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Direction
MINISTRY OF FINANCE
From : Ministry of Finance
Date : March 2, 2004
Ref. No. : Tai-Tsai-Rong-(4)-0934000190
Subject : Trust enterprises applying to engage in trust business shall
comply with the Explanation. Please take note and advise
your members accordingly.
Explanation:
1. The businesses that a trust enterprise may apply to engage in
shall be categorized in accordance with each item as set out
in Article 16 of the Trust Enterprise Act. Except for the
business of managing common trust funds, collective
investment trust fund accounts and those businesses listed
below, trust enterprises meeting certain requirements may
offer any trust product or combination of trust products by
submitting a business plan and standard trust agreement to
the MOF within fifteen (15) days after commencement of the
business:
(1) Products falling under the Act Governing Relations
Between the People of Taiwan and the People of the
Mainland and relevant laws and regulations under
such Act;
(2) Activities involving inward and/or outward remittance
of foreign currency which must be done through
Designated FX Banks in accordance with the relevant
provisions of the Foreign Exchange Control Act; and
(3) Discretionary trust services where the trust assets are
used for purposes of investment in securities as
defined in Article 6 of the Securities and Exchange
Act and/or in futures as defined by Article 3 of the
Futures Trading Law for which the trust enterprise
must apply to the Securities and Exchange
Commission for approval to concurrently engage in a
securities consulting business.
2. "Certain requirements" as referred to in Explanation 1 shall
mean:
(1) The rating of the trust enterprise shall meet the level
prescribed in the MOF letter, dated October 30, 2003
(Ref. No. Tai-Tsai-Rong-(4)-0924000965), which
level of rating is the rating requirement for trust
enterprises applying to issue and offer common trust
funds and to establish collective investment trust fund
accounts.
(2) The trust enterprise shall not be in violation of
relevant trust laws and regulations or the
Self-Disciplinary Rules adopted by the Trust
Association of R.O.C. (the "Association") or have
failed to correct material violations after being
requested to be so by the MOF or the Association.
3. If (i) the non-performing loan ratio of a bank is five percent
(5%) or less; (ii) the ratio of equity capital to risk assets of
the bank is eight percent (8%) or more; and (iii) the bank has
set aside a sufficient provision for loan loss, the bank may,
subject to the exceptions set out in Explanation 1, directly (i)
expand the scope of its employment of trust assets under a
trust business that has been approved by the MOF and (ii)
engage in the trust businesses set out in Articles 6 through 8
of the Enforcement Rules of the Trust Enterprise Act,
without, reporting to the MOF for record.
4. To apply to engage in each trust business set out in Article
16 of the Trust Enterprise Act other than those businesses
which have been approved by the MOF, a trust enterprise
shall, in accordance with Article 9 of the Enforcement Rules
of the Trust Enterprise Law, submit a business plan and
standard trust agreement to the MOF for approval.
Thereafter, new trust products falling under such trust
business shall be handled in accordance with Explanations 1
through 3 of this letter.
5. The business plan as referred to in Explanations 1 through 4,
above, shall include:
(1) The legal basis for engaging in the business, and
assessment and analysis of relevant laws and
regulations;
(2) A product description (indicating the category in
Articles 6 through 8 of the Enforcement Rules of the
Trust Enterprise Act), risk controls and management;
(3) Operating guidelines and procedures;
(4) Important provisions to be included in agreements
with customers;
(5) Internal control and audit systems; and
(6) Provisions for protection of customer interests.
6. When a bank applies to establish a specific trust business
department to handle matters (such as promotion, execution
of agreements with customers and receipt of trust assets)
with respect to receipt of trust assets in connection with a
trust business approved by the MOF, the head office of the
bank shall, in accordance with the "Regulations Governing
Bank Departments Conducting a Trust Business", submit an
application to conduct trust business by each department to
the MOF, together with the roster of persons in charge of
trust management and business and documents evidencing
their qualifications. After obtaining MOF approval, the
bank shall, in accordance with the MOF letter, dated January
6, 2004 (Ref. No.: Tai-Tsai-Rong-(2)-0922001604), enter the
business item "Trust Business Department Designated by the
Head Office Engaging in Trust Business Approved by the
MOF" into the internet reporting system of the Bureau of
Monetary Affairs of the MOF.
7. Investing special purpose trust funds in domestic and foreign
securities falls under the business of "money trust" as listed
in Article 16, Item 1, of the Trust Enterprise Act. The
designated trust business departments that have obtained
MOF approvals for "money trust" business may engage in
trust businesses in accordance with Explanations 1 through 3,
above. In the future, if a bank's department plans to engage
in such business, it may conduct the business after obtaining
approval and making entry in accordance with Explanation 6;
provided, that it shall exercise the care of good administrator
such as by making proper risk disclosures.
8. In engaging in the trust business, trust enterprises shall
comply with the following:
(1) Trust enterprises shall (i) comply with the
"Regulations for Trust Enterprises Internal Control
System and Audit System" by establishing internal
control systems; (ii) adopt an operating manual by
reference to the model prescribed by the Association;
and (iii) periodically revise the system and manual to
conform to amendments to laws and regulations,
business items and operating procedures;
(2) Trust enterprises shall perform their duties with
professional care and good faith, protect customer
interests and comply with rules relevant to solicitation
and promotion, risk disclosure, independent
decision-making, confidentiality, conflicts of interest,
negotiation of disputes arising from business and
anti-money laundering; and
(3) The Association may conduct examinations of its
members under the provisions of the "Trust
Association Rules for Examination of Finances and
Business of Members". When drafting its annual
examination plan, the Association may include (i) new
trust businesses and products engaged in by trust
enterprises and (ii) protection of customer interests as
the key points of the examination. If a trust
enterprise is found to be in material violation of the
Trust Enterprise Law and does not make correction
within the period of time specified by the MOF, the
MOF may suspend part or all of the business of such
trust enterprise in accordance with Article 44 of the
Trust Enterprise Act.
9. The MOF letter, dated October 23, 2002 (Ref. No.:
Tai-Tsai-Rong-(4)-0914000853) shall cease to be effective
from the date hereof.
If the translations of the texts differ from the original Chinese
texts, the original texts are preferential. |