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Chapter Law Content

Title: Regulations Governing Offshore Funds CH
Category: Financial Supervisory Commission(金融監督管理委員會)
Chapter IV Private Placement of Offshore Funds
Article 52
An offshore fund institution may conduct private placements of offshore funds to the following counterparties in Taiwan:
1. Banks, bills finance enterprises, trust enterprises, insurance companies, securities enterprises, financial holding companies, and other juristic persons or institutions approved by the FSC;
2. Natural persons, juristic persons, or funds meeting the conditions set by the FSC.
The total number of counterparties under subparagraph 2 of the preceding paragraph may not exceed 99 persons.
On reasonable request by a counterparty under subparagraph 2 of paragraph 1, prior to consummation of a private placement, the offshore fund institution shall be obligated to provide financial, business, or other information relevant to the current private placement of a fund.
In conducting private placements to specified counterparties, the offshore fund institution may not make any general advertisement or public inducement.
If paragraph 1or 2, or the preceding paragraph is violated, the placement shall be deemed a public offering to non-specified persons.
In order to privately place offshore funds in Taiwan to those counterparties specified in paragraph 1, subparagraph 1, the offshore fund institution may mandate a bank, trust enterprise, securities broker, SITE, or SICE to handle such business.
In order to privately place offshore funds in Taiwan to those counterparties specified in paragraph 1, subparagraph 2, the offshore fund institution shall for such purposes mandate a bank, trust enterprise, securities broker, SITE, or SICE that meets the qualification conditions specified in Article 9, subparagraphs 2 to 7 and that has paid-in capital, appropriated operating capital, or exclusively allocated operating capital of not less than NT$30,000,000, and shall also comply or ensure the compliance with the following:
1. The internal control system of the mandated institution shall include such operational principles as know-your-customer, product suitability analysis, filing with the SITCA for change or termination of the mandated institution, and its obligations for assistance and notification to the investors.
2. The fund manager shall have obtained an asset management license or eligibility in the place of registration.
3. The code of conduct for the institution mandated by the privately placed offshore fund.
The code of conduct under subparagraph 3 of the preceding paragraph, and any subsequent amendment thereto, shall be drafted by the SITCA and ratified by the FSC.
The mandated institution shall enter into a mandate agreement with the offshore fund institution; the required content of such agreement, and any subsequent amendment thereto, shall be drafted by the SITCA and ratified by the FSC.
The percentage of the investment in any individual privately placed offshore fund that is contributed by Taiwan investors may not exceed the limit set by the FSC.
In order to privately place offshore funds to specified persons in Taiwan, an offshore fund institution shall mandate an agent for litigious matters and an agent for tax matters.
In conducting a private placement to specified persons in Taiwan, if outward and inward remittance of investors' funds will be involved, the mandated institution shall submit relevant documentation to the CBC to apply for permission for relevant foreign exchange business.
Where an offshore fund institution itself conducts a private placement to specified persons in Taiwan, if outward or inward remittance of funds will be involved, the remittance shall be handled by the counterparty in accordance with the Regulations Governing the Reporting of Foreign Exchange Receipts and Disbursements or Transactions.
All receipts/payments of settlement monies and fees by the counterparty in respect of a private placement of offshore funds by an offshore fund institution shall be made in foreign currency.
An offshore fund privately placed prior to the 3 September 2010 amendment and issuance of these Regulations whose placees include those specified in paragraph 1, subparagraph 2 shall, within 6 months after the issuance of the amendment to these Regulations, be submitted to review by the SITCA. If any non-compliance is found, the offshore fund institution and mandated institution may not accept any new purchase request, and shall assist the investors to apply for redemption or take any other necessary action.
Article 53
Subscribers and purchasers of privately place offshore funds may not resell such funds except in one of the following circumstances:
1. by redemption by the offshore fund institution;
2. by transfer to a person/entity qualified under paragraph 1 of the preceding article;
3. by transfer by operation of law;
4. as otherwise approved by the FSC.
The restrictions on transfer as set out in the preceding paragraph shall be printed in conspicuous type on the certificate and stated in relevant written documents delivered to the subscriber or purchaser.
Article 54
Within five days from the date that the price of the privately placed offshore funds has been paid in full, the offshore fund institution shall report to the institution designated by the FSC and copy the CBC.
The required documentation and procedures for offshore fund institutions filing reports under the preceding paragraph shall be publicly announced by the FSC.