Chapter II Master Agents and Sub-Distributors of Offshore Funds
|
Section I Master Agents
|
| Article 8 | An offshore fund institution may mandate an approved SICE, securities investment trust enterprise ("SITE"), or securities broker to act as master agent to offer and sell offshore funds.
The offshore fund institution shall draw up and sign a personnel training program with its master agent. Directions for such training programs, and any subsequent amendments thereto, shall be drafted by the SITCA and ratified by the FSC.
A securities broker acting as a master agent under these Regulations may sign brokerage agreements for investment in foreign securities with its investors.
A securities brokers acting as a master agent under paragraph 1 shall join the SITCA.
|
|
| Article 9 | A master agent shall meet the following qualifications:
- Have paid-in capital, appropriated operating capital, or exclusively allocated operating capital of not less than NT$70,000,000;
- Have net worth per share of not less than par value according to the most recent CPA audited and certified financial report, provided that this requirement shall not apply if it has obtained its business license for less than 1 full fiscal year;
- Have the necessary information transmission facilities for real-time access to investment and relevant transaction information of the offshore fund institution;
- Have not been subject three times or more within the past half year to any disposition imposing a reprimand or requirement of improvements within a specified time limit under Article 103, subparagraph 1, of the Securities Investment Trust and Consulting Act, Article 66, subparagraph 1, of the Securities and Exchange Act, Article 100, subparagraph 1, of the Futures Trading Act, Article 44 of the Trust Enterprise Act, or Article 61-1, paragraph 1, of the Banking Act.
- Have not within the past 2 years been subject to a disposition as set out in Article 103, subparagraphs 2 to 5, of the Securities Investment Trust and Consulting Act, Article 66, subparagraphs 2 to 4, of the Securities and Exchange Act, Article 100, subparagraphs 2 to 4, of the Futures Trading Act, Article 44, subparagraphs 1 to 3, of the Trust Enterprise Act, Article 61-1, paragraph 1, subparagraphs 1 to 8 of the Banking Act, or Article 12-1, paragraph 1, subparagraphs 2 to 5 of the Financial Consumer Protection Act. However, this restriction does not extend to a disposition by the FSC ordering dismissal of personnel;
- Have business personnel and internal auditors meeting the qualification and staffing requirements as set out in Article 16 hereof;
- Have such other qualifications as may be prescribed by the FSC.
|
Info |
| Article 10 | A master agent other than one handling the offering and sale of offshore ETFs in Taiwan shall post an operating bond as specified below with a financial institution that is permitted to provide custodian services, and meets the conditions prescribed by the FSC:
- Where the master agent represents funds managed by one offshore fund manager, NT$30,000,000;
- Where the master agent represents funds managed by two offshore fund managers, NT$50,000,000;
- Where the master agent represents funds managed by three offshore fund managers, NT$70,000,000.
- Where the master agent represents funds managed by four offshore fund managers, NT$90,000,000;
- Where the master agent represents funds managed by five offshore fund managers, NT$110,000,000.
Except for investments in offshore funds through a non-discretionary trust of money agreement, where a sub-distributor purchases offshore funds in its own name on behalf of investors, the sub-distributor shall post an operating bond of NT$20,000,000 with a financial institution meeting the qualification in the preceding paragraph.
The operating bonds under the preceding two paragraphs shall be in cash, bank deposits, government bonds, or financial bonds, shall be free of any pledge or any form of encumbrance, and shall be placed with only one financial institution. Any change of the custodian institution or withdrawal of an operating bond may proceed only after it has been reported to the FSC via the SITCA and approved by the FSC.
Directions for the procedures for deposit, withdrawal, and substitution of operating bonds, and any subsequent amendments thereto, shall be prescribed by the SITCA and submitted to the FSC for approval.
In the calculation of the number of offshore fund managers under paragraph 1, if multiple offshore fund managers represented by the master agent are enterprises of the same corporate group, they will be deemed one offshore fund manager.
In these Regulations, the term "member of the same corporate group" means a holding company to which a fund manager belongs that has shareholdings in excess of 50 percent in the fund manager, or a subsidiary in which the fund manager has shareholdings in excess of 50 percent, or another subsidiary belonging to the same holding company in which the holding company has shareholdings in excess of 50 percent.
Any master agent that, before the enforcement of the 28 December 2022 amendment to these Regulations, already represents funds managed by four or more offshore fund managers shall make up in full the amount of operating bond required under paragraph 1 within 3 months from the date of enforcement of the amendment.
|
|
| Article 11 | The master agent shall handle the following matters:
- Production of relevant information such as the investor information summary and the Chinese translation of the prospectus, and delivery of such information to sub-distributors, participating dealers, and investors. However, the master agent is not required to deliver such information to investors if the offshore ETF is traded on the stock exchange;
- Acting as the agent for service of process and all document correspondence of the offshore fund institution in Taiwan;
- Communicating with the offshore fund institution, and providing investors with relevant issuance and transaction information on the funds it represents;
- Forwarding transaction instructions for purchase, redemption, or switch of offshore funds from the investor to the offshore fund institution, provided that this rule shall not apply to an agent of an offshore ETF;
- Assisting in matters related to the protection of rights and interests of investors in events where the master agent is not at fault;
- Other matters as required by law, regulations, or FSC provisions.
|
|
| Article 12 | The master agent shall publicly announce the following events within 3 days from the occurrence thereof:
- Revocation of the represented offshore fund’s approval or restriction of its investment activities by the competent authority in the place where the offshore fund is registered;
- Inability of the offshore fund institution to continue to conduct relevant business due to dissolution, suspension of business, transfer of business, merger or acquisition, cessation of business, voidance or revocation of its permit under laws or regulations of the country where it is located, or other similar material event;
- Voidance by the FSC of the registration of an offshore fund represented by the master agent;
- Any disposition made with respect to the offshore fund manager by the competent authority thereof;
- Any suspension or resumption of transactions of an offshore fund represented by the master agent;
- Any amendment or addition to the content of an offshore fund prospectus or other relevant documents delivered to investors with respect to an offshore fund represented by the master agent, where the change or addition materially affects investors’ rights or interests;
- Any investor litigation or material dispute in connection with the offering and sale in Taiwan of an offshore fund represented by the master agent;
- Any material change to the finances or business of the master agent;
- Any occurrence of a material event relating to the offshore ETF represented by the master agent, and such event materially affects investors’ rights or interests, or any approval to change the underlying index by the competent authority in the place where the ETF is registered;
- Any miscalculation of the fund's net asset value that reaches or exceeds the specified tolerable range set by the competent authority in the place where the offshore fund is registered;
- Any other event materially affecting investors’ rights or interests.
The master agent shall report any matter under subparagraph 1, 2, 4, 5, 9, or 10 of the preceding paragraph to the FSC within 3 days from its occurrence. The master agent shall, by the 5th day of the following month, summarize and report any matters under subparagraphs 6 to 8 or subparagraph 11 to the SITCA, which shall then forward the report to the FSC.
The master agent shall submit any of the following matters to the SITCA in advance for review and approval, and publicly announce the matter within 3 days after the approval:
- Any change in sub-distributors.
- Any change in participating dealers.
- In the case of an offshore fund represented by the master agent, any addition, suspension, resumption, or cancellation of the class that is offered and sold in Taiwan.
The SITCA shall report, on a monthly basis, any matters under subparagraphs 1 and 2 of the preceding paragraph to the FSC and the Central Bank of China (CBC), and any matters under subparagraph 3 to the FSC.
Where the master agent is unable to continue offering and distributing any offshore fund due to events referred to in subparagraphs 1 through 3 of paragraph 1, the master agent shall assist investors to carry out subsequent redemption, switch, or other relevant matters relating to the offshore funds.
An offshore fund shall require the approval of the FSC for any of the following events, and shall publicly announce such event within 3 days from its occurrence:
- Transfer, merger, or liquidation of the fund;
- Increase in the remuneration of the offshore fund manager or the custodian institution;
- Termination of the offering and sale of the offshore fund in Taiwan;
- Change of the offshore fund manager or the custodian institution of the offshore fund;
- Change of the fund name;
- Change of the basic investment policies or scope of the fund for investing in securities or trading securities related products, where inconsistent with the provisions of Article 23 hereof;
- Change of the fund type as a result of a change of its investment portfolio or strategy;
- Significant adjustment in the organization or change of name of the fund manager or the custodian institution.
- Any other matter required by the FSC for its approval.
|
Info |
| Article 13 | On each business day, the master agent shall report the fund names, and the aggregate amounts and numbers of units of confirmed purchases, redemptions, or conversions of the offshore funds represented by it the preceding business day and such other items as are prescribed by the FSC to the FSC or an institution designated by the FSC in the format and with the content specified by the FSC through the information transmission system designated by the FSC.
A master agent shall produce a monthly report for the offshore funds represented by it, in the format and with the content prescribed by the FSC, and within 10 business days after the end of each month, shall submit the report to the SITCA through the transmission system designated by the FSC, for the SITCA to compile and forward to the FSC and the CBC. However, data involving investment ratios may be supplemented by the end of the following month.
A master agent shall produce an annual financial report for the offshore funds represented by it in accordance with the regulations of the place where the fund is registered, and immediately publish it together with a Chinese language summary thereof. The same applies when a semi-annual financial report is required under the regulations of the place where the fund is registered.
|
|
| Article 14 | On each business day, a master agent shall publish the net asset value per unit of each offshore fund represented by it.
|
|
| Article 15 | Upon discovery that a sub-distributor, in handling the offering and sale of an offshore fund, or a participating dealer, in handling the purchase or redemption of an offshore ETF, is in violation of any law or regulation or contract, or is exceeding its authority, or is damaging the rights or interests of investors, the master agent shall immediately see that improvements are made by the sub-distributor, and immediately notify the FSC.
Where rights or interests of investors are harmed due to any intentional [act or omission], negligence, or violation of a contract or law or regulation by the master agent, a sub-distributor, a participating dealer, or any director, supervisor, manager, or employee thereof, such persons shall be liable for damages.
|
|
| Article 16 | To handle the offering and sale of offshore funds, the master agent shall have sufficient and qualified associated persons and internal auditors.
Associated persons handling the offering and sale of offshore funds and internal auditors shall meet the qualifications set out in the Rules Governing Responsible Persons and Associated Persons of Securities Investment Trust and Consulting Enterprises.
The registered internal auditor of the master agent may concurrently serve as an internal auditor referred to in the preceding paragraph.
The number of personnel engaging in the business referred to in paragraph 1 may not be less than three.
|
|
| Article 17 | FSC approval shall be required for any change or termination of a master agent and the change or termination shall be publicly announced and notice given to the investors within 2 days. However, the master agent may refrain from notifying the investors if the offshore ETFs are traded on the stock exchange.
The date of public announcement as mentioned in the preceding paragraph shall be at least 15 business days prior to the date of change or termination.
After termination of a master agent relationship, the master agent shall assist investors to carry out subsequent redemption, switch, or other relevant matters relating to the offshore fund until another offshore fund master agent takes over the business.
|
|
Section II Sub-Distributors |
| Article 18 | The master agent may mandate an approved SITE, SICE, securities broker, bank, trust enterprise, or institution approved by the FSC, to be a sub-distributor for offshore funds to handle the offering and sale of the offshore funds.
Trust enterprises or securities brokers acting as an offshore fund sub-distributor pursuant to these Regulations may enter into non-discretionary trust of money agreements or foreign securities brokerage agreements with their investors for such purpose.
|
|
| Article 19 | A sub-distributor shall meet the following requirements:
1. Have net worth per share of not less than par value according to the most recent CPA audited and certified financial report; if it issues shares with no par value, the net worth per share shall be not less than NT$10. However, this requirement shall not apply if it has obtained its business license for less than 1 full fiscal year, or if it is a bank whose ratio of regulatory capital to risk-weighted assets for the most recent year satisfies the provisions of Article 5 of the Regulations Governing the Capital Adequacy and Capital Category of Banks.
2. Have not within the past 2 years been subject, due to its operation of offshore fund, securities investment trust fund, or futures trust fund business, to any disposition under Article 103, subparagraphs 2 to 5, of the Securities Investment Trust and Consulting Act, Article 66, subparagraphs 2 to 4, of the Securities and Exchange Act, Article 100, subparagraphs 2 to 4, of the Futures Trading Act, Article 44, subparagraphs 1 to 3 of the Trust Enterprise Act, or Article 61-1, paragraph 1, subparagraphs 1 to 8 of the Banking Act, or Article 12-1, paragraph 1, subparagraphs 2 to 5 of the Financial Consumer Protection Act. However, this restriction does not extend to a disposition by the FSC ordering dismissal of personnel or where there is already concrete improvement in the circumstances regarding its violation and such improvement is recognized by the competent authority.
3. Have associated persons to handle the offering and sale who meet the qualifications for associated persons prescribed in the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Trust and Consulting Enterprises.
4. Have such other qualifications as may be prescribed by the FSC.
Subparagraph 1 of the preceding paragraph does not apply to trust enterprises and securities brokers engaging in the business of investing, on behalf of customers, in offshore funds under non-discretionary trust of money agreements or foreign securities brokerage agreements prior to the issuance of these Regulations.
Where an associated person was already engaging in the business of investing, on behalf of customers, in offshore funds at a trust enterprises under non-discretionary trust of money agreements or at a securities broker under foreign securities brokerage agreements prior to the issuance of these Regulations, and such associated person does not meet the qualifications prescribed in these Regulations, the person shall take corrective measures within 1 year from the date of issuance hereof; if the corrections have not been completed within that period, such person may not engage in business related to offshore funds. |
Info |
| Article 20 | A sub-distributor shall handle the following matters:
- Deliver relevant information such as investor information summaries and Chinese translations of prospectuses to investors;
- Assist in the resolution of investor disputes and handle matters related to the protection of the rights and interests of investors and all notification matters, in events where the sub-distributor is not at fault;
- Other matters as provided by law, regulations, or FSC provisions.
|
|
| Article 21 | If a sub-distributor ceases to handle the business of offering and selling offshore funds, it shall immediately notify the master agent.
After ceasing to handle the business referred to in the preceding paragraph, the sub-distributor shall assist investors in handling subsequent redemption, switch, or other relevant matters relating to the offshore funds until another offshore fund sub-distributor takes over the business.
|
|
| Article 22 | Mandating of a master agent by an offshore fund institution and mandating of a sub-distributor by the master agent shall be done in writing.
The required content of master agent agreements and sub-distributor agreements executed for mandates under the preceding paragraph described above, and any subsequent amendments thereto, shall be drafted by the SITCA and ratified by the FSC.
A sub-distributor agreement may be executed jointly among the sub-distributor, the offshore fund institution, and the master agent.
When offering and selling offshore funds under these Regulations, master agents and sub-distributors may not waive by contract any duty they bear to investors under any law or regulation.
A master agent of an offshore ETF shall sign an agreement with any participating dealer or dealers to stipulate the rights and obligations of the parties.
|
|