Chapter 2 Issuer or Master Agent |
| Article 6 | The offshore structured product issuing institution shall have a branch company set up in the Republic of China (referred to as the "issuer" hereunder). In the absence of such branch company, a parent company, branch company or subsidiary of the product's issuer or guarantor shall act as the master agent (referred to as the "master agent"), provided that the issuer or guarantor must be:
1. a subsidiary of the issuer that is located in the Republic of China, or a Taiwan parent company, branch company of an offshore subsidiary of the issuer; or
2. a parent company, branch or subsidiary company of the guarantor that is located in the Republic of China, or a Taiwan branch company of an offshore subsidiary of the guarantor.
The term "branch company" mentioned in the preceding paragraph is limited to the branch office of a foreign bank in Taiwan, the branch company of a foreign securities firm in Taiwan or the branch company of a foreign insurance company in Taiwan that is established with the approval of the Financial Supervisory Commission (referred to as "the FSC" hereunder).
The parent company of an offshore structured product issuing institution or a guarantor mentioned in Paragraph 1 hereof shall meet the following criteria:
1. the domestic bank, domestic securities firm, or domestic insurance company of a foreign financial holding company, bank, securities firm or insurance company is established in Taiwan with the approval of the FSC and its parent entity holds more than 50% of the shares through direct or indirect investment; and
2. the parent company agrees to be jointly and severally liable with the offshore structured product issuing institution or the guarantor for the offshore structured product.
The subsidiary of an offshore structured product issuing institution or a guarantor mentioned in Paragraph 1 hereof shall meet the following criteria:
1. the subsidiary bank, securities firm, or insurance company of a foreign financial holding company, bank, securities firm or insurance company is established in Taiwan with the approval of the FSC and its parent entity holds more than 50% of the shares of said subsidiary through direct or indirect investment; and
2. the subsidiary agrees to be jointly and severally liable with the offshore structured product issuing institution or the guarantor for the offshore structured product.
A "foreign financial holding company" as referred to in the preceding two paragraphs shall meet the following criteria:
1. it is supervised by a foreign financial supervisory and regulatory authority; and
2. its capital adequacy ratios meet Basel III requirements. |
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| Article 7 | An issuer or master agent shall post an operating bond according to the rules below with a bank that is permitted to provide custodian services and meets the conditions set by the FSC:
1. For the issuer or master agent of one offshore structured product issuing institution, an operating bond of NT$50,000,000 shall be posted;
2. For the issuer or master agent of two offshore structured product issuing institutions, an operating bond of NT$80,000,000 shall be posted; and
3. For the issuer or master agent of three or more offshore structured product issuing institutions, an operating bond of NT$100,000,000 shall be posted.
The operating bond under the preceding paragraph shall be posted in the form of cash, government bonds, bank deposits, or bank debentures, shall be free of any pledge or any form of encumbrance, and shall be placed with only one bank. The change of custodian institution or withdrawal of an operating bond may proceed only after it has been approved by the FSC; the preceding provision also applies to change of issuer or master agent.
The procedures for deposit, withdrawal, and substitution of operating bond shall be prescribed by the FSC. |
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| Article 8 | The issuers, master agents, trustees or sub-distributors and their responsible persons or employees shall handle the affairs of offshore structured products in good faith and exercising the fiduciary duty of loyalty and duty of care of a good administrator.
Unless otherwise provided by law or regulations, the enterprises and personnel thereof referred to in the preceding paragraph shall keep confidential all personal information, transaction information, and other relevant information of investors in offshore structured products. |
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| Article 9 | The issuer or master agent shall be responsible for the following matters:
1. Producing investor brochure and prospectus, both in Chinese version, for the offshore structured product it issues or distributes, and delivery of such information to the investors via trustees or sub-distributors;
2. Acting as the agent for service of process and all document correspondences in Taiwan on behalf of the offshore structured product issuing institution or guarantor;
3. Communicating with the offshore structured product issuing institution, and providing investors with relevant issuance and trading information on the offshore structured product it represents;
4. Forwarding transaction instructions of the trustees or sub-distributors for purchase or redemption of offshore structured product to the issuing institution; and
5. Other matters as required by law or regulations, or the FSC.
The information to be published in the Chinese version of investor brochure and prospectus mentioned in Subparagraph 1 of the preceding paragraph will be drawn up by Taiwan Financial Services Roundtable (referred to as the "TFSR" hereunder) in consultation with the trade association of the trustee or sub-distributor and reported to the FSC for reference. |
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| Article 10 | An issuer or master agent shall, on each business day, report the names of offshore structured products it issues or distributes, and the aggregate amounts of confirmed purchases or redemptions on the previous business day and other items as prescribed by the FSC to the FSC or a FSC-designated institution in a format and with the content specified by the FSC through the FSC-designated information transmission system.
An issuer or master agent shall produce monthly reports for the offshore structured product it issues or distributes in a format and with the content prescribed by the FSC and shall, within ten (10) days after the end of each month, submit the report to the FSC and the Central Bank of the Republic of China (Taiwan) through the FSC-designated information transmission system. |
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| Article 11 | Upon discovery that a trustee or sub-distributor violates any law or regulations, or exceeds the scope of authority to engage in trust investment or brokerage trading, or invest in offshore structured products linked to an investment-linked insurance policy, the issuer or master agent shall immediately demand the trustee or sub-distributor to take improvement actions and notify the FSC, and in two (2) business days, notify the FSC in writing the status of improvement. |
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| Article 12 | To handle the trading of offshore structured product, the issuer or master agent shall deploy sufficient and qualified business personnel and internal auditors that meet the following requirements:
1. The business personnel, the number of which may not be less than three (3), shall meet the requirements set out for business personnel in Article 6 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms or Paragraph 1, Article 16 of the Guidelines for the Qualifications of Responsible Person of Trust Business and Special Knowledge or Experience Requirement.
2. The internal auditors shall meet the requirements set out for internal auditors in Article 3 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms or Article 20 of the Implementation Rules for Bank Internal Audit and Internal Control System. |
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| Article 13 | Matters required to be publicly announced by an issuer or master agent pursuant to these Regulations shall be announced by transmission through the FSC-designated information transmission system. |
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| Article 14 | An issuer or master agent shall publish on each business day the reference prices on the offshore structured products it issues or distributes.
The trustees or sub-distributors shall, within the time period prescribed by the FSC, produce and deliver to the investors a transaction confirmation, account statement or other proof documents in written or electronic form, and disclose on the account statement the latest reference prices for the reference of the investors. |
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| Article 15 | The issuers, master agents, trustees or sub-distributors shall not:
1. Issue or engage in trust investment of offshore structured products by means of fraud, coercion, or other improper means.
2. Enter into an agreement with the investors to share profits or losses from investment in offshore structured products.
3. Engage in any false or deceptive conduct or other conduct obviously inconsistent with facts or intended to mislead others.
4. Engage in any act contrary to the intent of the instructions of the investor or the investor's interests, without the consent of the investor.
5. Utilize an investor's funds against the investor's instructions.
6. Allow any third party to use the name of the issuer, master agent, trustee, sub-distributor, or their associated persons to engage in trust investment of offshore structured products, or appoint an unqualified associated person to engage in the trust investment of offshore structured products.
7. 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 structured product.
8. Engage in any other activity that is prohibited by law or regulations or self-regulatory rules.
The remuneration system of a trustee or sub-distributor should give equitable consideration to the risk exposures of the investors, charge of fees and other factors, and shall not be based mainly on the amount of trust investment or sale. |
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| Article 16 | The issuer, the master agent and the trustee or sub-distributor of an offshore structured product shall sign a joint written agreement among them. The preceding provision does not apply where the aforementioned parties belong to the same legal entity.
The agreement mentioned in the preceding paragraph shall contain the following clauses:
1. Information and assistance to be provided and responsibilities to be assumed by the offshore structured product issuing institution as requested by the master agent and the trustee or sub-distributor for compliance with applicable laws and regulations;
2. In case the offshore structured product has any of the following events, the issuer or master agent shall make public announcement and notify the trustee or sub-distributor within three days from the occurrence thereof, and the trustee or sub-distributor will forward the same information to the investors:
(1) The offshore structured product issuing institution becomes unable 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;
(2) The long-term credit rating of the issuing institution or guarantor of offshore structured product or the issue rating of the offshore structured product is downgraded;
(3) The offshore structured product that the issuer or master agent handles has a material event as specified in the agreement that materially affects investors' rights or interests; or
(4) Any other event materially affecting investors' rights or interests.
3. Where an issuer or master agent becomes unable to continue to issue or distribute an offshore structured product, it shall assist the investors in carrying out subsequent redemption of the offshore structured product or other relevant matters.
The clauses to be contained in the agreement mentioned in Paragraph 1 hereof will be drawn up by the TFSR in consultation with the trade association of the trustee or sub-distributor and reported to the FSC for reference. |
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