A securities firm, unless concurrently operated by a financial institution and subject to other acts or regulations, shall maintain an appropriate ratio between its regulatory capital and its overall risk equivalent, except as approved by the Commission.
The appropriate ratio referred to in the preceding paragraph is called the regulatory capital adequacy ratio and its calculation method is the net amount of eligible regulatory capital divided by the overall risk equivalent.
For those foreign securities firms having Taiwan branches, if their home-country head office have already calculated their regulatory capital adequacy ratio under their local laws with the overall risk of their Taiwan branch office already entered into the calculation, and have met the standard, they may send those documents and information relating to the said regulatory capital adequacy ratio which have met the standard to the Commission to apply for a waiver of application of the provisions in this Chapter. However, unless specifically approved by the Commission, a monthly report on the head offices' regulatory capital adequacy ratio shall still be reported according to Article 21, paragraph 4.

The calculation of the net amount of eligible regulatory capital and the overall risk equivalent of the regulatory capital adequacy ratio as referred to in paragraph 2 of the preceding article is categorized into a simple calculation method and an advanced calculation method.
The securities firms to which the advanced calculation method for the regulatory capital adequacy ratio under the preceding paragraph applies, and the implementation date, shall be prescribed by the FSC.

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Securities firms, other than those concurrently operating financial institutions and foreign securities firms who have the FSC approval for waiver of this Chapter's regulations, shall fill out the Itemized Statement of the Regulatory Capital Adequacy of the Securities Firm monthly in accordance with the applicable calculation method, and by the 10th of the next month, report it according to the method prescribed in Article 21, paragraph 4. When necessary, the FSC shall require securities firms to file reports at any time.
The format of the Itemized Statement of the Regulatory Capital Adequacy of the Securities Firm referred to in the preceding paragraph shall be prescribed by the FSC.
In addition to disclosing capital adequacy information of the securities firm pursuant to the requirements of the FSC, the TWSE, or other relevant institutions, a securities firm shall disclose the most recent regulatory capital adequacy ratio information in the annual report.

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 lines of business, any establishment of additional branch offices, and any equity investment in any securities, futures, financial, or other enterprises.
2. Require the securities firm to strengthen the internal control and increase the frequency of internal auditing, and within one week of filing the report, send a concrete, detailed explanation and plan of improvement to the relevant authorities according to Article 21, paragraph 4.
3. If there has been no improvement made on the capital adequacy ratio at the end of the month that preceded the board of directors making proposal for distribution of profits, in addition that it shall be required to deduct from its undistributed profits those items to be set aside according to regulations, it shall further set aside 20 percent for special reserve according to Article 41, paragraph 1 of the Act.

When the regulatory capital adequacy ratio of a securities firm is at least 100 percent but is less than 120 percent, the FSC, in addition to handling the matter according to subparagraphs 1 and 2 of the preceding article, may also handle the matter in the following ways:
1. Reduce its scope of business operations.
2. Require the securities firm to fill out and report weekly a securities firm capital adequacy reporting form.
3. If there has been no improvement made on the capital adequacy ratio at the end of the month that preceded the board of directors making proposal for distribution of profits, in addition that it shall be required to deduct from its undistributed profits those items to be set aside according to regulations, it shall further set aside 40 percent for special reserve according to Article 41, paragraph 1 of the Act.

When the regulatory capital adequacy ratio of a securities firm falls below 100 percent, the FSC, in addition to handling the matter according to Article 64, subparagraphs 1 and 2 and Article 65, subparagraphs 1 and 2 herein, may also handle the matter in the following ways:
1. Disapprove any of its applications for increasing the number of branch offices.
2. If there has been no improvement made on the capital adequacy ratio at the end of the month that preceded the board of directors making proposal for distribution of profits, in addition that it shall be required to deduct from its undistributed profits those items to be set aside according to regulations, it shall further set aside the total amount as special reserve according to Article 41, paragraph 1 of the Act.

Securities firms that have already set aside special reserve in accordance with Articles 64 to 66 for the previous year, when setting aside various special reserves as required for this year pursuant to relevant regulations, shall include it as part of the undistributed profits, and then recalculate the required special reserve to be set aside according to the actual condition of the regulatory capital adequacy ratio.