Questions and Answers About Securities Related Business in Response to Major Disasters

Please refer to the TWSE website: Home/Clearing Services/Administrative Principles in Cases of Office Closure Due to Natural Disastershttps://www.twse.com.tw/en/page/clearing/suspended.html.

In accordance with the “Taiwan Stock Exchange Corporation Measures for Responding to Natural Disasters”, the settlements due between the investors and securities firms shall be handled in accordance with the following principles:

1. When the TWSE market is closed for the entire day due to the natural disaster:
   When the mayor of Taipei City announces the closure of offices of all government and educational institutions in Taipei City on the given day or the morning of the given day, the TWSE market shall be closed for the entire day. All securities firms shall suspend operations for the entire day and the settlements for funds and securities between the investors and the securities firms due on the given day shall be postponed accordingly.
2. When the TWSE market remains open for the entire day during the time of the natural disaster:
   1. Upon the occurrence of a natural disaster, the securities firms with head office and branch offices situated outside of the disaster area shall operate as usual, and the settlements between the investors and securities firms due on the given day shall be handled as usual.
   2. If, due to the occurrence of a natural disaster, the county commissioners or city mayors in the disaster area announce the closure of office for government and educational institutions in all or part of the area under their administrative jurisdiction, the securities firms inside the disaster area may decide at their own discretion whether to conduct operations as usual. Irrespective of whether operations are conducted as usual, settlements of funds between the investors and the securities firms due on the given day shall be postponed accordingly. The settlement of the book-entry transfers of the securities due on the given day shall be handled as usual.
   3. When the mayor of Taipei City announces closure of offices for all government and educational institutions in Taipei City in the afternoon of the given day, the TWSE market shall not close. Settlements of funds and securities between the investors and the securities firms due on the given day shall be conducted as usual. However, all other after-hours trading shall be suspended.
3. In the event that the offices at the place of the securities firm remain open whilst the offices at the place of the investor are closed due to the natural disaster and the investor is unable to fulfill the settlement obligation as scheduled, the securities firm may submit to the TWSE for recordation the consolidated information of the investors who are unable to perform the settlement due to the natural disaster, and in the meantime complete the settlement procedures on behalf of such investors. (August 1, 2008 Taiwan-Stock-Trading 0970204056)

If an investor suffers from any loss due to his/her inability to place trading orders with the securities firm where he/she maintains an account, the investor may file a claim if the securities firm is legally liable for such loss. In the event that an investor is unable to place trading orders due to natural disasters, the case shall be considered a Force Majeure event and the securities firm shall not be liable for the compensation.

In accordance with Article 76 of the “Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities”, the TWSE shall follow the relevant regulations and suspend the short sale when a TWSE-listed company announces the book closure date for the reason of ex-rights, ex-dividend or regular shareholders meetings. The investor engaged in the short sale shall cover the position to enable the compilation of the shareholders register. If the stock market is closed due to the natural disaster, the suspension or resumption of short sale shall not be postponed. In case the day happens to be the deadline for short covering, however, the deadline shall be postponed for one day.

It was stipulated in Article 67 of the “Operating Rules of the Taiwan Stock Exchange Corporation” that “In the trading of stocks, where a listed company has set a date for suspension of changes to the shareholders register (the book closure date) based on the record date for distributing dividends, bonuses or other interests pursuant to paragraph 2 of Article 165 of the Company Act, all settlements conducted after the date for suspension of changes to the shareholders register (the book closure date) shall be ex-dividend and ex-rights”. The book closure period shall be determined by the TWSE-listed company and shall be announced 12 business days in advance. The last day of the book closure period shall be the “Date of Record for Distribution of Rights and Interests”. The TWSE-listed company shall distribute its dividends or confirm the subscription rights of the new stock warrants based on the shareholders register at the Date of Record for Distribution of Rights and Interests. If an investor purchases stocks two business days prior to the book closure date and acquires the stocks after completing the settlement procedures (the second business day after the transaction is concluded), he/she shall not participate in the distribution of rights/interests because the listed company has already suspended any change to the shareholders register. The securities settled on that day, therefore, shall be ex-rights and ex-dividend. When the stock market is closed due to natural disaster, the ceiling price, floor price and opening price originally applicable to the ex-rights/ex-dividend transactions of the given day shall remain applicable on the next business day. For stocks scheduled for ex-rights/ex-dividend procedures after the market-closure date, the original schedule shall remain in force unless the TWSE-listed company has announced the change of the “Date of Record for Distribution of Rights and Interests”.

In accordance with the “Taiwan Securities Association - Procedures Governing the Allocation of Securities through Public Subscription by Securities Firms”, all subsequent procedures for the following items shall be postponed to the next business day in case the TWSE market is closed due to natural disasters or other reasons: deadline for subscription, the date for open drawing, as well as the payment, deduction, delivery or remittance of the handling fee, postage for the notice of, lottery-winning or contract price.

In accordance with Section 8 of the “Taiwan Securities Association - Procedures Governing the Allocation of Securities through Competitive Auction by Securities Firms”, all subsequent procedures for the following items shall be postponed to the next business day in case the TWSE market is closed due to natural disasters or other reasons: deadline for tender submission, date of tender opening, as well as the payment, deduction, delivery or remittance of the tender handling fee, bid deposit, lottery processing fee or contract price.

The listed companies should comply to “Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities” and actively disclose estimated damage situation, loss amount and corresponding measures. If a company’s reporting and operating systems are damaged by the disaster so that it is unable to disclose information within the specified deadline, the company should apply to the competent authority for extension. The TWSE will follow up and provide necessary assistance cooperatively.

1. According to Article 36 of the Securities and Exchange Act and Regulations Governing the Applicable Scope of Special Circumstances for the Public Announcement and Filing of Financial Reports and Operational Status Reports by Public Companies ("Regulations") prescribed by the Financial Supervisory Commission, when a listed company encounters force majeure such as earthquakes or flood so that it is unable to file the various financial reports on time, the company may, based on Article 36, Paragraph 2 of the Securities and Exchange Act and Article 4 of the "Regulations", apply to the competent authority for extension of the deadline within 15 days (inclusive) from the date of occurrence of the fact and prior to the public announcement and filing deadline. The company should provide in the meantime the reasons for its inability to make the public announcement and filing by the deadline, the relevant supporting documents, and the proposed extended deadline. The deadline may be extended for no more than one month, but may be extended again if necessary. In this context, the competent authority has the power to determine the deadlines for the companies with listed securities to file their financial reports, and to approve/disapprove the applications for extension of the deadlines, etc. If a company with listed securities encounters a serious disaster, it shall, based on the relevant regulations, submit an application to the competent authority for extending the financial reporting period. The TWSE will follow up and provide necessary assistance cooperatively.
2. If a listed company fails to file its financial reports within the deadline prescribed in relevant regulations, it shall be subject to a penalty of no less than NTD240,000 and no more than NTD4.8 million imposed by the competent authority in accordance with Article 178, Paragraph 1, Subparagraph 4 of the Securities and Exchange Act. Furthermore, in accordance with Article 6 of the “Regulations for Information Reporting by Securities - Listed Companies and Offshore Fund Organizations Engaged in ETF Business” issued by the TWSE, a default penalty of no less than NTD NTD10,000 and no more than NTD1 million may be imposed on the company by the TWSE. Also, the TWSE may suspend the trading of the listed securities of a domestic or foreign listed company (including TIB) respectively based on the “Operating Rules” of the Taiwan Stock Exchange Corporation. The violations shall in the meantime be reported to the competent authority for recordation.

1. If the stocks are lost, stolen or destroyed, the shareholder or the legal owner thereof shall report the event to the police authorities for recordation and obtain a police report. He/she shall in the meantime complete the loss of stock application form bearing the specimen seal/signature, which shall be sent to the issuing company or the agent of stock affairs to complete the loss reporting procedures.
2. If the transfer has not been previously registered by the legal owner of the stock, it is necessary to submit additional documents to the issuing company or the agent of stock affairs, including the purchase report issued by the securities broker, the certificate of the stock number, a copy of the personal ID and the specimen signature card.
3. The applicant shall, within five days after filing the loss report, apply to the civil court of the local district court at the location of the issuing company for public announcement of the event. A copy of the court application and the court acceptance voucher shall be sent to the issuing company or the agent of stock affairs.
4. Upon issuance of the public announcement ruling by the court, the applicant shall send a copy of the ruling and the newspaper carrying such a ruling to the issuing company or the agent of stock affairs.
5. Upon the expiration of the period of public announcement (for example,the effective period of court ruling is six months, then it is six months after the date of announcement made in the newspaper), the applicant may apply to the local district court for a judgment declaring the lost stock certificates void, presenting at the same time the public announcement ruling by the court, the newspaper carrying such ruling, as well as the personal ID and personal seal of the applicant. The public announcement ruling shall be voided if the above procedures are not completed within three months.
6. The applicant may apply to the issuing company or the agent of stock affairs for issuance of replacement stocks by attaching the court judgment declaring the lost stock certificates void, his/her personal seal and the completed “Application for the Replacement of Lost Stocks”.

If the market closes on the last trading date and maturity date of warrants because of natural disasters, such last trading date and maturity date are postponed to the next business day while investor’s rights and interests remain intact.