The term, "Investment and Trust Company", as used in this Act shall mean a financial institution which, for a specific purpose and in the capacity of trustee, accepts, operates, manages and employs Trust Funds and manages trust properties or, as an investment broker, invests funds relating to capital markets for specific purposes.
The operations and administration of an Investment and Trust Company shall be governed by this Act; matters with no applicable provisions in this Act shall be governed by other relevant laws; the administrative rules for Investment and Trust Companies shall be as stipulated by the Central Competent Authority.

Businesses which may be conducted by an Investment and Trust Company are as follows:
1.To extend medium-term and long-term loans;
2.To invest in government bonds, short-term notes, corporate bonds, Bank Debentures and listed stocks;
3.To guarantee issuance of corporate bonds;
4.To guarantee domestic and foreign transactions;
5.To underwrite and trade in securities for its own account or for customers;
6.To accept, manage and employ various Trust Funds;
7.To publicly raise mutual Trust Funds;
8.To manage various kinds of property under mandate;
9.To act as trustee for issuance of bonds;
10.To act as attester for the issuance of bonds and stocks;
11.To act as agent for issuance, registration and transfer of securities and distribution of interest and dividends thereon;
12.To act as executor of wills and administrator of estates of deceased persons;
13.To act as supervisor for the reorganization of companies;
14.To provide consulting services in connection with the issuance and raising of securities and to engage in agency services related to the aforesaid business; and
15.To conduct other relevant businesses which may be authorized by the Central Competent Authority.
With the approval of the Central Competent Authority, an Investment and Trust Company may use its non-trust funds to invest directly in productive enterprises or in residential construction and construction for business purposes.

For Investment and Trust Companies which engage in the underwriting and trading of securities, a special fund equivalent to at least ten percent (10%) of the net worth of the Investment and Trust Company in the preceding year shall be allocated for purposes of the operation thereof. Such special fund shall, prior to any appropriation thereof, be deposited in cash with other financial institutions or shall be used for the purchase of government bonds.

An Investment and Trust Company shall deposit a trust fund reserve with the Central Bank of China in cash or valuable securities acceptable to the Central Bank of China. Such reserve shall be within the range of fifteen percent (15%) to twenty percent (20%) of the total value of the various trust agreements, as determined by the Central Bank of China. However, the minimum reserve amount shall not be less than twenty percent (20%) of the Trust and Investment Company's total paid-in capital.
At the commencement of operations of an Investment and Trust Company, the aforesaid reserve shall temporarily be based on twenty percent (20%) of paid-in capital of such Investment and Trust Company, and, commencing one (1) year from such commencement of operations, such reserve shall be adjusted at the end of each month in accordance with the foregoing standard.

In accepting, managing or employing Trust Funds and managing properties under a trust mandate, trust agreements between Investment and Trust Companies and trustors shall contain the following terms:
1.Means and scope of employing the funds;
2.Method of management of properties;
3.Allocation of income;
4.Responsibility of the Investment and Trust Company;'
5.Submission of accounting reports;
6.Standards for payment and calculation of fees of the Investment and Trust Company; and
7.Other relevant agreed upon terms.

An Investment and Trust Company shall in good faith exert its utmost care in managing Trust Funds or trust assets in its custody.

The operation and administration of an Investment and Trust Company shall be handled by financial personnel with special knowledge and experience, assisted by qualified legal, accounting and other technical personnel necessary for the various businesses involved.

If an Investment and Trust Company violates laws, ordinances or trust agreements or, for other reasons for which the Investment and Trust Company is responsible, causes loss to trustors, the Investment and Trust Company's responsible director, officer-in-charge, and the Investment and Trust Company itself shall be jointly and severally liable to make compensation 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 (2) years after the date of his resignation registration.

Unless otherwise authorized by court order, by the written agreement of trustors (for purchase at market price) or, without consent of the trustors (for purchases at market price by open bid), an Investment and Trust Company shall not engage in the following transactions:
1.Acquisition of ownership of trust properties;
2.Creation or obtaining of any rights or privileges over trust properties;
3.Sale of its own properties or rights to trustors;
4.Other transactions related to the aforesaid three Subparagraphs; and
5.Any transactions employing Trust Funds and properties with the Investment and Trust Company's directors, staff members or third parties who have an interest in the Trust Funds operated by the Investment and Trust Company.
If an Investment and Trust Company makes the decision to engage in transactions proscribed in the aforesaid proviso, in addition to first applying to the Central Competent Authority for approval, the following restrictions shall apply:
1. If the Investment and Trust Company makes the decision to engage in a transaction, any director or staff member who has a direct or indirect interest in the trust accounts, trust properties or securities in connection with the such transaction shall not participate in such decision.
2. If the Investment and Trust Company engages in the underwriting or trading of securities, or directly invests for its own account or for the account of investors, the company's directors or staff members who are concurrently directors or staff members of the company issuing such securities or who have direct or indirect interests in the said securities shall not participate in any decisions relating to such transaction.

Prior to the investment of Trust Funds by an Investment and Trust Company pursuant to the terms of the relevant trust agreements, or prior to continuing investment of the s aid Trust Funds after retrieval of the Trust Funds by the Investment and Trust Company, such Trust Funds shall be deposited with Commercial Banks or Banks for a Special Business Purpose.

An Investment and Trust Company may operate the following Trust Funds:
1.Trust Funds for uses designated by the trustors; and
2.Trust Funds for uses determined by the Investment and Trust Company.
For Trust Funds, the uses of which are determined by the Investment and Trust Company, it may be specified in the trust agreement that the Investment and Trust Company shall be responsible for compensation for losses of principal.
For compensation for losses of principal, the Investment and Trust Company shall, at the end of each fiscal year, make a precise assessment of such principal losses and shall compensate such losses by allocating funds from the Investment and Trust Company's special reserve as stipulated in the relevant trust agreement(s).
The aforesaid special reserve shall be appropriated from the annual income derived from trust properties pursuant to standards approved by the Competent Authority.
Surpluses in the special reserve account, after full compensation for principal losses, shall be credited to the Investment and Trust Company's income; any deficit in the special reserve shall be covered by the Investment and Trust Company's own funds.

An Investment and Trust Company shall individually establish a special account for each trustor and each type of Trust Fund. The Investment and Trust Company's own properties and trustors' properties shall be kept in separate accounts and shall not be commingled.
An Investment and Trust Company shall not borrow funds for the account of its Trust Funds.

The creditors of an Investment and Trust Company may not apply for seizure or exercise other such rights over trust properties.

An Investment and Trust Company shall set up a trust property assessment committee to assess, every three (3) months, the value of the trust properties provided by each trustor. The result of the assessment of each such trust account shall be reported to the Board of Directors of the Investment and Trust Company.

An Investment and Trust Company shall submit to each trustor and to the Central Competent Authority, periodic accounting reports in accordance with the trust agreements and the regulations of the Central Competent Authority.

An Investment and Trust Company, in offering public common Trust Funds, shall prepare a plan for such issuance and shall submit the same to the Central Competent Authority for approval. Administrative rules governing the aforesaid public common Trust Funds shall be as prescribed by the Central Competent Authority.

Except as regards businesses approved by the Competent Authority in accordance with Article 101, Paragraph 2, above Article 74, Article 75 and Article 76 shall apply to Investment and Trust Companies.