TWSE Market Insights

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Securities firms that have signed the "Agreement for the Use of the Centralized Securities Trading Market" with the Taiwan Stock Exchange Corporation (hereinafter referred to as the "TWSE") are required to comply with various regulations, such as the TWSE's Operating Rules and Regulations Governing Brokerage Contracts when accepting investor account opening applications. In terms of regulatory framework, the compliance review system not only includes positive qualifications, such as the inspection and verification of identity or qualification certificates, authorization letters, and identification documents related to anti-money laundering regulations for financial institutions, but it also requires the retention of the seal card or signature specimen as evidence after completing the review process (note: if the principal opens an account through correspondence or electronic means, it may be handled separately in accordance with the "Standards Governing Principal Identification and Management of Credit Line Categorization in the Processing by Securities Firms of Account Opening"), and widely includes the requirements of parallel review of various negative qualifications.

For example, securities firms shall not accept account openings by persons without legal capacity or with limited legal capacity who are not represented by statutory agents or who do not have a consent letter from the relevant unit of the Securities and Futures Bureau (hereinafter referred to as the "SFB") of the Financial Supervisory Commission (hereinafter referred to as the "FSC") or of the TWSE, or by persons who have declared bankruptcy but whose rights have not been restored, or who are under a guardianship or assistance declaration which has not been revoked, or by legal entities without account opening authorization certificates, or by legal entities/individuals who convert original discretionary accounts into self-trading accounts. Securities firms should also reject account opening applications if the five-year period has not yet expired for cases of breach of securities trading contracts without due settlement, violations of the Securities and Exchange Act or the falsification of securities still under trial or already determined by judgment, violations of futures trading contracts not yet settled, or violations of futures trading management laws and regulations already determined by a criminal judgment.

In this regard, the TWSE has established the "Standards for Internal Control Systems of Securities Firms" (hereinafter referred to as the "Internal Control Standards for Securities Firms"), which outlines more than ten types of operational procedures and control points for the opening procedures and review of regular trading accounts, covering customers, handling personnel, confirmation letter and reply processing, internal personnel management, discretionary investment, multiple trading accounts, account transfers, review procedures and information completeness, minors coming of age, field filling, and electronic contract review and signing. Due to length limits, this article only intends to review some of the special types of accounts that have attracted market attention in recent years to explore the background factors of that time, and to examine the relevant regulatory requirements. As for the part that has been widely discussed in the market recently, that is, opening an entrusted securities account in the name of an estate administrator or executor of a will, it was previously discussed in "A Brief Explanation of Securities Firms Entrusted to Sell Entrusted Securities Obtained by Entrustors Due to Inheritance," and therefore, will not be further elaborated upon (extended reading link: https://www.twse.com.tw/market_insights/zh/detail/8a8216d69c37647f019c98cf280c00ac).

The laws of our country segregate and differentiate the rights, abilities, responsibilities, and obligations of natural persons based on whether they have come of age and possess the ability to distinguish right from wrong. If a person meets the adult age criterion defined by law, in principle the person has full legal capacity and can independently engage in legal activities such as signing contracts, renting houses, getting married, and opening accounts, and is no longer required to be supervised by his/her parents or other statutory agents. However, the person will need to assume his/her own rights and obligations. Therefore, if they intentionally or negligently infringe upon the rights of others, an adult must also bear the liability for damages alone, and the parents of the tortfeasor are exempt from joint liability. If criminal responsibility is involved, the person will no longer enjoy the protective umbrella advocated by the Juvenile Justice Act, such as replacing punishment with education and prioritizing prevention over treatment. If the circumstances of the crime are serious and the punishment is the death penalty or life imprisonment, then the punishment cannot be reduced.

Section CA-11110 of the original "Internal Control Standards for Securities Firms" (item name: "Regular Trading Accounts – Account Opening Procedures and Review Requirements") established by the TWSE roughly stipulated that, despite the fact that they deal with a large number of underage customers, if a securities firm faces a customer identity conversion in the near future, that is, when an underage customer who had the account opening procedures completed is reaching the age of adulthood, the securities firm shall request the customer to provide supplementary account opening documents beforehand, or complete other authorization procedures for the customer. In practical operations, however, most securities firms tend to handle this situation by notifying the customer to re-sign the account opening contract at the counter, and simultaneously handling the seal change to avoid disputes and simplify the process. Considering that the regulations above are not mandatory, and the degree of implementation by securities firms varies, there are occasional cases of family disputes arising from the ownership of funds and securities.

In view of this, the Taiwan Securities Association (hereinafter referred to as the "Securities Association") passed a resolution at the 13th meeting of the 8th board on October 21, 2021 to express the opinions of securities firms, and requested the TWSE in writing to explain the relevant account correction procedures for minors when they reach adulthood in order to truly protect the rights and interests of such customers after they come of age and to facilitate securities firms in accurately carrying out legal compliance operations. The letter issued by the Securities Association on October 25, 2021, which referenced Chung-Cheng-Shange-I No. 1100005529, roughly pointed out that Section CA-11110 of the "Internal Control Standards for Securities Firms" had generally stipulated that securities firms should ask investors who are coming or have already come of age to provide supplementary account opening documents as soon as possible or to process other authorized securities trading procedures, but they did not stipulate the details of the matters to be followed. As a result, if an adult customer is unaware of his/her rights and obligations and the potential impact in the future, and does not personally sign the account opening contract and change the seal at the counter, the securities firm may suspend all trading functions of the customer’s original account. The current general practice of securities firms mentioned above not only increases the daily work pressure of securities firms but may also lead to negative perceptions such as customer complaints or grievances, as it explicitly requires customers to personally handle correction or authorization matters at the counter.

In order to effectively improve the current situation of inconsistent implementation standards, the Securities Association recommends that the TWSE consider not forcing minors coming of age to sign new account opening contracts, and instead, requiring them only to complete the necessary correction procedures. The reason is that the legal act of the securities firm accepting the proxy account opening by a minor's parent has already had a definite effect, and the correction should not be made to the contract itself. According to Articles 13, 1086, and 103 of the Civil Code, minors under the age of seven have no legal capacity. Minors over the age of seven have limited capacity for conduct. Parents are the statutory agents of their underage child, and within the scope of their agency authority, the expression of their intention in the minor’s name has a direct effect on the child.

Therefore, the act of agency of the statutory agent shall be deemed to be an expression of intention or acceptance of intention in the name of the minor within the scope of the agency authority, and shall be effective on the minor himself/herself. In addition, current banking practices do not yet require underage customers to complete supplementary account opening procedures, such as re-signing account opening contracts, when they reach adulthood. Considering that both securities firms and banks belong to the financial industry, their businesses should have a high degree of similarity, and banks attach no less importance to transaction safety and customer rights protection than securities firms. Based on the principle of equity and other considerations, there may still be room for discussion regarding the necessity of re-signing account opening contracts when compared with the practices of the banking industry.

In summary, the Securities Association has shot three arrows at once, specifically hoping that the TWSE can agree to add three major mechanisms for securities firms to follow the age correction procedures for minors, namely "establishment of an information disclosure and notification mechanism," "automatic invalidation of original seal cards and related consent forms," and "establishment of mandatory personal information maintenance and certificate replacement." Firstly, in terms of establishing an information disclosure and notification mechanism, the securities firm should send a reminder to the underage customer before he/she reaches adulthood to gently inform him/her that if there is a practical need to continue entrusting the parents to place orders on his/her behalf, he/she should come to the securities firm's office after reaching adulthood and fill out a power of attorney, but should not lend the account to others for unauthorized use to avoid disputes. Such notification should be recorded or computer-audited for the purpose of subsequent audits.

Secondly, on the automatic invalidity of the original seal card and relevant consent forms concerning the statutory agency, due to the fact that the customer has reached adulthood, the reason for the parents’ statutory agency will be extinguished, and it is advised that the statutory agent 1 and statutory agent 2 (i.e., both parents) noted on the seal card retained by the underage customer when opening the account and the "Consent Letter for the Authorization of Securities Trading by the Statutory Agents of an Underage Child" should be automatically declared invalid. In other words, when a statutory agent represents an underage child for the purpose of expressing his/her intention, or when filling in documents or fields related to conducting transactions, the statutory agency of the parents shall be terminated at the moment when the investor reaches adulthood. If the investor makes an entrustment over the counter or entrusts someone else to place an order on his/her behalf in the future, he/she may process the application or update at that time, and the same procedures shall apply to online account opening.

Regarding the establishment of mandatory personal asset maintenance and voucher replacement, an underage customer should be required to confirm again within 30 days before reaching adulthood whether any retained information needs to be updated for maintenance. If the confirmation process is not completed, then similar to the processing of risk accounts, the securities firm shall temporarily suspend the trading function after the customer reaches adulthood. When the customer reaches adulthood, a certificate replacement must be carried out to ensure that trading orders are entrusted by the customer himself/herself.

In view of the fact that the amendment to the Civil Code, which redefines the adulthood age from 20 to 18, involves changes in important social systems and has an impact on both the people and government agencies, the government referred to the legislation enacted by the Japanese government which set a buffer period when lowering the adulthood age in its civil code, and accordingly set a buffer period of two years to facilitate the public's adjustment to the new system, with the implementation date set on January 1, 2023.From this perspective, the securities industry may face an urgent need in the year when the new law comes into effect to apply the procedures for correcting entrusted trading accounts due to an excessive increase in the number of original underage customers who meet the adulthood standard. After the aforementioned recommendation of the Securities Association, the TWSE immediately reviewed the current CA-11110 section of its "Internal Control Standards for Securities Firms," which states that, "when a minor reaches adulthood, it is advisable to request him/her to provide supplementary account opening documents, or complete other authorization procedures for trading securities to avoid disputes," to determine whether it is appropriate to clearly define the required procedures to eliminate doubts in the execution. The TWSE also considered whether it is necessary to add other compliance requirements for the current practice to serve as an option, other than re-signing the contract and handling seal changes at the counter, for the parties involved to follow and apply. The TWSE explored in depth the feasibility of various plans, and communicated with the SFB before the implementation.

Regarding the original intention of the aforementioned "providing supplementary account opening documents or completing other authorization procedures" stated in the "Internal Control Standards for Securities Firms" by the TWSE, it already includes, but is not limited to, the single option of "re-opening an account." This section has been agreed upon by the TWSE and the SFB after the TWSE’s explanation. However, to mitigate the risk of unauthorized trading in the original account arising from the loss of the parents’ statutory agency because the child reaches adulthood, while addressing the Securities Association's request to reduce operational burdens on securities firms, the TWSE also referred to the intent of Article 75-1 of the Securities and Futures Act and the "Standards Governing Principal Identification and Management of Credit Line Categorization in the Processing by Securities Firms of Account Opening" to interpret the text in CA-11110 of the "Internal Control Standards for Securities Firms," specifying that securities firms must notify parties nearing adulthood regarding accounts originally managed by parents on their behalf. Securities firms may adopt diversified methods to handle this matter to facilitate their compliance review.

From the aspects of customer rights protection, risk management implementation, and prevention of unauthorized agency, the TWSE reviewed the recommendations by the Securities Association item by item in order to facilitate the current internal control procedures, align them with industry practices, and effectively ensure that minor customers of securities firms are fully informed of their rights and obligations regarding their existing trading accounts upon reaching adulthood. After approval from the SFB, the related competent authority, the TWSE confirmed that securities trading accounts involve settlement risks and market orders, which are distinct from bank account processing, and therefore added the following operational procedures and control measures to strengthen internal controls for managing accounts of minors:

I. Securities firms shall notify underage principals by double-registered mail or other means of delivery that can confirm their intention 30 days before the principals reach adulthood, and inform them that they should provide the following supplementary account opening documents or complete other authorization procedures before the specified deadline, and the firms shall keep the records and relevant contact information: 

(I) Terminate the original agreement and sign a new agreement: After the "Agreement for Account Cancellation" is personally signed by the principal at the original business location, a new account shall be immediately opened on the spot, or at an alternative time through correspondence or electronic means.

(II) Keep the original agreement and add other required documents:

1. Return to the principal’s use: The principal may personally go to the original account opening location or apply online to prove that the applicant is the principal, and provide the expression of his/her intention. The securities firm shall clearly indicate in the original "Consent Form for Trading Authorization to the Statutory Agents of Minors," seal card, and other documents that they are voided. However, if there is a need to change the seal or other documents in the future, the principal should still complete the procedures at the counter.

2. Continue to be represented by others: Regardless of whether the authorized person is the original statutory agent or intends to change the agent to a third party, the principal shall sign relevant documents such as the letter of authorization and change the seal card at the counter.

II. Due to the change of actual user of the account, all necessary documents that need to be supplemented later should be properly attached and bound to the original contract for future reference. If no signing or authorization procedures are completed one business day before the principal reaches adulthood, the securities firm shall suspend the account from the next business day onward until the relevant procedures are completed.

Due to the fact that the decision on regular fixed-amount trading is previously made by the underage customer with the consent of the statutory agent, or made directly by the statutory agent for the customer, if the intention is delivered to the securities firm and accepted, the agreement between the two parties will immediately take legal effect. Therefore, it is inevitable that the public questions whether it is appropriate to apply the aforementioned "Internal Control Standards for Securities Firms" to the situation where the securities firm may suspend the use of the account, and suspend the execution of the agreed upon regular fixed-amount trading if the underage customer fails to complete any agreement signing or authorization procedures before reaching the age of adulthood.

In response to the question raised by the public, the TWSE issued a letter on March 11, 2022 with reference number Tai-Zheng-Fu No. 1110003934. Regarding the correction procedures for the originally signed securities trading agreement and restrictions on the use of the account after an underage customer reaches the age of adulthood, it is specifically stated that, according to the Civil Code, there should be a statutory agent for an underage individual, mainly because the individual may not yet be mentally mature; therefore, relevant protective measures are planned. This does not mean that parents may directly open an account in the name of their underage child and use the latter's name to hold stocks to circumvent laws and regulations. Referring to the judgment of the Supreme Court with reference number Tai-Shang No. 1731 in 1980, it is evident that a statutory agent merely holds an auxiliary position. Except in the case where the statutory agent acts and receives expressions of intent on behalf of an individual under the age of seven who is legally incapacitated, any contract entered into, without the statutory agent’s permission, by an individual with limited legal capacity who is over seven years old but has not yet reached the age of adulthood is not necessarily invalid under legal theory but is of uncertain validity. If it is subsequently approved by the statutory agent, the contract shall become effective. Even if the statutory agent does not approve the contract, if the principal acknowledges the contract after the cause of his/her limited capacity is eliminated, the acknowledgment shall have the same effect as approval by the statutory agent. Additionally, based on the enforcement practices of the National Tax Bureau, MOEA, funds in a trading account entrusted by an underage individual, if determined to be directly or indirectly sourced from his/her statutory agent, shall fall under the scope of gift tax.

Regarding the account suspension mentioned in the letter on January 25, 2022 with reference number Tai-Zheng-Fu No. 1110001450, it is unrelated to the validity of the originally signed contract. It merely refers to a temporary measure to deactivate the account function upon the expiration of a specified period, and full access to the account is allowed before the date of expiration. Even if the account suspension is temporary due to the expiration of the period, the control measures can be lifted upon completion of the necessary procedures, which is no different from the current model for handling frozen or inactive accounts. As for the scope of control for temporarily suspended accounts, it shall encompass all types of transaction orders, including but not limited to trading orders and subscription orders. Regular fixed-amount trading orders, being inherently preemptive agreements for purchase, should likewise be subject to regulation to ensure reasonableness. If a securities firm has provided reasonable and sufficient time for operation in advance per the requirement to enable the account owner and actual user of the account to make prior arrangements, there shall be no concern of affecting their rights to dispose of assets under their name.

Conversely, if the party in question has received the relevant notice but, due to his/her own intent or negligence, fails to promptly select and complete the subsequent corrective measures, the party shall have no right to claim any contractual performance obligations from the securities firm. Additionally, it is verified that in the standardized "Contract for Regular Fixed-Amount Securities Trading" provided by securities firms for customer signatures, it is stipulated in Article 1 that the rules, methods, notices, and directives of the TWSE shall be deemed part of the contract. Article 8 also specifies that the contract may be terminated based on the instructions of the regulatory authority, legal provisions, or unilateral written or electronic notice from the securities firm. In view of the above, since the securities industry has fully considered all types of subjective and objective circumstances concerning the impossibility of performance, there should be no doubt regarding any breach of contractual obligations.

According to Item 5, Paragraph 1, Article 76 of the Operating Rules of the Taiwan Stock Exchange Corporation, a securities firm shall refuse to accept account opening if it discovers that the customer has been declared under guardianship which is not yet voided; for an existing account, the securities firm shall reject orders for securities trading or subscription. However, this does not apply if the guardian disposes of securities for the interests of the ward.

In accordance with the aforementioned regulations, if the principal is declared under guardianship, he/she is generally prohibited from opening securities trading accounts. However, to safeguard the interests of the ward, for those who acquire securities through inheritance or gifts, they are allowed to sell the securities under their name. In this situation, the guardian may apply for account opening over the counter on behalf of the ward by presenting proof of guardianship appointment issued by the court for confirmation, the required documents for account opening such as the seal and identity proof of the ward who is declared under guardianship as well as those of the guardian, and the list of securities to be disposed of with the names and number of shares certified by the court. In addition, such type of special securities accounts can only be used for sale of securities, and securities firms are not allowed to buy securities for them.

The TWSE, in accordance with the instructions of the SFB and the competent authority, and for the benefit of domestic securities firms to be able to accurately grasp the essentials and guidelines for handling account opening and trading operations for individuals under guardianship, has posted relevant information on the "Domestic Business Promotion Website" page of its official website (, which integrates business items, operating procedures, and simulation scenarios, including but not limited to the handling methods when the county or city regulatory authority act as the guardian, and established item by item the "Q&A for Participation in Entrusted Securities Trading on the Centralized Trading Market by People Under Guardianship Declaration," with the main purposes of reducing the operational risks of securities firms and providing unified best practices for securities firms to refer to. The TSWE continuously reviews the flexibility of the practices in a rolling manner in order to work with securities firms to maintain overall market trading safety.

It also informed all securities firms via a circular that in their daily operations, if they still have doubts to be clarified when reviewing accounts to be opened by individuals under guardianship declaration, they may directly contact the Securities Service Team of the Intermediaries Service Department of the TWSE, and the dedicated business contact window will provide necessary consultation and assistance in order to jointly improve the quality of securities market services.

In short, guardianship declaration is a legal procedure which covers the submission of a request to the court, trial, appraisal, and ruling (note: with a psychiatrist or a physician having psychiatric experience participating and issuing a written report), and after registration and announcement by the household registration authority, the adult originally with legal capacity then becomes a person with no legal capacity due to the effect of guardianship declaration. The legal actions taken by persons under guardianship declaration are invalid, and they lose the rights to enter into contracts, manage property, and engage in litigation. That is to say, their legal acts must be executed by qualified guardians.

The original intention of the guardianship declaration system is to protect vulnerable individuals and prevent adults with mental disabilities from suffering losses to their rights due to internal factors such as erroneous judgments or external impacts such as fraud. As long as a person is unable to express or receive the expression of intention, or to recognize the effect of the expression of intention due to a mental disorder or other mental disability, his/her relatives, the prosecutor, the competent authority of a municipality, county, or city, or a social welfare institution may make a request to the family court accordingly. 

Since the legal actions taken by the parties under guardianship declaration are invalid, in order to ensure overall market trading safety, it is not appropriate to allow them to participate in the activities of the centralized trading market. Therefore, Item 5, Paragraph 1, Article 76 of the Operating Rules of the Taiwan Stock Exchange Corporation states that if a securities broker discovers that the principal has been declared under guardianship which has not been revoked, it shall refuse to accept the account opening application. 

Referring to the proviso of the TWSE's operating rules mentioned above, if the guardian of a person under guardianship declaration expresses that the disposal of securities is for the interests of the person under guardianship, the securities broker may, at its discretion, remove the account opening restriction. In other words, although a principal under guardian declaration may not open a securities trading account, if for the reason of protecting the interests of the principle under guardian declaration, such as inheritance or gift leading to acquisition of securities, the securities firm may make an exception and accept the account opening. The guardian may sell the securities held in the account of the principal under guardian declaration but entrusted purchases of securities are not allowed.

According to the local laws and regulations, minors are not yet mentally mature, and in the event of legal acts such as trading or contract signing, their parents must act as statutory agents to intervene and assist. Therefore, account opening by parents for their underage children does not require the consent of the court in principle. Conversely, if the guardian is determined by a court ruling, the guardian may not use or dispose of the ward’s property, or act on behalf of the ward to do so, unless it is for the ward’s own interests. Additionally, any act of purchasing or disposing of real estate, renting real estate or providing real estate for others to use, or terminating a real estate lease by an agent for the ward shall not be effective without the permission of the court, and the guardian may not use the ward's property for investment-related activities.

The following is an illustration with an actual case. Before starting the account opening process, a securities firm shall first confirm the identity of the guardian, clarify whether he/she is indeed the legal guardian of the person under guardianship declaration, and ask the guardian to provide various supporting documents such as the guardianship declaration ruling issued by the court, the guardian selection documents, and the household registration agency’s announcement. The legal status of the guardian can be confirmed if the content of the aforementioned documents matches the guardian’s personal information after comparison (note: for a natural person, his/her ID card and health insurance card should be verified; if the guardian is the competent authority of a municipality, county, or city, or a social welfare institution, the official letter of the government agency, the unified number of the withholding unit of the tax collection agency, or the registration certificate issued by the competent authority should be verified).Secondly, if a detailed list of assets, including the names and number of shares of the securities to be disposed of, has been attached when applying for guardianship declaration, the guardian should provide it together to prove that there is indeed a need to open an account to dispose of the securities held by the person under guardianship declaration.

The practical operations allow the guardian and the person who jointly issues the property inventory list to submit to the court the inventory list of the property of the person under guardianship declaration within two months after the court's ruling on the guardianship declaration. At the request of the guardian, the court may extend the reporting period if it deems such an extension necessary. Therefore, the securities firm may assist in completing the account opening process for an individual after confirming that he/she is indeed the guardian. However, the firm should track and control such special account accurately, and require the guardian to provide for comparison valid documents, such as the inventory list previously submitted to the court, before the guardian intends to sell securities in the future.

Allowing individuals under guardianship declaration to open accounts is a rare exception rather than a general rule. The aforementioned reasons for protecting the interests of the ward do not include the investment behavior of buying any securities to make a profit from price differences because securities market investment itself carries a considerable degree of risk, even if it is a regular fixed-amount ETF investment. If there is a loss in investment, it is clearly contrary to the interests of the ward and does not comply with the legislative intent of Article 1101 of the Civil Code to protect a person under guardian declaration. However, the purchase of government bonds, treasury bonds, central bank savings certificates, financial bonds, negotiable certificates of deposit, financial institution acceptance bills, or guaranteed commercial promissory notes is not restricted by law.

This type of special account is designed for exceptional circumstances, and is not a regular operation of the securities market. Therefore, unless written consent is obtained from the court, it is not appropriate to allow the account to have a sub-agency relationship. However, if the supervisory authority of a municipality or county directly under the central government, or the supervisory authority which is ruled to act as the guardian needs to carry out the guardianship operations through its subordinate units due to business responsibilities, the original supervisory authority subject to the ruling may specify the full name of the designated business unit in a formal document. The authority may use this document together with the data of the account manager listed in a separate letter from the unit to open the account with the unit seal and the personal seal of the account manager. This is done in order to facilitate the manager acting on behalf of the supervisory authority to, under the premise of protecting the interests of the ward, dispose of the securities under the ward’s name at an appropriate time.

The guardian may only sell the securities in the account of the person under guardian declaration, but as mentioned above, this does not include entrusting securities firms to make purchases. Considering that the disposal of the property of the ward is not yet a regular market investment activity, but a temporary countermeasure for the interests of the ward, a reasonable account duration should be set. It is recommended that if the party fails to handle it within six months, it should be restored to the original prohibited state.

If an investor who has opened a securities entrusted trading account subsequently experiences a guardianship declaration, the securities firm shall, in accordance with the current regulations of the TWSE, immediately cease accepting subsequent entrustments upon becoming aware of the fact. If the account opening contract originally stated this as a termination clause, the entrusted trading account can be cancelled after confirming that there are no inventory securities. Conversely, if the situation is not remarked as a requirement for termination, the account may be frozen first, taking into account compliance with the legal requirements and one's own business risks.

Regarding the knowledge of information on customer related guardianship declarations, KYC operations need to be carried out regularly, information can be obtained indirectly from third parties such as the media, or the situation of the parties involved can be actively understood through caring questions and other means to make judgments accordingly. When receiving notices from the court or notifications from the party’s family, the FSC, or securities related units, the securities firm should also immediately suspend the account from securities trading. Additionally, when the mental state of the person under guardianship declaration improves, regardless of the degree of recovery or whether an official medical certificate has been presented, the securities firm shall not directly agree to activate the suspended account. The case needs to go through legal procedures and a ruling again. That is, according to Paragraph 2, Article 14 of the Civil Code, the court may, upon the application of the person, his/her spouse or relatives within four degrees of kinship, or other cohabiting relatives from the past few years, the prosecutor, the competent authority, or a social welfare institution, review and confirm the reasons for the elimination of the guardianship declaration, and approve the revocation of the declaration to enable the subsequent application for account restoration.

With reference to Item 5, Paragraph 1, Article 76 of the Operating Rules of the Taiwan Stock Exchange Corporation, if a securities broker discovers that the guardianship declaration for the principal is not revoked, it shall refuse to accept the account opening application; if the account is already opened, the securities broker shall refuse to accept entrusted securities trading or subscription. However, this restriction does not apply if the guardian disposes of securities for the interests of the ward. In this regard, the procedures related to the account opening and entrusted trading of a person under guardianship declaration shall apply simultaneously to the new entrusted accounts by the person under guardianship declaration, as well as situations where a guardianship declaration is placed on an existing customer.

After the guardian submits an application to the family court of the place where the ward resides, and the judge issues a ruling after reviewing the documents and referring to relevant data, the guardian may personally go to the securities firm's office and present the ruling and related documents as proof for account opening. However, there have been many cases involving disputes over the ward’s property in practice. If the case has escalated from non-litigation to litigation, the content of the final judgment shall be referred to as evidence and the civil ruling shall not be solely relied upon.

Previously, a large-scale securities firm, having over 300 accounts with customers under guardianship declarations, sent a letter to the TWSE seeking a solution to address the issue of how to handle the large inventory of stocks in such accounts, in order to facilitate the guardian’s sale of stocks on behalf of the ward and achieve the purpose of enabling the ward to participate in entrusted securities trading in the centralized trading market, so as not to adversely affect the rights and interests of a multitude of customers due to misunderstandings of relevant regulations.

After investigation, the TWSE was of the opinion that if a securities firm intends to use a declaration or commitment letter issued by a guardian as a substitute for the obligation to confirm the securities details, although it can be regarded as a temporary measure for self-protection by the firm, it is difficult to say that it is not legally effective. However, if interested parties later raise objections and claim that the disposal of shares under the name of the guardian is not based on the interests of the ward, and then blame the securities firm for its negligence in confirmation when it was entrusted, then the firm may not be fully exempt from liability, and may face the risk of bearing some legal responsibility. In addition, regardless of whether the account is opened by an individual or a legal entity, securities firms may refer to Article 75-1 of the Operating Rules of the Taiwan Stock Exchange Corporation and require the applicant to prepare a seal and various identification documents. However, due to the special nature of such accounts, to be cautious, it is necessary to require the guardian to apply over the counter and have the securities firm's qualified business personnel verify the documents and information in person to avoid fraud or other illegal activities.

The court's intervention for review and permission is necessary when it comes to whether the guardian acts as an agent for the ward to purchase or dispose of real estate, or acts as an agent for the ward to rent out the building or site of the ward’s residence to others, or to terminate a lease. Regarding other guardian acts for the interests of the ward concerning the use, proxy disposition, or agreement to dispose of the ward's property which do not need court permission in accordance with the law, the TWSE claims that, as it is not the competent authority regarding the Civil Code, it is not appropriate or is difficult for it to comment on the provisions of Articles 1101 and 1103 of the Civil Code. The practical opinions of the legal community on this matter have yet to be integrated. However, the objective majority tends to believe that, based on an analysis of their overall structure, the aforementioned provisions already regulate that a guardian is not allowed to engage in the use, proxy disposition, or agreement to dispose of the ward's property if it is not for the ward's interests.

On the basis of the basic principles mentioned above, restrictions on the purchase, disposal, and leasing of high-value real estate derived from traditional concepts are subsequently listed. However, if a hasty conclusion is made based on the above that the property of the ward intended to be protected by the Civil Code does not include securities under the ward’s name with potentially higher value, or even virtual currencies that have flourished in recent years, it may be inappropriate and hinder keeping pace with the times. Additionally, the last paragraph of the article above concerning securities investment behavior explicitly prohibits investment with the property of a ward, except for targets with almost zero risk such as government bonds and treasury bills. If it is mistakenly concluded that the interests of the ward can be disregarded in the disposal of non-real estate assets, then it would seem to be inconsistent with the legislative intent of this article.

Considering that some nationals without registered residence do not hold overseas Chinese identity documents, and do not meet the requirements in the Regulations Governing Investment in Securities by Overseas Compatriots and Foreign Nationals, in order to promote inclusive finance and channel more funds to invest in the securities market, the TWSE announced on July 14, 2025 the amendment to its Operating Rules and the Regulations Governing Brokerage Contracts of Securities Brokers with reference number Tai-Zheng-Fu No. 11400129691, and added Item 3, Sub-Paragraph 1, Paragraph 1 simultaneously to Article 75-1 of the former and Article 3 of the latter, which stipulates that nationals who are non-domestic overseas Chinese and have no registered residence may open entrusted securities trading accounts.

According to the latest regulations mentioned above, a national without registered residence may personally hold a Taiwan residence permit that is sufficient to prove that he/she has no registered residence, and attach his/her Taiwanese passport and other identification documents, such as a health insurance card, driver's license, or student's card, to enable the securities firm to go through the account opening process after reviewing and confirming their correctness, and then obtain the qualification to enter the Taiwan stock market, which has experienced vigorous growth in recent years with its market value ranking the sixth largest in the world, surpassing that of the United Kingdom.

The term "nationals without registered residence" refers to specific ethnic groups, such as overseas Chinese or naturalized individuals who hold the nationality of the Republic of China, but do not have registered residence within the jurisdiction of the government of the Republic of China. Such individuals may enter our country with special passports, but they must apply for a “temporary entry permit with a reference number of Lin-Ren.” Although nationals without registered residence cannot enjoy benefits such as labor and health insurance, they are exempt from paying taxes, serving in the army, and meeting other national obligations, but they are bound by laws and regulations such as the Immigration Act. 

With reference to the relevant laws and regulations of the securities market in the past, if a national who has not established a registered residence or has not applied for a national identity card is unable to produce the necessary documents required by a securities firm for an account opening review, then it is even more difficult for the person to provide a fixed registered residence address as a contact requirement, and therefore cannot successfully carry out the basic securities account opening process, and will be blocked from the Taiwan securities market. The administrative departments of the government have long accepted petitions from groups of nationals without registered residence, which called for their rights guaranteed by the Constitution to participate in the capital market to be taken seriously. Therefore, the SFB instructed the TWSE to properly study a plan to allow nationals without registered residence to open securities accounts, based on the special consideration that though such nationals without registered residence are not overseas Chinese in Taiwan, they are still natural persons of this country. This fact should be taken into account together with the business promotion needs of the securities industry.

Earlier, when government departments accepted petitions from nationals without registered residence stating their difficulties in completing account opening procedures at securities firms' offices, the SFB, citing the provisions of Article 77-4 of the TWSE’s Operating Rules, determined that since their identity is domestic overseas Chinese, if they want to invest in domestic securities, they should submit an overseas Chinese identity certificate or a ROC passport with the identity of overseas Chinese, and attach a residence permit and other identification documents to entrust securities brokers to register with the TWSE. After obtaining an identity number, they could have the subsequent account opening review processed by securities brokers.

U, Article 75-1 of the TWSE's Operating Rules is a general requirement for domestic securities firms to sign entrusted trading contracts with natural persons, legal persons, and corporate bodies. As for Article 77-4 of the Operating Rules, it is an exception provision added for few special circumstances such as those involving overseas Chinese and foreigners. In other words, account opening applicants that securities firms may accept already include overseas Chinese and foreigners residing in Taiwan. Even if such individuals are overseas, they may designate their agents or representatives located in Taiwan to handle account opening.

Regarding the stricter requirements for securities market account opening compared to those for the banking industry, it can be attributed to the current trading system in Taiwan's securities market, which, while mandating that securities firms assess individual customers' investment capacity based on their financial resources, does not generally enforce mandatory checks on customer account balances and block trading amounts before entrusted transactions. Consequently, there remains a risk in post-transaction settlement. Therefore, in order to maintain the overall settlement order and trading safety of the securities market and prevent securities firms from accepting excessive margin trading, the TWSE, in accordance with the regulatory requirements of the competent authority, stipulates that securities firms must conduct reasonable reviews and screenings regarding investors' identities, investment capacities, and residence information. This process is analogous to the stringent loan collateral procedures of banks, and is significantly different from the low-level review typically applied by banks when merely accepting deposits.

Moreover, some conservative securities firms in practice have established more advanced internal control systems based on the TWSE’s regulations, such as the articles of association, bylaws, rules, circulars, and other normative documents. For instance, within the scope of contract freedom in the Civil Act, securities firms may, based on operational risks or other considerations, intensify their review and evaluation procedures for investors who sign entrusted trading agreements with them. Even if investors meet all the prescribed requirements regarding identity, supporting documents, and financial capacity, securities firms are not obligated to accept their account opening and may reject it without providing reasons.

Regardless of whether a national without registered residence acquires his/her ROC nationality due to any of the factors listed in Article 2 of the Nationality Act, such as parentage, place of birth, or naturalization, any individual with the ROC nationality is considered a national of the country. This is a right guaranteed by the Constitution. However, by referring to the current laws and regulations of our country such as the "Immigration Act," even those with national identity must have their rights and obligations distinguished based on factors such as whether they have registered residence. For nationals without registered residence, certain obligations are exempted, but they are also deprived of rights such as voting and holding public offices, and face restrictions in areas like labor and health insurance, state compensation, and immigration control. The principle of equal rights and responsibilities is universally recognized, and the regulations in our country are similar to those in other nations, making it difficult to claim discriminatory treatment toward such nationals.

Since the Nationality Act has not incorporated the "Single Nationality Principle," which is common internationally, the regulations regarding nationals acquiring multiple nationalities are relatively lenient and generally permit simultaneous acquisition of foreign nationality without prohibition. In general, even for investors with dual nationality, the Taiwan securities market does not prohibit any investors from injecting funds into the domestic securities market under the identity of foreigner or overseas Chinese. Such special-status investors only need to prepare the required supporting documents in advance, and then proceed with the account opening process at their chosen securities firms to easily obtain the qualification to participate in the stock market. Prior to the relaxation of the aforementioned policy with reference number Tai-Zheng-Fu No. 11400129691, securities market regulations still relied on domestic laws such as the Household Registration Act and could not transcend their scope. In the Taiwanese securities market, which is highly regulated by the competent authorities, domestic securities firms were unlikely to rashly violate the government's previous policy of differentiated management for nationals without registered residence based on limited commercial interests.

The main background condition for the emergence of a large number of people without registered residence requesting to open accounts in the securities market is that the Overseas Chinese Affairs Commission has become more cautious in examining the identity of overseas Chinese and issuing relevant certificates in recent years. Therefore, any national who was originally identified as residing abroad may experience an impact on the additional visa for their overseas residence status if they have resided in the country for a long time. For example, if an overseas Chinese holding a visa with overseas Chinese status does not return to his/her original place of residence for a continuous or cumulative period of time after residing in Taiwan, then he/she does not meet the requirement for residing abroad, and the Overseas Chinese Affairs Commission will no longer recognize him/her as an overseas-Chinese national, resulting in the loss of his/her overseas Chinese status. 

Therefore, the TWSE conveyed the requirement to the competent authority, and asked securities firms to clarify the true identities of existing customers as soon as possible. If there are any abnormalities, they should be corrected immediately according to the regulations at that time. As for new account holders, effective review of relevant supporting documents should be carried out to completely eliminate the chaos of some securities firms not specifically implementing the regulations. In other words, securities brokers who accept account opening requests from domestic natural persons shall handle them in accordance with Article 75-1 of the TWSE's Operating Rules. As for overseas Chinese and foreigners investing in domestic securities, they should submit relevant documents to apply for registration with the TWSE in accordance with Article 10 of the "Regulations Governing Investment in Securities by Overseas Compatriots and Foreign Nationals" (hereinafter referred to as the "Regulations on Overseas Compatriots and Foreign Nationals") before entrusting securities brokers to open accounts for trading domestic securities in accordance with Article 77-4 of the TWSE's Operating Rules.

According to Article 3 of the Regulations on Overseas Compatriots and Foreign Nationals, overseas Chinese and foreign nationals within the territory of the Republic of China who may invest in domestic securities are foreign institutional investors or natural persons who reside in the territory of the Republic of China with a certificate of identity of an overseas Chinese, a ROC passport with a visa for overseas residence status, or a residence permit. Therefore, if a national without registered residence holds a residence permit and still has a valid visa for an overseas Chinese, he/she may submit the supporting documents prescribed in the preceding paragraph to carry out the registration of an overseas Chinese investment, and entrust a securities firm to open an account in accordance with Article 77-4 of the TWSE’s Operating Rules. If the person does not have overseas Chinese status, he/she is not considered to be overseas Chinese under the provisions of the Regulations on Overseas Compatriots and Foreign Nationals. In other words, if the person is a national of our country, he/she should open an account as a natural person of the country and follow the relevant regulations.

After the securities firms implemented the aforementioned correction measures, the statistics showed that there were only a very small number of such cases, accounting for less than 0.005% of the total number of account openings across the country, and the impact was minimal. For those affected who responded to the requirements of securities firms by promising to provide national identity cards and other documents to correct the data based on the location of their registered residence, most have contacted various government agencies to complete the issuance of the required identity documents, and have continued to invest in the stock market of the country after becoming qualified. However, if the certificate of entry/exit date shows that they are long-term residents in the country, male nationals will lose the eligibility for the suspension of conscription for male overseas Chinese and will need to perform military service obligations. However, for those with no registered residence record, they may be exempt from these obligations. This is the spatio-temporal background for the rare occurrences of existing female nationals without registered residence.

Although the policy of opening securities accounts for nationals without registered residence is not without negative opinions, such as the inflow of unknown funds from abroad, the difficulty of managing nominee accounts, and the loss of tax equity, after comprehensive observation from many perspectives, the mainstream opinion is still positive. The industry and academia believe that this may improve the financial inclusiveness of the securities market, but the relevant authorities should continue to observe the subsequent market changes and impacts. In addition, it remains to be tracked and verified whether securities firms have indeed followed the relevant procedures when conducting account opening reviews. In this regard, the TWSE stated that it will urge securities firms to carefully monitor and review the relevant regulations in a rolling manner to follow the regulatory authorities’ policies; it will also propose timely supporting contingency plans based on market trends to achieve the vision of inclusive finance.

With regard to the control of default risk of nationals without registered residence, the TWSE has solemnly reminded securities firms that when accepting the opening of such accounts in the future, they must register the residence permit number and residence address on the residence permit, as well as conduct strict audits in accordance with the securities firms’ risk management norms. When necessary, proactive measures such as trading amount limit or advance payment for stock settlement may be taken based on the customer's financial and credit status.

The TWSE also promises to work with securities firms to jointly promote the implementation of various management measures tailored to the relevant parties. For example, on the strengthening of the identity verification mechanism, multiple file verification procedures may be adopted, and image and data records may be retained. In addition, graded account opening and credit limit restrictions will be implemented, and probably only the opening of accounts for trading securities already in possession will be allowed in the initial stage, in order to avoid trading risks due to excessive credit expansion. Some securities firms have also planned to establish abnormal transaction monitoring systems to detect large orders and frequent transactions in real time. As for the regular tracking after account opening, spot checks should be conducted in batches to verify the validity of such investors’ identities to ensure that such accounts are not abused.

In terms of medium- to long-term tracking indicators after policy implementation, it is necessary to carefully observe the changes in the total number of account openings and capital inflows, account default rates and settlement performance, and abnormal cases such as nominee accounts or manipulation behaviors, and analyze the trends of curves such as the quantity trend. If warning signals appear in advance, securities firms must formulate response strategies early to prevent market risks from further expanding.