Section II Application (or Filing) Procedures |
| Article 27 | Except for offshore funds subject to Article 27-1 or Article 28 hereof, before an offshore fund may be offered and sold, the master agent of the offshore fund institution shall file a completed application (or filing) accompanied by the following documents with the SITCA, which shall review it and forward it to the FSC for approval or effective registration:
1. Documents evidencing compliance with the qualifications for a master agent of an offshore fund set out in Article 9 hereof;
2. The master agent agreement between the offshore fund institution and the master agent;
3. The personnel training program entered into between the offshore fund institution and the master agent;
4. Document evidencing that the master agent has posted the operating bond in accordance with regulations;
5. The document evidencing approval for public offering from the offshore fund’s place of registration;
6. Where application (or filing) is made to offer and sell more than one offshore fund, an itemized list thereof;
7. Relevant information including the most recent annual financial report of the offshore fund(s) and a Chinese language summary thereof, the investment portfolio, investor information summary, and Chinese translation of the prospectus;
8. Documents evidencing compliance with Article 24 hereof;
9. A written statement issued by the offshore fund institution representing that it will, at the request of the FSC, provide account books and records related to the purchase, redemption, or switch of the offshore fund, and information related to the rights and interests of investors for the FSC to review;
10. A written statement issued by the offshore fund manager representing its compliance with Article 23, paragraph 1, subparagraphs 1 to 5 hereof;
11. The most recent financial report of the offshore fund manager;
12. Document evidencing the credit rating of the custodian institution of the offshore fund(s);
13. An opinion issued by a lawyer stating that the level of protection for the rights and interests of investors in the place of registration of the offshore fund(s) is no less than that in Taiwan;
14. An opinion issued by a lawyer stating that the level of protection for the rights and interests of investors in the place of registration of the offshore fund manager is no less than that in Taiwan;
15. Document evidencing membership in the SITCA;
16. Other documents as may be required by the FSC.
Where the place of registration of the fund and the home country of the offshore fund manager are recognized and publicly announced by Taiwan, the documents listed in subparagraphs 13 and 14 of the preceding paragraph, are not required.
After an application or filing for the offering and sale of an offshore fund has been submitted to and approved by or effectively registered with the FSC, the master agent shall issue a statement that each sub-distributor meets the qualification requirements and submit the statement and the sub-distribution agreement to the SITCA for review and approval before the sub-distributor may begin to conduct such business. |
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| Article 27-1 | The master agent mandated by the offshore fund institution shall file a completed application accompanied by the following documents with the SITCA, which shall review it and forward it to the FSC for approval, and only then may the offshore ETF be offered and sold, and an application filed for listing and trading on the stock exchange:
- Documents as required under subparagraphs 1 to 3, 5 to 7, 9, 11, and 15 of paragraph 1 of the preceding article;
- A written declaration by the offshore fund institution of its compliance with subparagraphs 2 and 5 of paragraph 1 of Article 23;
- Document evidencing that it is already listed and traded on a securities exchange;
- List of participating dealers, participation agreements, and the agreements signed between the master agent and participating dealers.
- Other documents as may be required by the FSC.
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| Article 27-2 | If an offshore fund institution is recognized by the FSC as meeting certain conditions, the effective registration system will be adopted for offshore fund offering and sale cases handled by its appointed master agent.
When the master agent files for an offshore fund offering and sale case as provided in the preceding paragraph, the registration will become effective upon the expiration of 45 business days counting inclusively from the date that the FSC receives the filing documents.
If the filing documents submitted by the master agent are incomplete, the required information is not fully furnished, or an event under Article 32 occurs, then if the master agent submits supplementation in full on its own initiative prior to being notified by the FSC of suspension of the filing for effective registration, the registration shall become effective when the effective registration period of the preceding paragraph has expired, counting inclusively from the date on which the FSC receives the supplementary documentation. |
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| Article 27-3 | If any of the following circumstances exists with respect to a master agent's filing for an offshore fund offering and sale case, the FSC may suspend its filing from becoming effectively registered:
1. The filing documents are incomplete or the required information is not fully furnished.
2. An event under Article 32 occurs.
3. The FSC considers suspension necessary to protect the public interest.
Beginning from the date on which the master agent is served notice of suspension of the filing for effective registration, it may submit supplementation addressing the reasons for suspension of the filing for effective registration and apply for lifting of the suspension. If the FSC does not further notify it to submit supplementation or reject its case, the registration shall become effective upon the expiration of the effective registration period set out in paragraph 2 of the preceding article, counting inclusively from the date on which the FSC receives the supplementary documentation.
After the master agent's filing for effective registration is suspended by the FSC under paragraph 1, if within 12 business days, counting inclusively from the date on which it receives the written notice of suspension, the master agent does not apply for lifting of the suspension in accordance with the preceding paragraph or it applies for lifting of the suspension but the reasons for the original suspension still exist, the FSC may reject its case. |
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| Article 28 | For offshore funds that were the subject of investment consulting by a SICE prior to the issuance of these Regulations, the master agent appointed by the offshore fund institution shall complete a written report and file it together with relevant documents with the FSC for effective registration before such funds may be offered and sold.
The required documents and procedures for reports filed by the master agent under the preceding paragraph shall be as publicly announced by the FSC.
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| Article 29 | After a master agent’s initial application (or filing) for the offering and sale of offshore funds is approved (or effectively registered) by the FSC, if outward and inward remittance of funds will be involved, the master agent shall file an application accompanied by relevant documentation, such as a list of sub-distributors and participating dealers, with the CBC for permission to handle relevant foreign exchange business, before commencing offering and sale. However, if the offshore ETFs are listed in New Taiwan Dollars, the application shall be filed on a case-by-case basis.
Where the receipt/payment of funds in connection with an offshore fund involves outward or inward remittance of funds by the centralized securities depository enterprise, the depository enterprise shall file an application with the CBC for permission to handle relevant foreign exchange business.
If the receipt/payment of funds by a participating dealer in connection with an offshore ETF involves any outward or inward remittance of funds, the participating dealer shall file an application with the CBC for permission to handle relevant foreign exchange business.
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| Article 30 | Under any of the following circumstances, the FSC may return or reject an application (or filing) for the offering and sale of offshore funds filed by a master agent:
1. The application (or filing) is in violation of law or regulation, and the violation would affect the offering and sale of the relevant offshore funds;
2. The protection for the rights and interests of investors provided by the laws and regulations of the country of registration of the offshore fund is obviously lower than that of the Taiwan;
3. The application (or filing) for the offering or sale of offshore funds has previously been returned, rejected, voided, or revoked by the FSC or withdrawn by the applicant and is being re-filed within 3 months from the date of the master agent’s receipt of the notification thereof from the FSC or the withdrawal;
4. It has filed an application (or filing) for any other offshore fund and has not yet obtained approval or effective registration;
5. A deadline for a supplemental filing set by the FSC due to an application (filing) being incomplete or insufficient is not met;
6. The master agent does not meet the qualifications set out in Article 9 hereof;
7. The master agent has violated these Regulations during the most recent 1 year, where the violation is serious in nature;
8. Any other circumstance where the SFB deems necessary for protection of the public interest. |
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| Article 31 | After a master agent has filed and obtained approval or effective registration from the FSC for the offering and sale of offshore funds, the FSC may suspend the offering and sale of such funds, or void or revoke its approval or effective registration in any of the following circumstances:
- A falsehood or misrepresentation in any document under Article 27, paragraph 1, Article 27-1, or Article 28, paragraph 1.
- A violation of the statement set out in Article 27, paragraph 1, subparagraph 9, , where serious in nature.
- A serious violation of the Article 12, paragraph 6 provision requiring prior FSC approval of changes, in which a change was made even though the FSC had rejected or disapproved the change.
- A serious violation of the total amount that may be offered and sold in Taiwan under Article 26-1.
- A violation of any subparagraph of Article 40, where serious in nature.
- Any other violation of these Regulations, or of any restriction or prohibition imposed by the FSC at the time of approval of the application or effective registration, where serious in nature.
- A violation of any other mandatory or prohibitive provision, where it would affect the rights and interests of investors, and is serious in nature.
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| Article 32 | If, after the master agent has filed with the FSC for approval or registration of the offering and sale of any offshore fund but before approval has been granted or registration has become effective, there is an occurrence of any event set out in Article 12, paragraph 1 or any subparagraph of paragraph 6 in connection with the master agent, the offshore fund institution, or the offshore fund, or any change in the content of the application or filing documents, where there would be a material affect on the rights and interests of investors, the master agent shall report to the FSC within 3 days from the date of occurrence.
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| Article 33 | The master agent or a sub-distributor shall handle the receipt/payments of funds for the purchase of offshore funds by investors by one of the following methods:
- Investors pay and receive funds directly to and from an offshore account designated by the offshore fund institution;
- The offshore fund institution authorizes the master agent to open a fund account with a Taiwan financial institution in the name of the offshore fund institution for such receipt/payment;
- Receipt/payment of funds is handled through a bank account designated by the centralized securities depository enterprise designated by the FSC, and the centralized securities depository enterprise remits payments to an offshore account designated by the offshore fund institution or a segregated account of the offshore fund institution opened with a Taiwan financial institution.
Where receipt/payment for fund purchases is handled in accordance with subparagraph 3 of the preceding paragraph, any monies related to the redemption, switch, distribution of interest/proceeds, and liquidation shall be remitted by the offshore fund institution to the bank accounts designated by investors through the bank account designated by the centralized securities depository enterprise. The offshore fund institution may not accept instructions from the master agent or any sub-distributor to change the bank account designation instructions of the centralized securities depository enterprise.
Where the master agent or the sub-distributor is mandated to invest in an offshore fund under a non-discretionary trust of money agreement or a foreign securities brokerage agreement, it may be exempted from the requirements of paragraph 1.
The receipt/payments of funds for the purchase and redemption of offshore ETFs shall be handled in accordance with the provisions set out by the offshore fund institution, the prospectus, and the CBC.
Procedures related to the opening of segregated accounts, receipt/payment of funds, and matters such as fund currency denomination [and switch] and inward and outward remittance of funds shall be handled in accordance with the regulations of the FSC and the CBC.
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| Article 34 | Purchases of an offshore fund made by the master agent from the offshore fund institution on behalf of investors or by a sub-distributor from the master agent on behalf of investors shall be made in the name of the relevant investor; provided, if the investor consents to purchase in the name of the master agent or the sub-distributor, this restriction shall not apply.
Where a master agent purchase an offshore fund in its own name on behalf of an investor from the offshore fund institution or a sub-distributor purchases an offshore fund in its own name on behalf of an investor from the master agent, the receipt/payment of funds shall be handled in accordance with paragraph 1, subparagraph 3, and paragraph 2, of the preceding Article, except in the case of mandated investment in offshore funds under non-discretionary trust of money agreements or foreign securities brokerage agreements.
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| Article 35 | If the receipt/payment of funds will be handled in accordance with Article 33, paragraph 1, subparagraph 3, and paragraph 2, the master agent or sub-distributor shall execute an agreement with the centralized securities depository enterprise requiring that any information transmission in connection with purchase, redemption, switch, distribution of interest/proceeds, and liquidation carried out for shareholders shall be handled by the centralized securities depository enterprise.
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| Article 36 | The master agent shall make a public announcement within 2 days after its application (or filing) for offering and sale of offshore funds has been approved or effectively registered.
The public announcement under the preceding paragraph shall contain the following particulars:
- Date and reference number of the FSC approval or effective registration of offering and sale;
- Name of the offshore fund manager;
- Name, telephone number, and address of the master agent;
- Name, telephone number and address of the sub-distributor(s);
- Name of the custodian institution and its credit rating;
- Name, type, class, investment strategy, and restrictions of the offshore fund;
- Commencement date of accepting purchase and redemption orders, and the cut-off time for accepting purchase and redemption orders on each business day, of the offshore fund;
- Chart showing any fees to be borne by investors and the amount thereof or calculation basis therefor;
- Minimum purchase amount;
- Calculation of the subscription amount;
- Procedures for purchase and method of payment;
- Chinese translation of the prospectus, investor information summary, and the method for distributing them or locations where they may be obtained;
- Investment risk disclosure warning;
- Methods by which the master agent will assist in protecting the rights and interests of investors;
- Matters required by the FSC to be disclosed;
- Other matters the disclosure of which is necessary for purposes of protecting the public interest and investors.
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| Article 37 | When any update or amendment is made to a prospectus for an offshore fund, the master agent shall publicly announce the Chinese translation thereof within 3 days after the update or amendment.
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| Article 38 | Where the offering and sale of offshore funds is not executed, the master agent shall refund the payment to the bank account designated by the investor in accordance with rules regarding the offering and sale of offshore funds.
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| Article 39 | When offering and distributing offshore funds, the master agent, the sub-distributor, or the participating dealer shall deliver the investment information summary and the Chinese translation of the prospectus to investors. However, this rule shall not apply to offshore ETFs that are traded on the stock exchange.
The investment information summary shall contain the following particulars:
- A statement introducing the master agent, the issuer of the offshore fund, the custodian institution, the sub-distributor(s), and any other relevant entities; if any related party relationships exist among them, an explanation of the relationships shall be given;
- A brief description of the offshore funds being offered and sold;
- The methods for purchase, redemption, and switch of offshore funds:
- Minimum purchase price;
- Method for payment of the price;
- Cut-off time for placing orders on each business day and the method for determining and handling late order documents;
- Procedures for purchase, redemption, and switch;
- Method for refund when the offering and sale of offshore funds fails to be executed;
- Rights, obligations, and duties of the master agent and the offshore fund institution;
- Information and services the master agent is required to provide;
- Method for handling disputes between the investor and the offshore fund institution, master agent, and/or sub-distributor;
- Methods for assisting in protecting the rights and interests of investors;
- Chart showing any fees to be borne by investors and the amount thereof or calculation basis therefor;
- Explanation of investment risks;
- Website on which investors may obtain relevant information;
- Types of certificates to be delivered representing the rights and interests of investors;
- In the case of the offering and sale of offshore ETFs, the following particulars shall also be specified:
- A brief description of the underlying index.
- A statement introducing the participating dealers.
- Methods and procedures of trading on the securities exchange or exchanges.
- Methods and procedures for purchase and redemption through participating dealers.
- Methods for exercise of rights by investors.
- Other items as may be prescribed by the FSC.
The investor information summary referred to in the preceding paragraph shall be updated within 1 month after the end of each quarter; the format thereof, and subsequent amendments thereto, shall be drafted by the SITCA and ratified by the FSC.
The master agent shall publicly announce any updates or amendments to the investor information summary within 3 days after the update or amendment.
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| Article 39-1 | In conducting the business of selling offshore funds, a master agent or sub-distributor shall, before the commencement of sale, disclose to the investors any remuneration, fees, or other benefits it receives from the offshore fund institution or master agent, as the case may be.
The master agent or sub-distributor shall promptly give notice to the investors of any change in the information disclosed under the preceding paragraph.
The enforcement guidelines for content of information to be disclosed and notification of change to be made under the preceding two paragraphs, and any subsequent amendment thereto, shall be drafted by the SITCA and ratified by the FSC.
The offshore fund master agent or sub-distributor shall take the actions required by the preceding three paragraphs within 6 months after the issuance of the 3 September 2010 amendment to these Regulations.
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| Article 40 | Unless otherwise provided by law, the master agent and the sub-distributor(s) may not:
- Offer or sell offshore funds by means of fraud, coercion, or other improper means;
- Agree with an investor to share profits or losses on investments in offshore funds;
- Engage in any false or deceptive act or other conduct obviously inconsistent with facts or intended to mislead others;
- Engage in any act contrary to the intent of the instructions of an investor or the investor's interests, without the consent of the investor, with intent to profit for itself or any third party;
- Utilize an investor's funds in breach of the investor's instructions;
- Continue to offer or sell an offshore fund after the offering and sale has been suspended, voided, or revoked by the FSC in accordance with Article 31 hereof;
- Allow any third party to use the name of the master agent, the sub-distributor, or an associated person of the master agent or the sub-distributor to engage in offering and sale of offshore funds, or appoint an unqualified distributor or associated person to engage in the offering and sale of offshore funds;
- Violate any law or regulation or any code of conduct set by a self-regulatory institution when engaging in the advertising and business promotion of an offshore fund;
- Engage in any other activity that is prohibited by a law or regulation or self-regulatory code.
The offshore fund institution and the master agent may not pay the sub-distributor or its personnel any remuneration, fees, or other benefits not specified in the sub-distribution agreement.
In conducting the business of selling offshore funds, the sub-distributor and its personnel may not receive from the offshore fund institution or master agent any remuneration, fees, or other benefits not specified in the sub-distribution agreement.
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| Article 41 | If the master agent produces an untrue investor information summary or Chinese version of the prospectus in violation of the preceding article, or fails to comply with Article 15, paragraph 1, hereof, the FSC may, in addition to handling the matter in accordance with Article 31, order the offshore fund institution to change its master agent within a specified time limit.
When a sub-distributor violates the preceding article, the FSC may, in addition to handling such violation in accordance with relevant laws and regulations, also suspend the sub-distributor's offering and sale of offshore funds for a period of up to 6 months.
If an offshore fund institution fails to change its master agent within a deadline set by the FSC for it to do so, the FSC may revoke the approval or effective registration of the offshore fund.
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| Article 42 | When offering and distributing offshore funds, the master agent and sub-distributor(s) shall gain full knowledge of and evaluate the investment knowledge, investment experience, financial condition, and investment risk tolerance level of their investors.
For an investor making a first-time purchase, the master agent and sub-distributor(s) shall require the investor to produce an identification document or a document evidencing registration as a juristic person and to fill out basic information.
The master agent and sub-distributor(s) shall put in place internal control systems including effective procedures for know-your-customer, sales conduct, prevention of short-swing trading, prevention of money laundering, and procedural principles to be complied with under laws and regulations, and submit the systems to the SITCA for review through the master agent.
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| Article 43 | In handling the purchase, redemption, or switch of offshore funds, the master agent and sub-distributors shall treat all fund investors fairly in accordance with the offshore fund prospectus and investor information summary; any late trading is prohibited.
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| Article 44 | In handling the purchase, redemption, or switch of offshore funds, the master agent and sub-distributor shall comply with the stipulated cut-off time for processing orders for such matters.
In handling the matters referred to in the preceding paragraph, unless it can prove that the investor submitted the order before the cut-off time, the master agent or sub-distributor may not arbitrarily diverge therefrom.
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| Article 45 | The master agent shall immediately publicly announce and notify sub-distributors of the convening of beneficiaries meetings or shareholders meetings of the offshore fund and any other material events related to the exercise of investor rights. Where the master agent purchases, for investors in the master agent's own name, any offshore fund from the offshore fund institution, the master agent shall immediately inform its investors of any matters that materially affect investors’ rights and interests, compile the comments of its investors, and notify the offshore fund institution of the comments.
Where a sub-distributor purchases offshore funds for investors in the sub-distributor's own name, upon receipt of notification of the convening of a beneficiaries meeting or shareholders meeting, the sub-distributor shall immediately inform its investors thereof and of any matters materially affecting investors’ rights and interests, compile the comments of its investors, and notify the offshore fund institution of the comments or transmit the comments through the master agent to the offshore fund institution.
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| Article 46 | Regulations governing procedures such as for the transmission of transaction information, receipt/payment of funds, custody of fund certificates, book-entry transfer, and clearing and settlement in connection with offshore funds by the centralized securities depository enterprise, and any amendments thereto, shall be drafted by the centralized securities depository enterprise and ratified by the FSC.
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