Chapter IV: Supervision |
| Article 33 |
（Trust services prohibited for non-trust service providers）Unless otherwise provided by other acts, non-trust enterprises shall not conduct trust businesses as defined by Article 16 hereof under mandate by non-specified persons. |
| Article 34 |
（Compensation reserve）A trust enterprise shall post a reserve fund to secure its indemnity obligations, benefit restitution or other obligations to trustors and beneficiaries resulting from its breach of fiduciary duties.
The required amount of such a reserve fund shall be as prescribed and promulgated by the Competent Authority; it shall not exceed the paid-in capital of the trust enterprise or the institution conducting a trust business concurrently.
The reserve fund described in paragraph 1 shall be deposited with the Central Bank of the Republic of China (Taiwan) in cash or government bonds within one (1) month after obtaining the license.
A trustor or beneficiary shall have a priority right against the reserve fund described in paragraph 1. |
| Article 35 |
（Joint liabilities for compensation for losses and damages）If a trust enterprise violates acts, ordinances or trust agreements, or, if, for other reasons for which the trust enterprise is responsible, trustors or beneficiaries suffer losses, the trust enterprise's responsible director, officer-in-charge and the trust enterprise itself shall be jointly and severally liable to compensate for the damages incurred.
The aforesaid liability imposed on the responsible director or officer-in-charge shall terminate if no lawsuit has been brought against such person within two years after the date they resign from the trust enterprise. |
| Article 36 |
（Liquidity of the management and use of monetary trusts）In handling trusts of money on a collective basis, a trust enterprise shall maintain adequate liquidity. When necessary, the Competent Authority may, after consultation with the Central Bank of the Republic of China, prescribe the scope of liquidity assets and a minimum ratio between the current assets of the trust enterprise and the trust enterprise's various liabilities. If a trust enterprise fails to comply with such minimum ratio, the Competent Authority shall notify the trust enterprise to make due adjustments within a specified period of time. |
| Article 37 |
（Accounting procedures）The accounting principles of a trust enterprise shall be submitted to the Competent Authority for approval by the Trust Association of the Republic of China. |
| Article 38 |
（Withdrawal of surplus reserve）Article 50 of the Banking Act of the Republic of China shall apply mutatis mutandis, to the reserves of Trust Enterprises. |
| Article 39 |
（Filing business reports and financial reports）Each trust enterprise shall submit its business report and financial statements to the Competent Authority and publish its balance sheet in a newspaper in circulation in its place of business or otherwise in accordance with the instructions of the Competent Authority. |
| Article 40 |
（Applicable scope of self-owned properties）The scope of use of the own assets of a trust enterprise other than a bank conducting a trust business shall be limited to:
1. Purchase of self-use real estate and facilities and operating expenses;
2. Investment in government bonds, money market instruments, corporate bonds, financial bonds and securities listed on a stock exchange or in the over-the-counter market and beneficial certificates;
3. Bank deposits; and
4. Other uses approved by the Competent Authority.
The aggregate amount of purchases of self-use real estate shall not exceed the net worth of the trust enterprise.
The aggregate amount of investments in corporate bonds, securities listed on a stock exchange or in over-the-counter market and beneficial certificates under paragraph 1, subparagraph 2, shall not exceed thirty percent (30%) of the net worth of the trust enterprise; the aggregate amount of investments in corporate bonds and securities issued by a single company or beneficial certificates of a single fund shall not exceed five percent (5%) of the net worth of the trust enterprise or the paid-in capital of the issuing company or five percent (5%) of the total outstanding amount of beneficial certificates, as applicable. |
| Article 41 |
（Obligations for reporting and announcement of important matters）If any of the following occurs, a trust enterprise shall, within two business days after the date next following the date of the occurrence, report the same to the Competent Authority and make an announcement in a newspaper in circulation in its place of business or otherwise in accordance with the instructions of the Competent Authority:
1. Any dishonor of bills due to insufficient funds, rejection [by others] to enter transactions with or loss of creditworthiness of the Trust Enterprise;
2. Any litigation, suit or proceeding before any court or administrative agency or any order, writ, injunction, judgment or decree of any court or government agency which has a material adverse effect on the financial condition or operation of the Trust Enterprise;
3. Any matter specified in Article 185 of the Company Act;
4. Changes of the chairman, general manager, or one-third or more of the directors of the Trust Enterprise;
5. Execution of material contracts or documents which change the nature of business of the Trust Enterprise;
6. Inability of the Trust Enterprise to pay expenses resulting from handling trust property; or
7. Any other material event which would have an adverse effect on the operations of the Trust Enterprise or the rights of the shareholders or beneficiaries. |
| Article 42 |
（Inspections, internal controls, and audit system of the competent authority）Article 45 of the Banking Act of the Republic of China shall apply, mutatis mutandis, to the Competent Authority's examination of a trust enterprise or order a trust enterprise to prepare and submit relevant information and reports.
A trust enterprise shall establish an internal control & audit system and set up an audit department.
Administrative regulations governing the internal control & audit system of a trust enterprise shall be as prescribed by the Competent Authority. |
| Article 43 |
（Procedures for managing inability to repay debts or damage to client interests）If a trust enterprise, due to obvious adverse changes in its business or financial status, fails to pay its liabilities when due or it is likely that the trust enterprise damages a trustor’s or beneficiary’s interests, the Competent Authority may order it to transfer the trust agreement and its trust property to another trust enterprise designated by the Competent Authority.
If a trust enterprise is unable to continue to engage in a trust business due to dissolution, suspension, shut down, or cancellation or revocation of approvals, it shall consult and let another trust enterprise assume its trust business and such assumption shall be approved by the Competent Authority.
If the trust enterprise does not process pursuant to the preceding paragraph, the Competent Authority shall designate another trust enterprise to assume the trust business of the original trust enterprise.
If the items which are mentioned in the preceding three paragraphs are transferred or assumed collective trust funds or beneficiary securities offering businesses, a trust enterprise that assumes such items shall announce these items. If the assumed items are other trust businesses, the foresaid trust enterprise shall request an opinion of a beneficiary; in the case that the beneficiary does not consent to such an announcement or does not show any indication whether he/she/it consents to the announcement, then his/her/its trust agreement is deemed to be terminated. |
| Article 44 |
（Penalties for operators in violation of laws）In addition to punishments provided for by this Act, in the event that a trust enterprise violates this Act or an order promulgated pursuant to the Act, the Competent Authority may order the trust enterprise to take corrective measures and to improve within the specified period of time; and depending on the seriousness of the violation, it may impose the following punishments:
1.Order the trust enterprise to terminate or suspend the position of its responsible person;
2.Suspend a part or all of the business;
3.Cancel the license; and/or
4.Other necessary measures. |