Regulations Governing Securities Firms Article 64

When the regulatory capital adequacy ratio of a securities firm is at least 120 percent but is less than 150 percent, the FSC may take the following actions:1. Postpone any additions by the securities firm to its types of operations or business items, any establishment of additional branch offices or simple branch offices, and any equity investment in any securities, futures, financial, or other enterprises.2. Require the securities firm to strengthen its internal controls and increase the frequency of internal auditing, and within one week of filing the report, submit a concrete, detailed explanation and correction plan to the relevant authorities in accordance with Article 21, paragraph 4.3. If the capital adequacy ratio has not been corrected by the end of the month preceding any proposal by the board of directors for distribution of profits, in addition to requiring the securities firm to deduct from its undistributed earnings those items required to be set aside according to regulations, it shall further be required to set aside 20 percent as special reserve in accordance with Article 41, paragraph 1 of the Act.