Chapter 2 Procedure for Offering and Issuing Collective Trust Funds |
| Article 4 |
A trust enterprise that meets the requirements set out in Subparagraphs 1 ~ 3, Article 5 of the Regulations Governing the Scope of Business, Restrictions on Transfer of Beneficiary Rights, Risk Disclosure, Marketing, and Conclusion of Contract by Trust Enterprises may apply for public offering and issuance of a collective trust fund. The trust enterprise shall, prior to undertaking public offering and issuance, submit the following documentation to the Trust Association of the ROC (the "Trust Association") for review, which, together with the review opinions, will be forwarded by the Trust Association to the competent authority for approval. Where the collective trust fund the trust enterprise offers is intended to be traded on a stock exchange or over the counter, the trust enterprise shall submit applications in accordance with applicable securities laws and regulations:
1. Collective trust fund offering and issuance application and plan;
2. Collective trust fund agreement;
3. Comparison table showing the similarities and differences between the agreement mentioned in the preceding subparagraph and the standard form contract;
4. Collective trust fund prospectus;
5. Documents evidencing that personnel operating and managing the collective trust fund meet the professional knowledge or experience requirements set forth by the competent authority in accordance with Paragraph 4, Article 24 of the Act, and in addition, for personnel having the power to make decisions, documents evidencing that they meet the qualifications and work experience set out in Article 17 herein;
6. The name list of trust supervisors, their qualification documents and acceptance letters;
7. Meeting minutes of the board of directors;
8. Where the offering plan proposes overseas offering for domestic investment, or domestic offering for overseas investment, a copy of the consent letter of the Central Bank of the Republic of China (Taiwan) ("Central Bank"); and
9. Other documents as required by the competent authority.
Prior to granting approval under the preceding paragraph to a trust enterprise that applies for public offering and issuance of a money market collective trust fund, the competent authority shall consult the opinions of the Central Bank.
The processing period for reviewing a trust enterprise's application for public offering and issuance of a collective trust fund by the competent authority shall be 2 months from the day the competent authority accepts the application or receives the last supplementary documentation; provided that the application has any of the circumstances provided in Article 10 herein as grounds for denying approval, or that any other exceptional circumstance exists that require extension of the review period, or that the competent authority deems it necessary for the protection of public interest, the processing period may be extended to 6 months.
After a trust enterprise has been approved by the competent authority to publicly offer and issue a collective trust fund, any change to its offering plan shall require the consent of a majority of the trust supervisors or the adoption of a resolution at a beneficiaries' meeting; the minutes of such trust supervisors meeting or beneficiaries' meeting, reasons for the change, and other documents required by the competent authority shall be submitted to the Trust Association for review, which, along with the review opinions, will be forwarded by the Trust Association to the competent authority for approval. |
| Article 5 |
A collective trust fund may be denominated in foreign currencies. Unless it is otherwise provided by the competent authority, the subscription and redemption of such a fund and the payment of related fees shall be effected in the foreign currency designated by the trust enterprise, and the trust enterprise may not change the denominated currency at will after designation. Where any payment relating to the fund involves inward or outward remittance of funds, relevant rules of the Central Bank shall be followed.
The trust assets of a foreign-currency denominated collective trust fund may be invested in instruments denominated in foreign currencies only, and the investment may not involve or be linked to NTD interest rate or exchange rate index products.
A NTD-denominated collective trust fund that uses its assets to make overseas investments shall invest not less than 15 percent of its outward remittance in foreign exchange swap or cross-currency swap products. |
| Article 6 |
Where the previously approved limit on the public offering and issuance of a collective trust fund has been reached, and there is a need for additional offering, the trust enterprise may apply to the competent authority for approval by submitting the reasons therefor.
The inward and outward remittance of any portion of an additional offering of a collective trust fund shall be conducted in accordance with relevant rules of the Central Bank. |
| Article 7 |
The offering plan of a collective trust fund shall contain the following particulars:
1. Important matters below regarding the offering of the collective trust fund:
(1) Name, objectives, type, denominated currency and offering amount of the fund;
(2) Fund utilization policies, investment scope (including geographic areas), restrictions, targets and ratios;
(3) Fund's risk level and risk tolerance categories of investors who will find the fund's risk level acceptable;
(4) Public offering and issuance method, planned offering period, and an assessment of the offering plan's possible impact on, and benefits for, the financial securities market;
(5) Conditions determining whether or not the collective trust fund will be established, and the method by which matters will be handled if it is not established;
(6) Standards for valuation of trust assets;
(7) Method for the transfer of beneficiary rights;
(8) Method for the calculation of net value per beneficial unit;
(9) Schedule and method for the distribution of trust proceeds;
(10) Method for handling expenses and tax obligations;
(11) Prohibited activities and responsibilities of the trust enterprise; and
(12) Other matters as required by the competent authority.
2. Reasons for terminating the collective trust fund offering plan, and the procedure by which the termination will be handled.
3. Method for managing the collective trust fund assets.
4. Internal control and internal audit system for the custody of the collective trust fund assets.
5. The names of interested parties as defined in Subparagraph 1, Article 7 of the Act.
6. Other matters as required by the competent authority. |
| Article 8 |
A trust enterprise that offers and issues a collective trust fund shall provide beneficiaries with a prospectus.
The prospectus referred to in the preceding paragraph shall include the following particulars:
1. The fund offering plan.
2. Key points of the collective trust fund agreement and a comparison table showing the similarities and differences between the agreement and the standard form contract.
3. Summary data regarding the recent operations of the trust enterprise (including financial report of the trust enterprise for the most recent fiscal year, and the scale and net value of the collective trust fund).
4. The names, academic qualifications and experience of personnel holding decision-making power over utilization of the collective trust fund.
5. The names, academic qualifications and experience of trust supervisors.
6. Phone number and address of customer service and complaint handling department.
7. Other matters as required by the competent authority.
The collective trust fund prospectus shall not contain misrepresentations, fraudulent or other misleading information. |
| Article 9 |
The collective trust fund agreement shall be made in writing, and shall contain the following items in addition to those set out in Paragraph 1, Article 19 of the Act:
1. Name, type, denomination currency, risk level of the fund, and risk tolerance categories of investors who will find the fund's risk level acceptable.
2. Where the fund has specific investment targets, the specifics of the targets and valuation standards for the targets.
3. Rights of the beneficiaries, fees and taxes to be assumed by beneficiaries, and calculation methods therefor.
4. Basic policies for, scope of, and restrictions on fund utilization and management.
5. Risk disclosure statement by the trustee stating that it does not guarantee the principal or the rate of return of the fund.
6. Procedure for handling change of trustee.
7. Procedures regarding the resignation or discharge of trustee, and the appointment of a new trustee.
8. The method by which trust supervisors are appointed, and their remuneration.
9. Matters to which the beneficiaries consent regarding the exercise of rights by trust supervisors and beneficiaries' meeting.
10. Rules of conduct for beneficiaries' meeting.
11. Applicable language, governing laws, court of jurisdiction, and supervision by the competent authority.
12. Methods for service of notices and public announcements.
The Trust Association shall draw up a standard form contract for collective trust agreement, and submit it to the competent authority for approval.
When a trust enterprises adopts or modifies the collective trust fund agreement, the extent of protection of rights and interests of beneficiaries provided in the agreement shall not be less than that under the standard form contract for collective trust fund approved by the competent authority. |
| Article 10 |
A trust enterprise's application for public offering and issuance or additional offering of a collective trust fund will be denied approval in case of any of the following circumstances:
1. The trust enterprise has been banned by the competent authority to engage in collective trust fund business.
2. The competent authority has revoked or voided the public offering and issuance of a collective trust fund by the trust enterprise within the past 6 months, or the trust enterprise has voluntarily canceled the public offering and issuance of a collective trust fund within the past three months.
3. Its board of directors has not passed a resolution for the fund offering.
4. Any matter contained in the application violates any law or regulation, thereby affecting the public offering and issuance of the collective trust fund.
5. Objective facts based on the application documentation show that the trust enterprise does not have the ability to complete the offering plan.
6. The application documentation is incomplete or the information contained therein is insufficient and cannot be supplemented, or supplementation is permitted, but fails to be completed by a deadline set by the competent authority.
7. The accounting and financial reports have not been prepared in accordance with applicable laws and regulations and generally accepted accounting principles, where serious in nature.
8. The trust enterprise has not effectively implemented its internal control or auditing system.
9. The trust enterprise records loss for the previous fiscal year after final accounting; provided that this restriction shall not apply to trust enterprises not yet established for two complete fiscal years.
10. The trust enterprise has other violation of laws or regulations, the Trust Association's articles of association, code, or resolution, or the collective trust fund agreement, where serious in nature.
11. Any other circumstances under which the competent authority deems that approval of the public offering is likely to harm the public interest. |
| Article 11 |
In the event any of the following circumstances exists after a trust enterprise has been approved to publicly offer and issue a collective trust fund, the competent authority may revoke the approval:
1. Public offering and issuance has not commenced during the time period starting from the date of approval as set out in Article 12 herein.
2. The trust enterprise has misrepresentations, frauds, or any other acts that are sufficient to mislead others in conducting the collective trust fund business.
3. The occurrence of any event with a material effect on beneficiary rights and interests which is not publicly announced and reported to the competent authority within 2 business days from the actual date of occurrence.
4. Non-compliance with any additional conditions imposed by the competent authority at the time of approval.
5. Other circumstances violating laws or regulations, where serious in nature.
After a trust enterprise has been granted approval to publicly offer and issue a collective trust fund, the competent authority shall void the approval if it is subsequently discovered that the original application documents contain any misrepresentation, fraud or other misleading circumstances constituting a serious violation of law,.
Where a trust enterprise has a circumstance described in the preceding two paragraphs, it shall make a public announcement within 2 business days from the date of service of the letter of revocation or voidance from the competent authority, and proceed by the mutatis mutandis application of Article 41 herein. |
| Article 12 |
After its application to publicly offer and issue a collective trust fund has been approved, a trust enterprise shall commence the offering within 6 months from the date of service of the approval letter, unless otherwise specified by laws or regulations. A trust enterprise with legitimate reasons may apply to the competent authority for an extension of the offering period prior to the deadline. Such extension shall not be longer than 6 months, and shall be granted only once. |
| Article 13 |
A trust enterprise shall apply to the competent authority for approval prior to the establishment of a collective trust fund by public offering and issuance. The date of approval by the competent authority shall be the record date of establishment of the fund.
A trust enterprise that fails to raise the minimum amount required for the establishment of a collective trust fund prior to the expiration of the offering period shall, within 10 business days after the expiration of the offering period, notify the beneficiaries in writing and report to the competent authority for recordation. |
| Article 14 |
Guidelines for the marketing, agreement execution/signing, information disclosure, and risk management for a trust enterprise engaging in collective trust fund business shall be drafted by the Trust Association and submitted to the competent authority for approval.
A trust enterprise shall observe the guidelines referred to in the preceding paragraph in undertaking public offering and issuance of collective trust fund. |