| Title： |
Regulations Governing Offshore Structured Products(2014.07.18) |
| Date： |
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Article 4
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Offshore structured products that do not comply with these Regulations may neither be purchased through trust investment or brokerage trade nor included among the underlying assets of an investment-linked insurance product inside the Republic of China.
Trust enterprises, securities firms and insurance enterprises (referred to as the "trustees or sub-distributors" hereunder) shall follow these Regulations when engaging in trust investment, conducting brokerage trading or issuing investment-linked insurance products involving products specified in Article 2 herein; any matters not provided for herein shall be governed by other applicable laws and regulations. Trustees or sub-distributors shall follow the applicable rules and regulations of the Central Bank of the Republic of China (Taiwan) where such activities involve inward or outward remittance of funds.
Offshore structures products sold via trust investment or brokerage trade to professional institutional investors may not be subject to the Article 9, paragraph 1, subparagraph 1, Article 14, Article 20, and Article 22 of the Regulation.
Offshore banking branch (OBU) and offshore securities branch (OSU) duly approved by the competent authority pursuant to the "Offshore Banking Act, "are not subject to these Regulations when selling offshore structured products via trust investment or brokerage trade to offshore individuals, juristic persons, government entities, or financial institutions.
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Article 6
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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 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 branch company of an offshore subsidiary of the issuer; or
2. a 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 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 paragraph 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
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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 17
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An offshore structured product must meet the following criteria and the documents provided in Subparagraphs 1 through 6 and Subparagraph 8 of Paragraph 1, Article 19 herein have been reviewed by the trustee or sub-distributor in accordance with the rules set out by TFSR pursuant to Paragraph 1 of Article 20 herein before it can be offered to professional investors for trust investment, brokerage trade or linking to an investment-linked insurance product in the Republic of China:
1. The long-term credit rating of the issuing institution or the guarantor, or the issue rating of the offshore structured product is at a certain level or higher given by a credit rating agency approved or recognized by the FSC.
2. The product is not denominated in NTD.
3. The product is not linked to any of the following:
(1) NTD interest rate or exchange rate indices.
(2) Securities issued in Taiwan.
(3) Taiwan stock indices compiled by domestic and foreign institutions and relevant financial products. The preceding provision does not apply to indices compiled by the Taiwan Stock Exchange Corporation or the GreTai Securities Market in collaboration with a foreign institution and not using stocks listed in Taiwan as the main constituent stocks.
(4) Offshore funds not approved by or not effectively registered with the FSC for offering and sale in Taiwan, and offshore funds not privately placed in Taiwan in accordance with the provisions of the Regulations Governing Offshore Funds.
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Article 26
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These Regulations shall be implemented one month following promulgation.
The amended provisions of these Regulations shall be implemented from the date of issuance.
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