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Amendments

Title：

Regulations Governing Offshore Funds  CH

Amended Date： 2023.12.14 
Article Content Chapter Content Search Article No. Search Amended Article Legislative History Chinese

Title： Regulations Governing Offshore Funds(2022.12.28)
Date：
Article 3     An offshore fund manager or an institution appointed by the offshore fund manager ("offshore fund institution") shall appoint a single master agent to represent it in the offering and sale of its funds in Taiwan.
    A master agent serving as agent in the offering and selling of offshore funds in Taiwan may represent no more than five offshore fund managers.
    A sub-distributor may handle the offering and sale of one or more offshore funds in Taiwan.
    Unless otherwise provided in these Regulations, the provisions hereof concerning master agents or sub-distributors shall apply to investment in offshore funds through trust enterprises under non-discretionary trust of money agreements or through securities brokers under foreign securities brokerage agreements.
    Except in cases of investment in offshore funds through trust enterprises under non-discretionary trust of money agreements, a sub-distributor handling the purchase, redemption, or switch of an offshore fund by investors shall forward the transaction instructions to the offshore fund institution via the master agent.
    A participating dealer processing or engaging in the purchase or redemption of offshore exchange traded funds (ETFs) shall do so by the method prescribed by the offshore fund institution, and is not required to go through the master agent when transmitting transaction instructions to the offshore fund institution.
Article 9     A master agent shall meet the following qualifications:
  1. Have paid-in capital, appropriated operating capital, or exclusively allocated operating capital of not less than NT$70,000,000;
  2. 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;
  3. Have the necessary information transmission facilities for real-time access to investment and relevant transaction information of the offshore fund institution;
  4. 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.
  5. 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;
  6. Have business personnel and internal auditors meeting the qualification and staffing requirements as set out in Article 16 hereof;
  7. Have such other qualifications as may be prescribed by the FSC.
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:
  1. Where the master agent represents funds managed by one offshore fund manager, NT$30,000,000;
  2. Where the master agent represents funds managed by two offshore fund managers, NT$50,000,000;
  3. Where the master agent represents funds managed by three offshore fund managers, NT$70,000,000.
  4. Where the master agent represents funds managed by four offshore fund managers, NT$90,000,000;
  5. 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 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.
  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.
Article 24     When a master agent submits an application (or filing) for the offering and sale of an offshore fund, the offshore fund manager of the offshore fund, other than an offshore ETF, shall meet the following conditions:
  1. The total net asset value of all funds under the management of the fund manager (which may include its controlling and subsidiary institutions) raised by public offering and invested in securities exceeds US$2 billion or the equivalent in other foreign currencies. The calculation of the "net asset value" excludes pension funds and discretionary investment accounts.
  2. The fund manager has not been sanctioned in connection with the handling of asset management business, with a record, by the competent authority of its home country during the past 2 years in any case in which it furthermore still has not remedied the issue.
  3. The fund manager has been established for at least 2 years.
  4. The fund manager or a member of the same corporate group has made concrete contributions, in compliance with FSC regulations, that further asset management business in Taiwan, and has been recognized by the FSC. The fund manager, however, may be exempted from this requirement if the place of registration of the fund and the home country of the offshore fund manager have been recognized and publicly announced by Taiwan.
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 accompanied by the following documents with the SITCA, which shall review it and forward it to the FSC for approval:
  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 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 the application for the offering and sale of an offshore fund has been submitted to and approved by 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.
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:
  1. Documents as required under subparagraphs 1 to 3, 5 to 7, 9, 11, and 15 of paragraph 1 of the preceding article;
  2. A written declaration by the offshore fund institution of its compliance with subparagraphs 2 and 5 of paragraph 1 of Article 23;
  3. Document evidencing that it is already listed and traded on a securities exchange;
  4. List of participating dealers, participation agreements, and the agreements signed between the master agent and participating dealers.
  5. Other documents as may be required by the FSC.
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:
  1. A falsehood or misrepresentation in any document under Article 27, paragraph 1, Article 27-1, or Article 28, paragraph 1.
  2. A violation of the statement set out in Article 27, paragraph 1, subparagraph 9, , where serious in nature.
  3. 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.
  4. A serious violation of the total amount that may be offered and sold in Taiwan under Article 26-1.
  5. A violation of any subparagraph of Article 40, where serious in nature.
  6. 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.
  7. A violation of any other mandatory or prohibitive provision, where it would affect the rights and interests of investors, and is serious in nature.