1. Registration for dematerialized securities
(1) Operational basis
On June 30, 2000, the revision to Article 8 of the Securities and Exchange Act has passed its third reading in the Legislative Yuan. Revised law had permitted the issuing and book entry of dematerialized securities. On November 12, 2001, two new articles — Articles 162-2 and 257-2 — were added to the Company Act, clearly stipulating that dematerialized securities must be registered with the particular agency responsible for centralized securities custody.
In response to these changes, TDCC (was TSCD) began planning the necessary adjustments to the central deposit account structure, in which the issuers could be included as participants, and also began developing registration and book-entry operations for dematerialized securities, which commenced on December 20, 2001. A solid foundation was therefore to be established for securities dematerialization in Taiwan.
(2) Book-entry delivery
Upon receipt of instruction from issuers, TDCC will transfer the securities into shareholders' TDCC accounts under each participant and notify the respective participants to record the transfer in their customer's account book. Securities delivered by such book-entry transfer may be issued without the actual physical securities print. Shareholders are still able to trade, settle, and pledge the shares recorded in their account books.
For shareholders who do not have any TDCC account with a participant, TDCC will transfer their securities into the “registration” sub-account by the issuers.
(3) Termination of registration
TDCC may terminate the registration of dematerialized securities under the following circumstances:
- Issuers qualified for issuing physical securities may apply to TDCC for terminating the registration of dematerialized securities and switching to physical issuance.
- Except where the issuance of dematerialized securities is not required to be conducted by a public company only, TDCC may terminate the registration of such dematerialized securities if the issuer has been approved or forced to be converted into a private company by the competent authority.
- TDCC may terminate the registration of dematerialized securities issued by companies that fail to meet the “Qualifications for Issuers to Apply for Dematerialized Issuance of Securities”, or that refuse or dodge TDCC’s investigation without justified causes, or that do not submit ?necessary materials for investigation, or that violate any relevant laws, regulations or provisions of TDCC’s account agreement.
2. Registration of short-term bills
When the bills settlement and clearing system was being planned, the legal framework for dematerialization had not yet been completed. Because of various concerns therein, the dematerialization of bills in the primary market was to be implemented in stages. It was then decided that the first step would be to dematerialize or to immobilize the bills traded in the secondary market. As for the primary market, physical bills would continue to be issued, but yet to be entrusted to TDCC for such central custody.
Since the related laws and regulations, as those that were relating to electronic signatures, have been in place altogether with the necessary online transaction systems, the conditions have been deemed ripe enough for dematerialized issuance in the primary market. TDCC therefore has planned the issuance of book-entry short-term beneficial securities, asset-backed commercial paper (ABCP), and negotiable certificates of deposit (NCD) into bills market, and has launched the system on March 27, 2006 and January 3, 2011, respectively. In the future, TDCC will continue to promote the dematerialized issuance of Commercial Paper II (CPII).