end client to us for records by signing a copy of the Intermediary Certificate.
* Investment permit from Taiwan authorities *
* Contact person list for settlement, corporate actions, billing and statements matters

*As the custodian bank and local agent of foreign investors, the local sub-custodian will assist the foreign investors in applying and obtaining investment permits from Taiwan authorities

Broker dealers: For broker dealer client, Securities Clearing Agreement (instead of Custodian Agreement) should be completed together with the relevant documents as stated above.

Notes:
1. The sub-custodian will arrange SWIFT keys to be set up between the branch and the client.
2. Signatures appearing on the account opening forms/list of specimen signatures of the authorized signatories list must be duly verified by your present banker (for non-bank clients).
3. A person entitled to exercise or control the exercise of 10% or more of the voting rights of a company is regarded as a principal shareholder of the company (for non-bank clients).
4. Copies of company documentation (local version plus English version) must all be certified as true copies by a Certified Public Accountant (CPA), solicitor/notary public or banker from an European Union or Financial Action Task Force (FATF) member jurisdictions (for non-bank clients).
5. Apart from documents listed below, we may request additional account opening documents and information as and when necessary.