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Chapter I General Principles
Article 1
This Act is specially enacted to foster the sound operations and development of securities investment trust and consulting business, promote the integrated administration of the asset management services market, and protect investment. Matters not provided
for in this Act shall be governed by the Securities and Exchange Act.
Article 2
The term "Competent Authority" as used in this Act means the Financial Supervisory Commission.
Article 3
The term "securities investment trust" as used in this Act means offering securities investment trust funds and issuing beneficiary certificate to unspecified persons, or privately placing securities investment trust funds and delivering beneficiary certificate
to specified persons, and investing in or trading securities, securities-related products, or other items approved by the Competent Authority.
The term "securities investment trust enterprise" as used in this Act means an institution that operates securities investment trust businesses with the permission of the Competent Authority.
The types of business operated by securities investment trust enterprises are as follows:
1.Securities investment trust business.
2.Discretionary investment business.
3.Other relevant business permitted by the Competent Authority.
A securities investment trust enterprise shall report the types of business it will operate to the Competent Authority and apply for its approval.
Article 4
The term "securities investment consulting" as used in this Act means providing analysis, opinions, or recommendations on matters relating to investment in or trading of securities, securities-related products, or other items approved by the Competent Authority,
in return for compensation obtained directly or indirectly from a principal or third party.
The term "securities investment consulting enterprise" as used in this Act means an institution that operates securities investment consulting businesses with the permission of the Competent Authority.
The types of business operated by securities investment consulting enterprises are as follows:
1.Securities investment consulting business.
2.Discretionary investment business.
3.Other relevant business permitted by the Competent Authority.
A securities investment consulting enterprise shall report the types of business it will operate to the Competent Authority and apply for its approval.
Article 5
Following are definitions of other terms as used in this Act:
1."Securities investment trust contract" means a trust contract signed between a securities investment trust enterprise as the settlor and a fund custodian as the trustee, for purposes of regulating the mutual rights and obligations between the securities investment
trust enterprise, the fund custodian, and the beneficiaries.
2."Fund custodian" means a trust company or a bank concurrently operating trust businesses that serves, on the basis of a trust relationship, as the trustee under a securities investment trust contract, and handles the custody, disposition, and collections
and payments of a securities investment trust fund according to the instructions of the securities investment trust enterprise, and conducts business related to fund custody under this Act and the securities investment trust contract.
3."Beneficiary" means a person designated in the securities investment trust contract as entitled to benefit from the securities investment trust fund.
4."Securities investment trust fund" means the trust property under the securities investment trust contract, including the subscription price obtained from the public offering or private placement of beneficiary certificate, and any proceeds accruing thereupon
and assets purchased therewith.
5."Beneficiary certificate" means securities issued or delivered for purposes of public offering or private placement of a securities investment trust fund, and serving to represent the rights enjoyed by the beneficiaries in the fund.
6."Offshore fund" means a fund established outside of the territory of the Republic of China and having the nature of a securities investment trust fund.
7."Securities investment consulting contract" means an investment consulting mandate contract signed with respect to a mandate given to a securities investment consulting enterprise by a customer to provide analysis, opinions, or recommendations regarding matters
relating to investment or trading in securities, securities-related products, or other items approved by the Competent Authority.
8."Securities" means securities under Article 6 of the Securities and Exchange Act.
9."Securities-related products" means securities-related futures, options, or other financial products that have been approved by the Competent Authority for trading.
10."Discretionary investment management business" means the business, with respect to discretionary investment assets that a customer delivers by a mandate or transfers under a trust, of conducting value analysis and making investment judgments regarding securities,
securities-related products, or other items approved by the Competent Authority, and executing investments or trades for the customer based on such investment judgments.
11." Discretionary investment custodian " means a trust company or a bank concurrently operating trust businesses that, in accordance with this Act and the contract(s) applying to the discretionary investment management mandate, maintains custody of the discretionary
investment assets and handles custody business in connection with the discretionary investment.
12."Discretionary investment assets" means assets that a customer delivers by a mandate or transfers under a trust for purposes of discretionary investment, and any proceeds accruing thereupon and assets purchased therewith.
Article 6
Securities investment trust, securities investment consulting, and discretionary investment business may not be operated except in accordance with this Act.
A trust enterprise that offers and issues a mutual trust fund for the purpose of investing in securities, and meets certain conditions, shall apply to concurrently operate securities investment trust business as provided in this Act.
The "certain conditions" referred to in the preceding paragraph shall be prescribed by the Competent Authority in consultation with the competent authority for the Trust Enterprise Act.
Article 6-1
To facilitate the development of financial inclusion and financial technologies, applicants, not limited to securities investment trust enterprises and securities investment consulting enterprises, may apply to conduct innovative experimentation in securities
investment trust, securities investment consulting, and discretionary investment business pursuant to the Financial Technology Development and Innovative Experimentation Act.
An innovative experiment under the preceding paragraph may be exempted from the application of the provisions of this Act within the period and scope approved by the Competent Authority.
The Competent Authority shall take into reference the results of implementation of the innovative experimentation under paragraph 1, and review the appropriateness of this Act and relevant financial laws and regulations in light thereof.
Article 7
Securities investment trust enterprises, securities investment consulting enterprises, fund custodians, discretionary investment custodians, and their directors, supervisors, managerial officers, and employees, shall conduct business in good faith and with
the duties of due care, diligence, and fidelity as good administrators, in accordance with this Act and with regulations and contracts authorized and issued or entered into under this Act.
Enterprises, institutions, and personnel referred to in the preceding paragraph shall keep confidential the personal data, transaction data, and other related information of beneficiaries and customers, except where otherwise provided by another act or regulation
or the Competent Authority.
Anyone who violates a provision of the preceding two paragraphs shall be liable for compensation for resultant damage incurred by a beneficiary or contractual counterparty of the securities investment trust fund.
Article 8
The following are prohibited in the operation of securities investment trust business, securities investment consulting business, discretionary investment business, fund custody business, discretionary investment custody business, and other business under this
Act:
1.Misrepresentation.
2.Fraud.
3.Any other act sufficient to mislead other persons.
A financial report or any other related business document reported or publicly announced by a securities investment trust enterprise, securities investment consulting enterprise, fund custodian, or discretionary investment custodian may not contain any misrepresentation
or concealment.
Anyone who violates a provision of the preceding two paragraphs shall be liable for injury consequently sustained by a beneficiary or contractual counterparty of the securities investment trust fund.
Article 9
For injury caused intentionally by a person who is liable for damages for a violation of this Act, a court may, at the request of the victim, according to the circumstances of the case, impose at its discretion punitive damages of not more than three times
the amount of the injury; for injury caused by gross negligence, it may impose at its discretion punitive damages of not more than twice the amount of the injury.
Rights to claim damages as prescribed in this Act shall be extinguished if not exercised within two years from the time the claimant learns of the cause entitling the claimant to claim damages, or within five years from the date of occurrence of such cause
for damages.
Chapter II Securities Investment Trust Funds
Section I Public Offering, Private Placement, Issuance, and Marketing of Funds
Article 10
A securities investment trust enterprise may not publicly offer a securities investment trust fund without first obtaining approval from the Competent Authority or effective registration by filing with the Competent Authority. The Competent Authority shall
prescribe regulations governing the documents required to be submitted and the regulations for approval of applications or effective registration filings, conditions for approval or effective registration, and other compliance requirements.
Operational procedures for the public offering, issuance, and sale of funds, and the subscription and redemption thereof, shall be drafted by the Securities Investment Trust and Consulting Association and submitted to the Competent Authority for ratification.
If a fund mentioned in the preceding two paragraphs is an overseas-raised fund investing domestically, or a domestically raised fund investing overseas, approval from the Central Bank is required.
Article 11
A securities investment trust enterprise may carry out a private placement of beneficiary certificate with the following counterparts:
1.Banks, bills finance enterprises, trust enterprises, insurance enterprises, securities enterprises, or other juristic persons or institutions approved by the Competent Authority.
2.Natural persons, juristic persons, or funds meeting conditions set by the Competent Authority.
The total number of offerees under subparagraph 2 of the preceding paragraph may not exceed 99 persons.
Upon the reasonable request by a counterpart(s) under subparagraph 2 of paragraph 1 prior to consummation of the private placement, a securities investment trust enterprise shall be obligated to provide financial, business, or other information relevant to
the current private placement of securities investment trust beneficiary certificate.
Within five days from the date that the price of the privately placed beneficiary certificate has been paid in full, the securities investment trust enterprise shall report the same to the Competent Authority; the particulars required to be reported shall be
specified by the Competent Authority. A person intending to raise funds through private placement overseas for investment domestically or to raise funds through private placement domestically for investment overseas shall, when filing the report, submit therewith
a photocopy of the Central Bank approval letter.
The restrictions on transfers of privately placed beneficiary certificate shall be conspicuously noted on the beneficiary certificate and shall be stated in the relevant written documentation delivered to the offeree or purchaser.
The provisions of Article 43-7 and Article 43-8, paragraph 1, of the Securities and Exchange Act shall apply mutatis mutandis to privately placed beneficiary certificate.
Article 12
Unless the Competent Authority provides otherwise, a securities investment trust contract shall specify the following particulars:
1.Name and address of the securities investment trust enterprise and the fund custodian.
2.Name and duration of the securities investment trust fund.
3.Rights, obligations, and legal responsibilities of the securities investment trust enterprise.
4.Rights, obligations, and legal responsibilities of the fund custodian.
5.Rights, obligations, and legal responsibilities of the beneficiaries.
6.Basic policies and scope for using the securities investment trust fund to invest in securities and trade securities-related products.
7.Matters relating to the distribution of proceeds of the securities investment trust.
8.Matters relating to the redemption of beneficiary certificate.
9.Fees to be borne by the securities investment trust fund.
10.Management and custodial fees of the securities investment trust enterprise and the fund custodian.
11.Calculation of the net asset value of the securities investment trust fund and the beneficiary units.
12.Matters relating to termination of the securities investment trust contract.
13.Matters relating to convening of beneficiaries meetings, quorum requirements, voting requirements, and the method for resolutions.
A securities investment trust contract template shall be drafted by the Securities Investment Trust and Consulting Association in consultation with the Trust Association, and submitted to the Competent Authority for ratification.
Article 13
Depending on market conditions, the Competent Authority may impose ceilings on the fees charged for the purchase or redemption of beneficiary certificate by beneficiaries, and the management or custodial fees charged by securities investment trust enterprises
or fund custodians and impose restrictions on the types of fees to be borne by securities investment trust funds.
Article 14
The Competent Authority will specify the types of securities investment trust funds that securities investment trust enterprises may publicly offer or privately place, the scope of investments or trading thereby, and restrictions thereupon.
If investments or trading by funds under the preceding paragraph involves any item other than securities-related products, the Competent Authority shall first consult with the competent authority for the relevant industry and obtain its consent; if it involves
the money market, it shall also consult with and obtain the consent of the Central Bank.
Article 15
A securities investment trust enterprise publicly offering a securities investment trust fund shall deliver a prospectus to prospective subscribers in the manner prescribed by the Competent Authority.
A securities investment trust enterprise privately placing a securities investment trust fund with specific persons shall be obligated to deliver a private placement memorandum to offerees at their request.
A securities investment trust enterprise that fails to deliver a prospectus or private placement memorandum in accordance with the preceding two paragraphs shall be held liable for injury consequently sustained by bona fide trading counterparties.
The provisions of Article 32 of the Securities and Exchange Act shall apply mutatis mutandis to liability for damages for any injury sustained by a bona fide counterparty because of any misrepresentation or concealment in the main required content of a prospectus
or private placement memorandum.
The Competent Authority shall prescribe the matters required to be specified in a prospectus under paragraph 1 and a private placement memorandum under paragraph 2.
Article 16
No person may, themself or as an agent, engage within the Republic of China in the public offer, sale, or investment consultancy of offshore funds without first obtaining approval from the Competent Authority or effective registration upon filing with the Competent
Authority.
Private placement of offshore funds shall comply with the provisions of Article 11, paragraphs 1 to 3, and may not involve any act of general advertising or public solicitation. If those provisions are not complied with, it shall be deemed a public offering
of offshore funds; the same restriction shall apply to any act of general advertising or public solicitation in respect of investment consultancy for offshore funds.
Securities investment trust enterprises, securities investment consulting enterprises, securities firms, issuers of offshore funds and institutions designated thereby, and other institutions designated by the Competent Authority may engage in the business specified
in paragraph 1 within the Republic of China; the Competent Authority shall prescribe regulations governing related qualifications and conditions, application or filing procedures, business items that may be engaged in, and other compliance requirements.
The Competent Authority shall prescribe regulations governing the types, investment or trading scopes, and restrictions thereupon, of offshore funds that may be publicly offered, sold, or addressed in investment consulting within the Republic of China by persons,
themselves or as agents, and the relevant application or filing procedures and other compliance requirements.
If the public offer or sale of offshore funds within the Republic of China by a person, themself or as an agent, under paragraph 1, involves inward or outward remittance of funds, approval shall be obtained from the Central Bank.
Article 16-1
Assets lawfully acquired in the name of a securities investment trust enterprise or a securities investment consulting enterprise on behalf of its investors shall be kept separate and independent of the enterprise's own property.
Creditors may not make any claim or exercise any other right against the assets under the preceding paragraph to satisfy any debt owed by a securities investment trust enterprise or a securities investment consulting enterprise with respect to its own property.
Section II Fund Operation
Article 17
In managing a securities investment trust fund to invest or trade, a securities investment trust enterprise shall base its decisions on its analysis; it shall keep records of its execution thereof, and shall also submit a review on a monthly basis. Its analysis
and decisions shall be founded on reasonable grounds and bases.
The securities investment trust enterprise shall include the analysis, decisions, execution, and review referred to in the preceding paragraph in the internal control system and faithfully implement the system. Records shall be kept of the control activities,
and shall be preserved for a certain period of time.
The Competent Authority shall prescribe the period of time for which they shall be preserved.
Article 18
The Competent Authority shall prescribe regulations governing the methods by which securities investment trust enterprises manage securities investment trust funds in investment and trading, and the giving of instructions for custody, disposition, collection
and payment, and other relevant matters.
Assets held by a securities investment trust enterprise in the course of managing a securities investment trust fund shall be registered in the name of the fund account with the fund custodian. Provided, foreign securities and foreign securities-related products
that are held may be registered in the manner stipulated in the agreement entered into between the fund custodian and the appointed foreign custodian.
Article 19
A securities investment trust enterprise shall manage securities investment trust funds in accordance with this Act, regulations authorized and adopted under this Act, and the provisions of the securities investment trust contracts, and is prohibited to do
any of the following acts, except where otherwise provided by the Competent Authority:
1.Instruct the fund custodian to make a loan or provide security.
2.Engage in securities margin transactions.
3.Engage in securities trading with any other securities investment trust fund managed by the same securities investment trust enterprise.
4.Invest in securities issued by such securities investment trust enterprise or a company having an interest relationship with such securities investment trust enterprise.
5.Manage the securities investment trust fund to purchase beneficiary certificate of the fund.
6.Instruct the fund custodian to lend securities held by the fund to another person.
The Competent Authority shall define the scope of the term "company having an interest relationship" as used in subparagraph 4 of the preceding paragraph.
Article 20
The securities investment trust enterprise and fund custodian shall place the securities investment trust fund prospectus, sales-related documents, securities investment trust contract, and latest financial statements at their place of business and their agent's
place of business to make them available for reading, or shall make them available for reading by another method designated by the Competent Authority.
Section III Fund Custody
Article 21
A securities investment trust fund publicly offered or privately placed by a securities investment trust enterprise, the private property of the securities investment trust enterprise, and the private property of the fund custodian shall be independently maintained.
Creditors may not make any claim or exercise any other rights against the assets of the fund to satisfy liabilities incurred by the securities investment trust enterprise or the fund custodian of the fund with respect to their own private properties.
The fund custodian shall establish and maintain a separate account for each securities investment trust fund in its custody in accordance with this Act, regulations authorized and adopted under this Act, and the securities investment trust contracts.
Article 22
An institution to which any of the following circumstances applies may not serve as a fund custodian:
1.It has been subject to a disposition by the Competent Authority under Article 115, and the disposition period has not yet expired.
2.It has not yet obtained a credit rating of a certain grade or higher from a credit rating institution approved or recognized by the Competent Authority.
An institution to which any of the following circumstances applies may not serve as a fund custodian of a securities investment trust enterprise, except with the approval of the Competent Authority:
1.Its investment in the securities investment trust enterprise reaches a certain percentage of the total issued shares of the enterprise.
2.It serves as a director or supervisor of the securities investment trust enterprise, or any of its directors or supervisors serves as a director, supervisor or managerial officer of the securities investment trust enterprise.
3.A certain percentage of its total issued shares is held by the securities investment trust enterprise.
4.The securities investment trust enterprise or its representative serves as a director or supervisor of the institution.
5.It serves as a certifying institution of the securities investment trust fund.
6.The institution and the securities investment trust enterprise are subsidiaries of the same financial holding company or are affiliated enterprises.
7.Other institutions that the Competent Authority specifies as inappropriate to serve as a fund custodian.
Where a director or supervisor is a juristic person, the provisions of subparagraph 2 shall apply mutatis mutandis to its representative or person appointed to exercise its duties on its behalf.
The "certain percentage" in subparagraphs 1 and 3 of paragraph 2 shall be prescribed by the Competent Authority.
The term "subsidiary" in subparagraph 6 of paragraph 2 means a subsidiary as defined in Article 4 of the Financial Holding Company Act.
Article 23
If a fund custodian learns that a securities investment trust enterprise has violated a securities investment trust contract or an applicable act or regulation, it shall immediately request the securities investment trust enterprise to perform its obligations
under the contract or the applicable act or regulations; if there is a likelihood of injury to the rights or interests of beneficiaries, it shall immediately report to the Competent Authority, with a copy to the Securities Investment Trust and Consulting Association.
If a securities investment trust enterprise intentionally or negligently injures assets of the fund, the fund custodian shall seek recovery from the enterprise on behalf of the rights and interests of the fund beneficiaries.
Article 24
If the fund custodian intentionally or negligently violates this Act, a regulation authorized and adopted under this Act, or a securities investment trust contract, causing injury to assets of the fund, it shall be liable for damages. The securities investment
trust enterprise shall furthermore seek recovery from the institution on behalf of the rights and interests of the fund beneficiaries.
A fund custodian institution shall be responsible for any intentional or negligent [act or omission] of its agents, representatives, or employees when performing their obligations under a securities investment trust contract to the same extent that the fund
custodian institution is responsible for its own intentional or negligent [acts or omissions].
Section IV Fund Redemption
Article 25
Where the securities investment trust contract stipulates that the beneficiary is entitled to request redemption of the beneficial interest certificate unless the Competent Authority has provided otherwise, the beneficiary may request in writing or by other
stipulated means that the securities investment trust enterprise redeem the beneficial interest certificate, and the securities investment trust enterprise may not refuse to do so; payment of the redemption price may not be delayed.
The Competent Authority shall prescribe regulations governing the calculation of the redemption price, the time limit for payment of the redemption price, issuance of a new beneficial interest certificate upon partial redemption, the temporary suspension of
calculation of redemption price, delayed payment of the redemption price, and other compliance requirements with respect to securities investment trust funds.
Section V Fund Accounting
Article 26
An individual account shall be established for each securities investment trust fund publicly offered or privately placed by a securities investment trust enterprise and accounting books and records shall be established as provided by the Competent Authority;
they shall be kept in the manner and for the period set forth in the Business Accounting Act and applicable regulations.
Article 27
The accounting year of a securities investment trust fund shall be from 1 January to 31 December each year unless otherwise stipulated in the securities investment trust contract or otherwise approved by the Competent Authority.
Article 28
The securities investment trust enterprise shall calculate the net asset value of the securities investment trust fund each business day.
The Securities Investment Trust and Consulting Association shall draft standards for the calculation of the net asset value of securities investment trust funds and submit them to the Competent Authority for approval.
Article 29
The securities investment trust enterprise shall, on each business day, publicly announce the net asset value per beneficiary unit of the securities investment trust fund for the previous business day. Provided, for securities investment trust funds raised
by offering beneficiary certificate overseas, the laws and regulations of the place where they are offered shall govern.
The provisions of the preceding paragraph do not apply to securities investment trust funds privately placed with specific persons by the securities investment trust enterprise. Provided, the net asset value per beneficiary unit of the securities investment
trust fund shall be reported to the beneficiaries according to the provisions of the securities investment trust contract.
Article 30
A securities investment trust enterprise shall keep the assets of each securities investment trust fund in the following manners according to the percentages prescribed by the Competent Authority:
1.Cash.
2.Bank deposits.
3.Short-term bill purchased from bill dealers.
4.Other manners provided by the Competent Authority.
Banks or short-term bills under subparagraphs 2 or 3 of the preceding paragraph shall have obtained at least a certain rating from a credit rating institution approved by the Competent Authority.
The total amount of assets held in the manners in subparagraphs 2 to 4 of paragraph 1 by a securities investment trust fund that is publicly offered or privately placed domestically may not exceed a certain percentage; the percentage shall be set by the Competent
Authority in consultation with the Central Bank.
Article 31
Any profit from investment income of the securities investment trust fund that shall be distributed according to the stipulations of the securities investment trust contract shall be distributed within six months from the close of the accounting year unless
otherwise approved by the Competent Authority, and the distribution date shall be specified in the securities investment trust contract.
Section VI Beneficiary certificate
Article 32
Beneficiary certificate shall be registered.
Beneficiary certificate may be issued in scripless form and delivered by book-entry transfer.
Regulations governing matters related to beneficiary certificate shall be drafted by the Securities Investment Trust and Consulting Association and submitted to the Competent Authority for ratification.
Article 33
Where several persons own the same beneficial interest certificate(s), the co-owners shall select one of them to exercise their beneficial rights.
Where a government or juristic person is the beneficiary, it shall appoint one natural person to exercise its beneficial rights on its behalf.
Article 34
Beneficiary certificate may freely be transferred unless otherwise provided by law.
The transfer of beneficiary certificate shall be effected by endorsement and delivery by the beneficiary, and the transferee's name shall be specified on the beneficiary certificate.
A transfer under the preceding paragraph shall not be asserted as a defense against a securities investment trust enterprise unless the name or title and domicile or residence of the transferee have been specified by the beneficiaries' register of the securities
investment trust enterprise.
The preceding paragraph does not apply to the transfer of beneficiary certificate effected by means of book-entry transfer or registration. Regulations governing book-entry transfer or registration shall be promulgated by the Competent Authority.
Article 35
The beneficial rights of a securities investment trust fund shall be divided equally based on the total number of beneficiary units. The number of beneficiary units of each beneficiary certificate shall be as specified on the beneficiary certificate.
The rights of the beneficiary shall be in accordance with the content specified on the beneficiary certificate and are exercisable according to the number of beneficiary units. Identical beneficial rights shall be enjoyed under any additional public offerings
or private placements of the fund.
Article 36
Unless the beneficiary certificate are scripless, the securities investment trust enterprise shall record the required information on them in the format prescribed by the Competent Authority, and issue them after they have been signed by the fund custodian.
The following information is required to be specified on beneficiary certificate under the preceding paragraph:
1.Name of the securities investment trust fund, total number of beneficiary units, issue date, duration, and whether additional issues are permitted.
2.Name and address of the securities investment trust enterprise and the fund custodian.
3.Name (individual or entity) of the beneficiary.
4.Number of beneficiary units represented by the beneficiary certificate.
5.Method for calculating the purchase price per beneficiary unit and the fee.
6.Method for calculating, payment method and times, for the management or custodial fees charged by the securities investment trust enterprise and fund custodian.
7.When the beneficiary requests redemption of the beneficiary certificate, the procedure, time, place, and method for calculating the redemption price and redemption fee, and the time and method of payment of the redemption price by the securities investment
trust enterprise.
8.Method for calculating and publicly announcing the net asset value of the beneficiary units.
9.If there are any restrictions on whom beneficiary certificate may be transferred to, the content and effect of the restrictions.
10.Other particulars that the Competent Authority requires to be specified.
Beneficiary certificate issued shall be certified unless the certificates are in scripless form. The certification provisions governing the issuance of stocks and corporate bonds by public companies shall apply mutatis mutandis to the certification of beneficiary
certificate.
Article 37
A beneficiary's right to claim the distribution of proceeds shall be extinguished by prescription if not exercised within five years from the distribution date of the proceeds. Any proceeds that are extinguished by prescription shall be incorporated into the
securities investment trust fund.
A beneficiary's right to claim payment of the price for the redemption of beneficiary certificate shall be extinguished by prescription if not exercised within 15 years from the expiration of the time limit for payment of the price.
When exercising the rights referred to in the preceding three paragraphs before extinction by prescription has occurred under this article, a beneficiary may not claim default interest.
Section VII Beneficiaries meeting
Article 38
The exercise of the rights of beneficiaries shall be done by means of a resolution at a beneficiary's meeting. Provided, this restriction shall not apply to acts done solely for the benefit of a beneficiary themselves.
Article 39
The following matters shall be done subject to a resolution of a beneficiaries meeting. Provided, this restriction shall not apply where the Competent Authority has provided otherwise.
1.Replacement of the fund custodian.
2.Replacement of securities investment trust enterprise.
3.Termination of the securities investment trust contract.
4.Increase in the management or custodial fees of the securities investment trust enterprise or fund custodian.
5.Material amendment to the basic policies or scope of securities investment or securities-related product trading by the fund.
6.Amendment to the securities investment trust contract that would have a material effect on the rights or interests of beneficiaries.
Article 40
When any event occurs that by law, regulation, or the securities investment trust contract requires a resolution of a beneficiaries meeting, the securities investment trust enterprise shall convene a beneficiaries meeting. When the securities investment trust
enterprise is unable or fails to convene the meeting, the fund custodian shall convene it. When the fund custodian is unable or fails to convene it, it shall be convened as provided in the securities investment trust contract or by the beneficiaries themselves.
When all are unable or fail to convene it, a person appointed by the Competent Authority shall convene it.
For beneficiaries themselves to convene a beneficiaries meeting, beneficiaries who have held continuously for at least one year beneficiary certificate representing beneficiary units accounting for at least three percent of the total beneficiary units issued
and outstanding of the fund at the time of the proposal shall file an application to the Competent Authority in writing, describing the matters proposed and the reasons for convening the meeting, and convene the meeting themselves after obtaining approval
therefrom.
When a beneficiaries meeting is convened by a party other than the securities investment trust enterprise, the securities investment trust enterprise, at the request of the fund custodian, the beneficiaries, or the person appointed by the Competent Authority,
shall provide any documents or materials necessary for convening the beneficiaries meeting.
Article 41
If in conducting fund custodian business, a fund custodian requests a securities investment trust enterprise to perform its obligations as provided in Article 23, paragraph 1, and the enterprise fails to do so, thereby injures the rights or interests of beneficiaries,
and the securities investment trust enterprise fails to make corrections by a deadline after being notified in writing to make corrections by the deadline, the institution may, after applying to the Competent Authority and obtaining approval, convene a beneficiaries
meeting to replace the securities investment trust enterprise.
Article 42
The Competent Authority shall prescribe regulations governing the time limits for convening, procedures, resolution methods, meeting protocol, and other compliance requirements with respect to beneficiaries' meetings.
The Competent Authority, if it deems it necessary to protect the public interest or the rights or interests of beneficiaries, may amend, by an order, the provisions of the securities investment trust contract regarding the quorum requirements, voting requirements,
and resolution method for the meeting of beneficiaries as provided in the securities investment trust contract.
Article 43
The procedures for amending the securities investment trust contract are as follows:
1.For a publicly offered securities investment trust fund, approval shall be obtained from the Competent Authority; the securities investment trust enterprise shall publicly announce the content within two days after approval has been obtained.
2.For a privately offered securities investment trust fund, a report shall be filed with the Competent Authority within five days after the amendment.
Article 44
Paragraph 3 of Article 6, Article 16, Article 32, paragraphs 1 to 3 of Article 36, Article 39 to paragraph 1 of Article 42, Article 43, and Articles 52 to 59 of the Trust Act do not apply to securities investment trusts.
Section VIII Termination, Liquidation, and Merger of Funds
Article 45
In any of the following events, a securities investment trust contract shall be terminated after approval has been given by the Competent Authority:
1.The securities investment trust enterprise or fund custodian is dissolved, bankrupted, or its approval is withdrew or revoked, or its management or custodianship of the securities investment trust fund is obviously unsound, and the Competent Authority has
ordered that it be replaced, such that it is unable to continue executing its duties, and there is no other suitable securities investment trust enterprise or fund custodian to assume the rights and obligations of the original enterprise or institution.
2.A beneficiaries meeting resolves to replace the securities investment trust enterprise or fund custodian, and no other suitable securities investment trust enterprise or fund custodian assumes the rights and obligations of the original enterprise or institution.
3.The net asset value of the fund is lower than the standard set by the Competent Authority.
4.The securities investment trust fund is unable to continue operating because of market conditions, the characteristics or scale of the fund, or other legal or factual reasons.
5.A beneficiaries meeting resolves to terminate the contract.
6.The securities investment trust enterprise or fund custodian is unable to accept a resolution of a beneficiaries meeting, and no other suitable securities investment trust enterprise or fund custodian assumes the rights and obligations of the original enterprise
or institution.
7.Another other reason for termination as set forth in the securities investment trust contract.
Where it is desirable to terminate the securities investment trust contract to protect the public interest or the rights and interests of beneficiaries, the Competent Authority may order its termination.
Where a securities investment trust contract is terminated because of expiration of the duration thereof, a report shall be filed with the Competent Authority for recordation within two days from expiration.
A securities investment trust enterprise shall publicly announce the termination of a securities investment trust contract within two days from the date of filing for recordation or of approval.
Article 46
Securities investment trust enterprises may conduct mergers of securities investment trust funds; regulations governing the conditions, procedures, or other applicable matters for mergers thereof shall be prescribed by the Competent Authority.
Article 47
When a securities investment trust contract is terminated, the liquidator shall complete the liquidation of the securities investment trust fund within three months from the date the Competent Authority approves liquidation and shall distribute the balance
after liquidation to the beneficiaries pro rata to the number of beneficiary units. Provided that where, for some legitimate reason the liquidation cannot be completed within three months, the liquidator may apply to the Competent Authority before the expiration
of the time limit for one extension, which shall be limited to three months.
The liquidator shall report to the Competent Authority and publicly announce, and notify the beneficiaries of, the methods for liquidation and distribution under the preceding paragraph. Within two months from the conclusion of the liquidation procedures, he
shall report the results thereof to the Competent Authority for recordation and notify the beneficiaries of the same.
Article 48
The securities investment trust enterprise shall serve as the liquidator of the fund. Where an event specified in subparagraphs 1 or 2 of paragraph 1 of Article 45 exists with respect to the securities investment trust enterprise, the fund custodian shall serve
as the liquidator. Where an event specified in subparagraphs 1 or 2 of paragraph 1 of Article 45 also exists with respect to the fund custodian, a beneficiaries meeting shall select by a resolution a securities investment trust enterprise or fund custodian
that complies with the provisions of the Competent Authority to be the liquidator.
When the fund contract is terminated because an event specified in subparagraphs 1 or 2 of paragraph 1 of Article 45 exists with respect to the fund custodian, the liquidator may select a suitable fund custodian to assume, after approval is obtained from the
Competent Authority, the fund custody duties during the liquidation period.
Unless otherwise provided by law or contract, the rights and obligations of the liquidator and the fund custodian during the duration of the fund shall be the same as those of the original securities investment trust enterprise and fund custodian.
Article 49
From the date the conclusion of the liquidation is reported to the Competent Authority, the liquidator shall keep all account books and statements for not less than 10 years.
Chapter III Discretionary Investment Business
Article 50
A securities investment trust enterprise or securities investment consulting enterprise may not operate discretionary investment businesses until it has met the conditions set by the Competent Authority and has obtained approval from the Competent Authority.
The Competent Authority shall prescribe regulations governing conditions, eligibility, application procedures, personnel administration, contract signing, account processing, and other compliance requirements under the preceding paragraph.
Article 51
Discretionary investment assets received from customers by securities investment trust enterprises or securities investment consulting enterprises shall be kept separate and independent from the private property of the securities investment trust enterprises
or securities investment consulting enterprises and discretionary investment custodians.
Creditors may not make any claim or exercise any other rights against the discretionary investment assets to satisfy liabilities incurred by the securities investment trust enterprise or securities investment consulting enterprise and the discretionary investment
custodian with respect to their own private properties.
Article 52
A securities investment trust enterprise or securities investment consulting enterprise that will operate discretionary investment businesses shall deposit an operation bond with a financial institution.
Where a trust enterprise that will concurrently operate discretionary investment businesses has already deposited a compensation reserve, it is not required to deposit an operation bond.
The Competent Authority shall prescribe the deposit method and amount of the operation bond and the eligibility criteria for financial institutions with which it may be deposited.
A principal, settlor, or beneficiary who is [a creditor of] a claim arising from discretionary investment business shall have a preferential right of payment from the operation bond referred to in paragraph 1 or the compensation reserve referred to in paragraph
2.
Article 53
Where a securities investment trust enterprise or securities investment consulting enterprise operates discretionary investment businesses on a mandate basis, the customer shall place the assets in the discretionary investment custody of the custodian or transfer
them to the custodian by a trust.
A trust enterprise that concurrently operates discretionary investment businesses may keep the trust property in its own custody; if it keeps the trust property in its own custody it shall appoint dedicated personnel to handle the custodial matters.
A securities investment trust enterprise or securities investment consulting enterprise may not keep discretionary investment assets in its own custody except under the circumstances provided in the preceding paragraph.
If a customer of a discretionary investment business is a trust enterprise or another enterprise approved by the Competent Authority, the customer may keep the discretionary investment assets in its own custody.
Article 54
Where a control relationship exists between the discretionary investment custodian and the securities investment trust enterprise or securities investment consulting enterprise, the securities investment trust enterprise or securities investment consulting
enterprise shall be obligated to inform the customer.
"Control relationship" in the preceding paragraph shall be defined by the Competent Authority.
Article 55
The value of the discretionary investment assets of a single customer accepted by a securities investment trust enterprise or securities investment consulting enterprise operating discretionary investment businesses may not be less than a certain amount.
The total amount accepted for investment purposes by a securities investment consulting enterprise operating discretionary investment businesses may not exceed a certain multiple of its net worth. Provided, this restriction shall not apply where its paid-in
capital reaches a certain amount.
"Certain multiple" and "certain amount" in the preceding two paragraphs shall be defined by the Competent Authority.
Article 56
The scope of investment or trading by securities investment trust enterprises or securities investment consulting enterprises operating discretionary investment business, and restrictions thereupon, shall be prescribed by the Competent Authority.
Where the business of discretionary investment in foreign securities operated by a securities investment trust enterprise or securities investment consulting enterprise involves inward or outward remittance of funds, approval shall be obtained from the Central
Bank.
A securities investment trust enterprise or securities investment consulting enterprise operating discretionary investment business and investing in securities shall, except as otherwise provided by law, appoint a securities broker to do so on the centralized
securities exchange market or over-the-counter markets.
Article 57
A securities investment trust enterprise or securities investment consulting enterprise operating discretionary investment business shall do so in compliance with operating rules.
Operating rules under the preceding paragraph regarding contract signing, account opening, trading, settlement, clearing, and handling of other related matters, and any amendments thereto, shall be drafted by the Securities Investment Trust and Consulting Association
and ratified by the Competent Authority.
Article 58
The provisions of Article 17 shall apply mutatis mutandis to investment decisions that a securities investment trust enterprise or securities investment consulting enterprise makes to utilize discretionary investment assets.
A securities investment trust enterprise or securities investment consulting enterprise utilizing discretionary investment assets shall diversify its investments; the Competent Authority shall prescribe the investment target diversification rate.
Article 59
The following acts are prohibited in the operation of discretionary investment business:
1.Using information learned in the course of professional duties to engage in securities trading for the enterprise's own account or for any party other than the customer.
2.Engaging in any trading prejudicial to the rights and interests of the customer when utilizing discretionary investment assets to trade securities.
3.Signing any agreement with the customer to share proceeds or losses resulting from investment in securities, provided that this restriction shall not apply where the Competent Authority has otherwise made provision for performance-linked compensation.
4.Using a customer's discretionary investment assets to conduct matched order trades with the enterprise's own funds or the discretionary investment assets of another customer, provided that this restriction does not apply to unintentionally matched order trades
that occur on a centralized securities exchange market or on an over-the-counter market.
5.Using a customer's account to trade securities for the enterprise's own account or for any other party.
6.Outsourcing a discretionary investment services contract, in full or in part, to another party to perform, or assigning such a contract to another party, provided that this restriction shall not apply where the Competent Authority has provided otherwise.
7.When utilizing a customer's discretionary investment assets to trade securities, in the absence of legitimate reason, shifting executed orders from the discretionary investment account into the enterprise's own account, the account of another, or another
discretionary investment account, or shifting them from another account into the discretionary investment account.
8.Formulating investment decisions not based upon an investment analysis report, or basing investment decisions on an investment analysis report that clearly is lacking in reasonable analytical foundation and basis, provided that this restriction shall not
apply where a reasonable explanation can be given.
9.Any other acts that would adversely affect the operation of the enterprise or the rights or interests of customers.
Article 60
Before signing a discretionary investment contract with a customer, a securities investment trust enterprise or securities investment consulting enterprise shall carry out the following matters:
1.It shall assign dedicated personnel to explain in detail to the customer matters related to the discretionary investment services and provide the customer with a discretionary investment services prospectus.
2.It shall allow the customer a period of at least seven days to review the entire content of the terms and conditions, fully acquaint themself with the customer's financial ability, investment experience, objectives, and requirements, and compile a reference
file on the customer including a data sheet and other relevant documentation.
The discretionary investment services prospectus shall be made an attachment to the discretionary investment contract; the Competent Authority shall prescribe the particulars required to be included in the prospectus.
Article 61
A securities investment trust enterprise or securities investment consulting enterprise operating discretionary investment businesses shall sign a discretionary investment contract with the customer specifying the various rights and obligations arising between
it and the customer as a result of the mandate or trust relationship, and the customer and the custodian also shall separately sign a mandate or trust contract. Provided, this restriction shall not apply to one who, under this Act, is permitted to keep the
discretionary investment assets in its own custody.
Where discretionary investment assets involve idle funds, the utilization and scope thereof shall be prescribed by the Competent Authority.
The particulars required to be included in a discretionary investment contract under paragraph 1 shall be prescribed by the Competent Authority.
A template for discretionary investment contracts under paragraph 1 shall be drafted by the Securities Investment Trust and Consulting Association and submitted to the Competent Authority for ratification.
Article 62
An operator of discretionary investment businesses shall create a separate account for each individual customer and record, on a daily basis the trading activities of the customer's assets, and the balance of the discretionary investment assets by volume and
monetary amount.
A customer may request to examine the data referred to in the preceding paragraph and the appointed securities investment trust enterprise or securities investment consulting enterprise may not refuse such a request.
Any service fees returned or other benefits paid by a securities firm, futures broker, or other trading counterparty when investment assets are used for trading of securities, securities-related products, or other items that may be invested in or traded as
provided by the competent authority, shall be applied to offset the customer's transaction costs.
An operator of discretionary investment businesses shall produce monthly reports detailing each customer's asset trading record and current status and deliver the reports to the customers.
When losses on the net asset value of the discretionary investment assets of a customer reach a certain percentage of the original discretionary investment assets, the securities investment trust enterprise or securities investment consulting enterprise shall
within two business days from the date of occurrence of the event produce a report referred to in the preceding paragraph and deliver the report to the customer. The same shall subsequently apply each time losses reach a certain percentage of the net asset
value specified in the previous report.
The "certain" percentages in the preceding paragraph shall be prescribed by the Competent Authority.
In the case of a discretionary investment business customer who meets conditions set by the competent authority, the securities investment trust enterprise or securities investment consulting enterprise and the customer may between themselves agree on matters
including the custody of the discretionary investment assets, matters required to be done before signing a contract, and account processing, and are exempted from application of the provisions of the preceding four paragraphs, paragraph 1 of Article 53, and
Article 60, and of paragraph 1 of the preceding Article regarding the signing of a mandate or trust contract between a customer and a custodian.
Chapter IV Securities Investment Trust and Consulting Enterprises
Section I General Provisions
Article 63
Securities investment trust enterprises and securities investment consulting enterprises may begin operations only after obtaining permission from the Competent Authority and being issued a business license.
Securities investment trust enterprises and securities investment consulting enterprises shall obtain permission from the Competent Authority before establishing branch units.
None other than a securities investment trust enterprise or securities investment consulting enterprise may use a name similar to "securities investment trust enterprise" or "securities investment consulting enterprise."
Article 64
A securities investment trust enterprise or securities investment consulting enterprise may operate discretionary investment businesses by means of a trust; where it meets certain conditions, it shall apply under the Trust Enterprise Act to concurrently operate
trust businesses.
"Certain conditions" in the preceding paragraph shall be defined by the competent authority for the Trust Enterprise Act in consultation with the Competent Authority.
Operators of discretionary investment business by means of trusts shall be limited to securities investment trust enterprises, securities investment consulting enterprises, or entities permitted to operate trust business under the Trust Enterprise Act.
Article 65
If a trust enterprise operates businesses ratified by the competent authority for the Trust Enterprise Act that involves the trust enterprise having the discretion to decide the investment targets for which the trust property is used, uses the trust property
in securities defined in Article 6 of the Securities and Exchange Act, and meets certain conditions, it shall apply to the Competent Authority to concurrently operate discretionary investment business.
"Certain conditions" in the preceding paragraph shall be defined by the Competent Authority in consultation with the competent authority for the Trust Enterprise Act.
Article 66
A securities investment trust enterprise or a securities investment consulting enterprise that meets the conditions prescribed by the Competent Authority and obtains permission may concurrently operate the other enterprise.
A securities investment trust enterprise or securities investment consulting enterprise that has obtained approval from the Competent Authority may concurrently operate other enterprises.
Securities firms, futures trust enterprises, futures advisory enterprises, managed futures enterprises, or other related enterprises that have obtained permission from the Competent Authority, may concurrently operate securities investment trust enterprises
or securities investment consulting enterprises.
Where futures trading accounts for a certain percentage or monetary amount of the issued amount of a securities investment trust fund publicly placed or privately offered by a securities investment trust enterprise, it shall apply to concurrently operate a
futures trust enterprise.
The percentage or monetary amount of futures trading under the preceding paragraph shall be prescribed by the Competent Authority.
Article 67
Securities investment trust enterprises and securities investment consulting enterprises may be organized only as companies limited by shares.
The minimum paid-in capital amount of a securities investment trust enterprise or securities investment consulting enterprise shall be fully subscribed by the promoters at the time of incorporation. The amount thereof shall be prescribed by the Competent Authority.
Article 68
A person under any of the following circumstances may not serve as a promoter, responsible person, or associated person of a securities investment trust enterprise or securities investment consulting enterprise; where such a person is already serving as a responsible
person or associated person, he or she shall be dismissed, and may not serve as a director, supervisor, or managerial officer, and the Competent Authority shall request the competent authority for corporate registration by letter to withdraw or revoke the
registration of such person:
1.Has previously been convicted by a final and unappealable judgment of a crime under the Organized Crime Prevention Act, and has not completed serving the sentence, or five years have not elapsed since completion of the sentence, expiration of the suspended
sentence, or pardon.
2.Has previously been sentenced by a final and unappealable judgment to imprisonment for one year or more for fraud, breach of trust, or misappropriation, and has not completed serving the sentence, or two years have not elapsed since completion of the term
of sentence, expiration of the suspended sentence, or pardon.
3.Has previously been sentenced by a final and unappealable judgment to a sentence of imprisonment or greater severity for misappropriation related to public function or occupation and has not completed serving the sentence, or two years have not elapsed since
completion of the sentence, expiration of the suspended sentence, or pardon.
4.Has previously been convicted by a final and unappealable judgment of a crime under the Securities and Exchange Act or this Act, and has not completed serving the sentence, or three years have not elapsed since completion of the sentence, expiration of the
suspended sentence, or pardon.
5.Has previously been sentenced by a final and unappealable judgment to a sentence of imprisonment or greater severity for engaging in the business of accepting deposits, managing trust funds or public properties, or handling domestic or foreign remittances
in violation of Article 29, paragraph 1, of the Banking Act and has not completed serving the sentence, or three years have not elapsed since completion of the term of sentence, expiration of the suspended sentence, or pardon.
6.Has previously been sentenced by a final and unappealable judgment to a sentence of imprisonment or greater severity for engaging in trust business in violation of Article 33 of the Trust Enterprise Act and has not completed serving the sentence, or three
years have not elapsed since completion of the sentence, expiration of the suspended sentence, or pardon.
7.Has been adjudicated bankrupt and his or her rights have not been reinstated, or previously served as a director, supervisor, managerial officer, or in another equivalent position of a juristic person when such juristic person was adjudicated bankrupt, and
three years have not elapsed since the bankruptcy was concluded, or the reconciliation has not been fulfilled.
8.Has been refused transaction because of dishonor of a negotiable instrument and transactions have not been reinstated.
9.Has no legal disposing capacity or limited disposing capacity, or has been declared by a court to be under assistance and that declaration has not been withdrew.
10.Has been subject to a disposition under Article 56, or subparagraph 2 of Article 66 of the Securities and Exchange Act, or to a disposition of dismissal from duties under subparagraph 2 of Article 103, or Article 104, of this Act, and three years have not
elapsed since such disposition.
11.Has previously served as a director or supervisor of a securities firm, securities investment trust enterprise, or securities investment consulting enterprise, and during the term of such position, such enterprise was subject to a disposition under subparagraph
3 of Article 66 of the Securities and Exchange Act, or to a disposition of suspension of business or revocation of its permission for operation under subparagraph 4 or 5 of Article 103 of this Act, and one year has not elapsed since such disposition.
12.Has been subject to removal or dismissal from duties under Article 100, paragraph 1, subparagraph 2, or Article 101, paragraph 1 of the Futures Trading Act, and five years have not elapsed since such disposition.
13.It has been discovered that the promoter has allowed others to use their own name for the purpose of acting as a promoter, director, supervisor, managerial officer or associated person of a securities investment trust enterprise or securities investment
consulting enterprise.
14.There is factual evidence that the promoter has engaged in or been involved in other dishonest or improper activities, showing the promoter to be unsuitable for engaging in securities investment trust and securities investment consulting business.
Where a promoter, director, or supervisor is a juristic person, the provisions of the preceding paragraph shall apply mutatis mutandis with respect to the exercise of duties by its representative or designated representative.
Article 69
The Competent Authority shall prescribe regulations governing personnel requirements, qualification requirements for responsible persons and associated persons, codes of conduct, training, registration deadlines, procedures, and other compliance requirements
for securities investment trust enterprise and securities investment consulting enterprises.
Article 70
The Competent Authority shall prescribe regulations governing restrictions, bans, prohibitions, or other compliance matters in the conduct of advertising, public informational meetings, and other business activities by securities investment trust enterprises
and securities investment consulting enterprises.
Article 70-1
A person or entity that is not a securities investment trust enterprise or securities investment consulting enterprise may not do any of the following in advertising in connection with securities investment or business solicitation:
1.Mislead people to believe that it has been approved by the Competent Authority to operate securities investment trust, securities investment consulting, or discretionary investment businesses.
2.Concurrently with engaging in investment analysis, do any customer solicitation or investment inducement for the purpose of providing securities investment advice.
3.Make any representation of guaranteeing profits or bearing losses for securities investment.
4.Cite testimonials, letters of appreciation, past performance, or other similar words or representations that could readily lead others to have mistaken faith in the profitability of securities investment.
5.Falsely use the name of any well-known person or company from the political, financial, monetary, video or film, or other domain to recommend, solicit or induce investment in securities.
6.Any other inappropriate recommendation/promotional conduct related to the preceding five subparagraphs.
An internet platform provider, internet application service provider, internet access service provider, or other network communication media enterprise, when publishing or broadcasting any advertisement that is of a person or entity that is not a securities
investment trust enterprise or securities investment consulting enterprise and that involves securities investment or business solicitation, shall in the advertisement disclose or specify the commissioning publisher or sponsor and other related information.
An internet platform provider, internet application service provider, internet access service provider, or other network communication media enterprise may not publish or broadcast any advertisement that violates either of the preceding two preceding paragraphs.
If it subsequently becomes aware of such a violation after publishing or broadcasting an advertisement, it shall, at its own initiative or within a deadline as notified by a judicial police authority, remove the advertisement, restrict the browsing of it,
cease broadcasting it, or take other necessary measures.
When an internet platform provider, internet application service provider, internet access service provider, or other network communication media enterprise publishes or broadcasts an advertisement that violates paragraph 1 or paragraph 2, it shall be jointly
and severally liable with the commissioning publisher and sponsor of the advertisement for damages to anyone who suffers damage because of mistaken belief in the advertisement content or because of being defrauded. However, this shall not apply if it has already
taken necessary measures under the latter part of the preceding paragraph.
An enterprise's joint and several liability for damages under the preceding paragraph may be reduced or remitted under any of the following circumstances:
1.It does not receive any property/financial benefit from the publishing or broadcasting of the advertisement.
2.The publishing or broadcasting of the advertisement was not done out of intent or gross negligence.
Article 71
Responsible persons, associated persons, and other employees of securities investment trust enterprises and securities investment consulting enterprises are also prohibited from doing, in the course of exercising their duties, any act that an enterprise is
prohibited from doing as provided in Article 19, paragraph 1, Article 59, or in an act, regulation, or contract.
Acts done by responsible persons, associated persons, and other employees of securities investment trust enterprises and securities investment consulting enterprises when engaging in business listed in the subparagraphs of paragraph 3 of Article 3 and paragraph
3 of Article 4, where civil liability is involved, are presumed to be acts within the scope of the authorization by the enterprise.
Article 72
Departments, Application Procedures, and Required Documents)
The Competent Authority shall prescribe establishment standards governing the conditions for establishing of securities investment trust enterprise and securities investment consulting enterprise companies and branch units, the departments they are required
to establish, application procedures, required documents, and supervisory regulations governing their finances, business, relocation, closure, and other compliance matters.
For the concurrent operation of securities investment trust enterprises or securities investment consulting enterprises by other kinds of enterprises, the Competent Authority shall consult with the competent authorities for the target enterprises concerning
the establishment and financial and business supervision matters under the preceding paragraph.
Section II Securities Investment Trust Enterprises
Article 73
A director or supervisor of a securities investment trust enterprise or a shareholder holding 5 percent or more of the total issued shares thereof may not concurrently serve as a promoter of any other securities investment trust enterprise or as a shareholder
holding 5 percent or more of the total issued shares thereof.
One that has a relationship of affiliated enterprise as defined under Chapter VI-I of the Company Law with respect to a director, supervisor or shareholder holding 5 percent or more of the issued shares of a securities investment trust enterprise may not serve
as a promoter, director, or supervisor, or a shareholder holding 5 percent or more of the total issued shares, of another securities investment trust enterprise.
Where non-compliance with the preceding two paragraphs results from a merger, adjustments shall be made to effect compliance within one year from the date of the merger.
Shares held by the shareholder's spouse or minor children or held under others' names shall be included in the calculation of shareholdings of five percent or more of total issued shares under paragraphs 1 and 2 above.
Article 74
The promoters operating a securities investment trust enterprise shall meet certain qualification requirements; among the promoters shall be a fund management institution(s), bank(s), insurance company(ies), financial holding company(ies), securities firm(s),
or other institution(s) recognized by the Competent Authority, and the combined share subscribed thereby shall be not less than 20 percent of the first issue of shares; before any transfer of shareholdings by such promoter(s), the securities investment trust
enterprise shall file an advance report of such transfer with the Competent Authority for recordation.
Qualification requirements for promoters referred to in the preceding paragraph shall be prescribed by the Competent Authority.
A securities investment trust enterprise shall have one or more shareholders meeting the qualification requirements referred to in the preceding two paragraphs, whose total shareholdings (excluding shareholdings from distributions of new shares for employee
bonuses, or from issuance of new shares reserved for subscription by employees, or shareholdings meeting certain conditions) may not be less than 20 percent of the total issued shares; before any transfer of shareholdings by such shareholder(s), the securities
investment trust enterprise shall file an advance report of such transfer with the Competent Authority for recordation.
"Certain conditions" in the preceding paragraph shall be defined by the Competent Authority.
Article 75
The total combined shares held by a single securities investment trust enterprise shareholder other than one meeting the qualification requirements in the preceding article, related parties of the shareholder, and any other persons under whose name the shareholder
holds shares, may not exceed 25 percent of the total issued shares of the company.
The scope of related parties referred to in the preceding paragraph shall be prescribed by the Competent Authority.
Article 76
A promoter of a securities investment trust enterprise may not, within one year from the date of the company's incorporation, concurrently serve as a promoter of another securities investment trust enterprise.
A promoter of a securities investment trust enterprise who has served as a promoter in accordance with the qualifications set forth under Article 74 may not serve as a promoter of any other securities investment trust enterprise within three years from the
date of issuance of the business license of that securities investment trust enterprise by the Competent Authority.
Article 77
From the time that the securities investment trust enterprise decides to utilize the securities investment trust fund to engage in any type of corporate stock or equity derivative trade until such time as the securities investment trust fund no longer holds
that corporate stock or equity derivative, no responsible person, department supervisor, branch unit manager, or fund manager of the securities investment trust enterprise, themselves or their spouse, minor child, or other persons in whose name they transact,
may engage in trading such corporate stock or equity derivative; provided, this restriction shall not apply where otherwise provided by the Competent Authority.
A responsible person, department supervisor, branch unit manager, fund manager, or related party thereof, of a securities investment trust enterprise who engages in trading of any corporate stock or equity derivative shall report the circumstances of the trade
to the securities investment trust enterprise as provided by the Competent Authority.
The scope of "related persons" in the preceding paragraph shall be defined by the Competent Authority.
Article 78
A responsible person of a securities investment trust enterprise and its department supervisors, branch unit managers, fund managers, or spouses thereof, when acting as a director, supervisor, managerial officer, or shareholder with 5 percent or more of the
total issued shares, of a securities issuing company may not participate in decision making when the securities investment trust enterprise utilizes the securities investment trust fund to trade in the securities of such issuing company.
A securities investment trust enterprise and its responsible persons, department supervisors, branch unit managers, fund managers, or shareholder's representative in a share issuing company from which the securities investment trust enterprise purchases stock
may not assume a position as a director, supervisor, or managerial officer of an issuing company from which the securities investment trust fund purchases stock; provided, this restriction shall not apply where otherwise provided by the Competent Authority.
The responsible persons, department supervisors, or branch unit managers of a securities investment trust enterprise may not invest in any other securities investment trust enterprise or concurrently act as a director, supervisor, or manager of another securities
investment trust enterprise, securities investment consulting enterprise or securities firm, provided that this restriction shall not apply where otherwise provided by the Competent Authority.
Paragraph 4 of Article 73 shall apply mutatis mutandis to the calculation of the shareholding of shareholders with 5 percent or more of the total issued shares under paragraph 1.
Article 79
Where a director or supervisor of a securities investment trust enterprise is a corporate shareholder, the provisions of this Act concerning directors and supervisors shall apply mutatis mutandis to the performance of duties by its representative or designated
representative.
Where a position of director or supervisor in a securities investment trust enterprise is held by a representative of a corporate shareholder, the provisions of this Act concerning directors and supervisors shall apply mutatis mutandis to the corporate shareholder.
Article 80
As necessary for purposes of protecting the public interest or beneficiaries' rights and interests, the Competent Authority may order a securities investment trust enterprise or a securities investment trust fund managed by it to obtain a credit rating from
a credit rating institution approved or recognized by the Competent Authority.
As necessary for purposes of protecting the public interest or beneficiaries' rights and interests, the Competent Authority may order a securities investment trust company to meet certain conditions to deposit an operation bond; those certain conditions, the
method of deposit of the operation bond, the deposit rate, conditions for withdrawing the deposit, custody of the bond, and the method of its utilization shall be prescribed by the Competent Authority.
Article 81
A securities investment trust enterprise shall publicly announce and report to the Competent Authority any matter that materially affects the rights and interests of beneficiaries within two days from the occurrence of the fact.
Matters that materially affects the rights and interests of beneficiaries" in the preceding paragraph shall be defined by the Competent Authority.
Article 82
The provisions of Articles 73 to 76 do not apply to other enterprises concurrently operating securities investment trust enterprises unless the Competent Authority provides otherwise for purposes of protecting the public interest or preserving market order.
Section III Securities Investment Consulting Enterprises
Article 83
When a securities investment consulting enterprise accepts a mandate from a customer to provide analysis, opinions, or recommendations regarding matters relating to investment or trading in securities, it shall enter into a written securities investment consulting
contract setting forth the rights and obligations of both parties.
A customer may terminate a contract under the preceding paragraph by giving written notice within seven days from the date of receiving the written contract.
A declaration of intention to terminate a contract under the preceding paragraph shall take effect from the time it reaches the securities investment consulting enterprise.
When a contract is terminated under paragraph 2, the securities investment consulting enterprise may demand commensurate compensation from the customer for services provided before the termination of the contract, but it may not demand any damages or penalty
for the termination of the contract.
The required content of securities investment consulting contracts under paragraph 1 shall be prescribed by the Competent Authority. The Securities Investment Trust and Consulting Association shall draft a template for the contract and submit it to the Competent
Authority for ratification; the same shall apply to any amendments thereto.
Chapter V Self-Regulatory Organizations
Article 84
Securities investment trust enterprises and securities investment consulting enterprises may not commence business without being admitted to membership in the Securities Investment Trust and Consulting Association; without legitimate reason, the Securities
Investment Trust and Consulting Association may not deny an application for membership thereby or attach improper conditions to its membership.
Unless otherwise provided in this Act, the Commercial Associations Act shall apply to the establishment, organization, and supervision of the Securities Investment Trust and Consulting Association referred to in the preceding paragraph.
Article 85
The Securities Investment Trust and Consulting Association shall install at least three directors and one supervisor, all of whom shall be elected by the general meeting of members from among the member delegates in accordance with the articles of association.
Provided, at least one-fourth of each of the directors and supervisors shall consist of related experts, among whom at least half shall be appointed by the Competent Authority, and the remainder shall be appointed by the boards of directors and supervisors
and ratified by the Competent Authority. The rules governing such appointments shall be prescribed by the Competent Authority.
The directors and supervisors shall serve for a term of three years. Those serving by re-election may not exceed one-half. If those serving by re-election exceed one-half, they shall be kept or eliminated on the basis of the relative numbers of votes they received,
with the resultant vacancies to be occupied by member delegates not serving by re-election, likewise based sequentially upon the relative numbers of votes that they received. The chairman of the board of directors is eligible for re-election once only.
Article 86
The Competent Authority shall prescribe regulations governing the regulation and supervision of Securities Investment Trust and Consulting Association business by the Competent Authority, the required content of the articles of association of the Securities
Investment Trust and Consulting Association, the qualification requirements for the responsible persons and associated persons of the Securities Investment Trust and Consulting Association, its finances and business, and other compliance requirements.
Article 87
The Securities Investment Trust and Consulting Association may collect some fees from its members in addition to the fees set forth by the Commercial Associations Act, as necessary to effect the function of self-regulation and to coordinate with the development
of securities investment trust and consulting business. The categories and rates of such fees shall be proposed by the Securities Investment Trust and Consulting Association and ratified by the Competent Authority.
Article 88
The missions of the Securities Investment Trust and Consulting Association include the following matters, in addition to the matters set out in Article 5 of the Commercial Associations Act:
1.Adopting self-regulatory rules and overseeing self-regulation by its members.
2.Carrying out matters that the Competent Authority has authorized it to handle.
3.Imposing sanctions on members who violate acts, regulations, or self-disciplinary rules, such sanctions including suspension of privileges, imposition of penalties, warnings, orders to make corrections by a deadline, and so forth; or requiring a member to
suspend an associated person thereof from executing his or her duties for a period of one to six months.
4.Investigating whether members are abiding by acts, regulations, and self-regulatory rules.
5.In cases where a member's business operations are obviously unsound and have materially injured the rights and interests of investors, coordinating other members to assist in handling the business of the member or reporting to the Competent Authority and
asking it to make an appropriate disposition.
6.Administering property of bankrupt members.
7.Rendering dispositions to withdraw or suspend the memberships of members who violate this Act.
Where the Securities Investment Trust and Consulting Association requires a member to suspend an associated person thereof from executing his or her duties under subparagraph 3 of the preceding paragraph or renders a disposition under subparagraph 7 of the
preceding paragraph, it shall report to the Competent Authority for recordation.
As necessary to the mission under paragraph 1, the Securities Investment Trust and Consulting Association may make inquiries of its members, require them to provide relevant materials for review, or notify them to give explanations; a member may not refuse
to comply.
Article 89
The Securities Investment Trust and Consulting Association shall adopt a member self-regulatory agreement and regulations governing appeals against sanctions for violations. These shall be enforced after they have been submitted to and passed by the general
meeting of members and then reported to and ratified by the Competent Authority; the same shall apply to any amendments thereto.
Article 90
When the Competent Authority deems it necessary for purposes of protecting the public interest or rights and interests of beneficiaries, it may order the Securities Investment Trust and Consulting Association to amend its articles of association, rules, or
resolutions, provide reference materials or reports, or to perform certain other acts.
Article 91
Where a director or supervisor of the Securities Investment Trust and Consulting Association violates an act or regulation, fails to abide by the Association's articles of association or rules, abuses his or her authority, or breaches the principle of good
faith, the Competent Authority may issue an official reprimand or order the Securities Investment Trust and Consulting Association to dismiss the director or supervisor.
Article 92
The Securities Investment Trust and Consulting Association may, in accordance with the articles of association, impose necessary sanctions upon members or member delegates who violate its articles of association, rules, self-regulatory agreement, or related
operational self-regulatory codes, or resolutions of the general members meeting or the board of directors.
Chapter VI Administrative Supervision
Article 93
Securities investment trust enterprises and securities investment consulting enterprises operating business of discretionary investment services for customers shall establish internal control systems; the Competent Authority shall prescribe regulations governing
such systems.
Article 94
Associated Persons and Other Business Matters and Promotional Activities)
Where, pursuant to this Act or another act or regulation, and with the approval of the Competent Authority, a securities investment trust enterprise concurrently operates a securities investment consulting enterprise or vice versa, or either such kind of enterprise
concurrently operates another enterprise, or is concurrently operated by another enterprise, they may do nothing that would involve a conflict of interest with or prejudice to the rights or interests of beneficiaries or customers in terms of concurrent appointments
of and codes of conduct of their responsible persons or associated persons, sharing and utilization of information, sharing of operating equipment or places of business, or advertising, public informational meetings, or other business promotion activities.
The Competent Authority shall prescribe applicable regulations.
Article 95
Regulations governing qualification requirements, merger procedures, and other compliance requirements for mergers between securities investment trust enterprises and securities investment consulting enterprises or between such enterprises and financial institutions
or other enterprises shall be prescribed by the Competent Authority, except where such matters are otherwise provided for in the Financial Institution Mergers Act, Business Mergers and Acquisitions Act, or other acts.
Article 96
Where a securities investment trust enterprise is unable to continue engaging in securities investment trust fund business because of dissolution, suspension or termination of business, or withdrawal or revocation of its business permission, it shall seek another
securities investment trust enterprise to assume that business, subject to the approval of the Competent Authority.
When a securities investment trust enterprise is unable to find a successor in accordance with the preceding paragraph, the Competent Authority will designate another securities investment trust enterprise as a successor; the designated securities investment
trust enterprise may not refuse unless it reports to and receives approval from the Competent Authority based on a legitimate reason.
Where a securities investment trust fund is obviously mismanaged by a securities investment trust enterprise, the Competent Authority may order the enterprise to transfer the fund to the management of another securities investment trust enterprise designated
by the Competent Authority.
Public announcement of succession or transfer referred to in the preceding three paragraphs shall be made by the successor securities investment trust enterprise.
Paragraphs 1 to 3 shall apply mutatis mutandis where a fund custodian is unable to continue engaging in fund custody business because of dissolution, suspension or termination of business, or withdrawal or revocation of its business permission; public announcement
of succession or transfer matters thereof shall be made by the securities investment trust enterprise.
Article 97
If a securities investment trust enterprise or securities investment consulting enterprise is unable to continue operating discretionary investment business because of the dissolution of the enterprise or because of the withdrawal or revocation of its business
permission, its discretionary investment contracts shall be terminated.
If a securities investment trust enterprise or securities investment consulting enterprise has suspended or ceased business or is obviously being mismanaged, the Competent Authority may order it to transfer its discretionary investment contracts to be managed
by another securities investment trust enterprise or securities investment consulting enterprise designated by the Competent Authority
Under the circumstances in the preceding paragraph, the securities investment trust enterprise or securities investment consulting enterprise shall solicit the opinion of the customer; if the customer disagrees or does not express any intention, its discretionary
investment contract will be deemed terminated.
Article 98
Where a securities investment trust enterprise or securities investment consulting enterprise has had its permission withdrew or revoked, been ordered to suspend business, or ceased business of its own accord, such enterprise shall wind up any securities investment
trust or securities investment consulting business that it was doing before such withdrawal, revocation, suspension, or cessation.
A securities investment trust enterprise or securities investment consulting enterprise whose permission for securities investment trust or securities investment consulting business has been withdrew or revoked shall continue to be deemed a securities investment
trust enterprise or securities investment consulting enterprise within the scope of winding down securities investment trust or securities investment consulting business under the preceding paragraph; a securities investment trust enterprise or securities
investment consulting enterprise that has been ordered to suspend business or has ceased business of its own accord shall be deemed not yet to have suspended or ceased business within the scope of its winding down of securities investment trust or securities
investment consulting business that it was doing before it suspended or ceased business.
Article 99
A securities investment trust enterprise or securities investment consulting enterprise shall, within three months after the close of each fiscal year, publicly announce and file with the Competent Authority its annual financial report that has been audited
and certified by a certified public accountant, approved by the board of directors, and recognized by the supervisors.
The annual financial report referred to in the preceding paragraph shall be submitted to the Securities Investment Trust and Consulting Association for compilation and submission to the Competent Authority.
Article 100
With respect to the utilization of each securities investment trust fund, a securities investment trust enterprise shall prepare an annual financial report with the format and content prescribed by the Competent Authority within 2 months from the close of each
fiscal year, and monthly reports within 10 days from the end of each month, for submission to the Competent Authority.
The annual financial report referred to in the preceding paragraph shall be audited and certified by a certified public accountant approved by the Competent Authority, signed by the fund custodian, and publicly announced by the securities investment trust enterprise.
The annual financial report and monthly reports referred to in paragraph 1 shall be submitted to the Securities Investment Trust and Consulting Association for compilation and submission to the Competent Authority.
Article 101
To protect the public interest or preserve order in the market, the Competent Authority may at any time require a securities investment trust enterprise, securities investment consulting enterprise, fund custodian, discretionary investment custodian, or a related
party thereof, to submit financial and business reports or other related materials within a time limit, and may, directly or by authorizing an appropriate institution to do so, inspect its financial and business condition and other related matters. Such enterprise,
institution, or related party thereof may not evade, impede, or refuse the inspection.
When the Competent Authority deems it necessary, it may at any time appoint a lawyer, certified public accountant, or other professional or technical personnel to carry out an inspection under the preceding paragraph and to submit a factual report or opinion
to the Competent Authority, with the expense to be borne by the inspected party.
To protect the public interest or preserve order in the market, the Competent Authority may request a relevant competent government authority or financial institution to provide necessary information or records with respect to anyone suspected of conduct in
violation of this Act.
Information obtained in the preceding three paragraphs may not be made public or provided to any other person, except as necessary for sound supervision and investor protection.
Article 102
If, when examining a financial or business report or other relevant materials filed by a securities investment trust enterprise, securities investment consulting enterprise, fund custodian, or discretionary investment custodian, or inspecting the financial
or business condition thereof, the Competent Authority discovers any noncompliance with an act or regulation, it may issue an official reprimand and additionally may duly impose penalties in accordance with law.
Article 103
Where a securities investment trust enterprise or securities investment consulting enterprise has violated this Act or any order issued hereunder, in addition to imposing other penalties pursuant to this Act, the Competent Authority may, depending on the severity
of the offense, impose any of the following disposition:
1.A warning.
2.Order the securities firm to dismiss a director, supervisor, or managerial officer from their office.
3.Suspend the whole or part of the enterprise's public offering or private placement of securities investment trust funds or taking on of new business for not more than two years.
4.Suspend the whole or part of the business of the company or its branch for not more than six months.
5.Revoke the business permission of the company or its branch.
6.Any other necessary disposition.
Article 104
Where a director, supervisor, managerial officer, or employee of a securities investment trust enterprise or securities investment consulting enterprise does anything in the course of executing their duties that violates this Act or other applicable acts or
regulations, where sufficient to affect the normal execution of business, the Competent Authority may at any time order the enterprise to suspend such person from exercising business for up to one year or to dismiss such person from their position and, depending
on the severity of the violation, may impose a sanction on the enterprise under the preceding article.
Chapter VII Penal Provisions
Article 105
A person who, in operating securities investment trust business or fund custody business, violates Article 8, paragraph 1, with respect to the public or beneficiaries shall be punished by imprisonment for not less than 3 years and not more than 10 years, and
may additionally be fined a criminal fine of not less than NT$10 million and not more than NT$200 million
A person who, in operating securities investment consulting businesses, discretionary investment business, discretionary investment custody businesses, or other businesses under this Act, violates Article 8, paragraph 1, with respect to the public or a customer(s)
shall be punished by imprisonment for not less than one year and not more than seven years, and may additionally be fined a criminal fine of not more than NT$50 million.
Any proceeds from the commission of a crime by an offender committing an offense under the preceding two paragraphs, other than that which shall be returned to a victim or a third party, shall be confiscated regardless of whether it belongs to the offender.
Article 105-1
A director, supervisor, managerial officer, or employee of a securities investment trust enterprise or securities investment consulting enterprise who commits an act in breach of duties, with the intent to secure for himself/herself or for another, an unlawful
benefit, or a benefit detrimental to the interests of securities investment trust fund assets or discretionary investment assets, causing damage to the securities investment trust fund assets, discretionary investment assets, or other interests, shall be punished
with imprisonment for not less than three years and not more than ten years, and additionally may be fined a criminal fine of not less than NT$10 million and not more than NT$200 million. If the property or property interest obtained from the commission of
the crime is NT$100 million or more, the offender shall be punished with imprisonment for not less than seven years and additionally may be fined a criminal fine of not less than NT$25 million and not more than NT$500 million.
An attempted offense described in the preceding paragraph shall be punishable.
In the case of a person who commits an offense under the preceding two paragraphs and subsequently voluntarily surrenders himself/herself before the offense is discovered, if he/she voluntarily hands over the criminal proceeds in full, his/her punishment shall
be reduced or remitted; his/her punishment shall be remitted if another principal offender or an accomplice is captured as a result.
In the case of a person who commits an offense under paragraph 1 or 2 and confesses during the prosecutorial inquiry, if he/she voluntarily hands over the criminal proceeds in full, his or her punishment shall be reduced; his/her punishment shall be reduced
or remitted if another principal offender or an accomplice is captured as a result.
Article 106
Any of the following offenses by a securities investment trust enterprise, securities investment consulting enterprise, fund custodian, or discretionary investment custodian shall be punished by imprisonment for not less than 1 year and not more than 7 years,
and in addition, a criminal fine of not more than NT$50 million may be imposed:
1.Any falsehood or concealment in the content of a prospectus or private placement memorandum submitted to the Competent Authority.
2.Any falsehood or concealment in the content of any account book, form/statement, document, or other reference or report material submitted under an order by the Competent Authority.
3.Any falsehood or concealment in the content of any account book, form/statement, voucher, financial report or any other business document specified by law or in an order/regulation issued by the Competent Authority under a law.
Article 107
Any of the following offenses shall be punished by imprisonment for not more than five years, and in addition, a criminal fine of not less than NT$1 million and not more than NT$50 million:
1. operating, without permission from the Competent Authority, securities investment trust business, securities investment consulting business, discretionary investment business or another business requiring approval from the Competent Authority.
2. engaging in, or acting as an agent for, the public offer or sale of offshore funds within the Republic of China in violation of Article 16, paragraph 1.
Article 108
Any director, supervisor, managerial officer, or employee of a securities investment trust enterprise or securities investment consulting enterprise who solicits, agrees to accept, or accepts any property or other improper benefit in connection with the performance
of his or her duties shall be punished by imprisonment for not more than five years, detention, and/or a criminal fine of not more than NT$2.4 million.
Any person referred to in the preceding paragraph who solicits, agrees to accept, or accepts any property or improper benefit for actions in breach of his or her duties shall be punished by imprisonment for not more than seven years and additionally may be
fined a criminal fine of not more than NT$3 million.
Article 109
Any person who promises to offer, agrees to offer, or delivers any property or other improper benefit to any person who acts contrary to his or her duty as specified in the preceding article shall be punished by imprisonment for not more than three years, detention,
and/or a criminal fine of not more than NT$1.8 million.
The punishment of the offense specified in the preceding paragraph may be reduced if the offender confesses or voluntarily surrenders; the punishment may be reduced if the offender confesses during an investigation or trial.
Article 110
Any person who engages in, or acts as an agent for, investment consultancy of offshore funds within the Republic of China in violation of Article 16, paragraph 1, shall be punished by imprisonment for not more than two years, detention, and/or a criminal fine
not more than NT$1.8 million.
Article 111
For any of the following offenses, a securities investment trust enterprise or securities investment consulting enterprise shall be fined an administrative fine of not less than NT$600,000 and not more than NT$3 million, and ordered to make corrections within
a specified period; if it fails to make corrections within such period, administrative fines of two to five times that amount may be imposed for each instance of failure until such time as corrections have been made:
1.operating business that has not been approved by the Competent Authority, in violation of Article 3, paragraph 4, or Article 4, paragraph 4.
2.violating provisions of the regulations prescribed by the Competent Authority under Article 14, paragraph 1, Article 18, paragraph 1, or Article 56, paragraph 1, concerning investment or trading scope, methods, or restrictions.
3.violating provisions of the regulations prescribed by the Competent Authority under Article 16, paragraph 4, concerning investment or trading scope or restrictions.
4.violating Article 16-1, paragraph 1, Article 19, paragraph 1, Article 51, paragraph 1, or Article 59.
5.violating provisions prescribed by the Competent Authority under Article 58, paragraph 2, concerning the investment target diversification rate.
6.operating without a business license issued by the Competent Authority, in violation of Article 63, paragraph 1.
7.violating applicable codes of conduct or restrictive or prohibitory provisions of the regulations prescribed by the Competent Authority under Article 69.
8.violating applicable restrictive or prohibitory provisions of the regulations prescribed by the Competent Authority under Article 70.
9.establishing a branch unit or relocating, or closing a company or branch unit without approval from the Competent Authority, in violation of the standards or regulations prescribed by the Competent Authority under Article 72, paragraph 1.
Article 112
Any of the following offenses shall be punished by an administrative fine of not less than NT$300,000 and not more than NT$1.5 million, and the offender will be ordered to make corrections within a specified period; if the offender fails to make corrections
within such period, consecutive administrative fines of two to five times that amount may be imposed for each instance of failure until such time as corrections have been made:
1.failing to deliver a prospectus in accordance with Article 15, paragraph 1.
2.using a name similar to "securities investment trust enterprise" or "securities investment consulting enterprise" in violation of Article 63, paragraph 3.
Article 113
A securities investment trust enterprise, securities investment consulting enterprise, fund custodian, or discretionary investment custodian that commits any of the following offenses shall be fined an administrative fine of not less than NT$120,000 and not
more than NT$600,000, and ordered to make corrections within a specified period; if it fails to make corrections within such period, consecutive administrative fines of two to five times that amount may be imposed for each instance of failure until such time
as corrections have been made:
1.Violating a provision of Article 11, paragraph 4, or Article 43, subparagraph 2, concerning reporting to the Competent Authority.
2.Violating Article 17, paragraph 1 or 2.
3.Failing to make materials available for reading under Article 20.
4.Failing to prepare, report, publicly announce, make available, or preserve any account book, form/statement, voucher, financial report, or other business document or matter as required under Article 26, Article 49, Article 74, paragraphs 1 or 3, Article 81,
paragraph 1, Article 99, paragraph 1, or Article 100, paragraph 2.
5.Violating a provision of Article 29, paragraph 1, Article 43, subparagraph 1, Article 45, paragraph 4, Article 96, paragraph 4 or 5, concerning matters required to be publicly announced.
6.Failing to make a report, public announcement, notice, or recordation under Article 47, paragraph 2.
7.Failing to prepare customer data or preserve related documents under Article 60, paragraph 1, subparagraph 2.
8.Failing to create an account, record information, prepare records, or deliver records or reports under Article 62, paragraph 1, 4, or 5.
9.Violating regulations prescribed by the Competent Authority under Article 69 concerning personnel requirements or under Article 72, paragraph 1, concerning departments required to be established.
10.Acts causing conflicts of interest with or injury to the rights and interests of beneficiaries or customers in violation of Article 94.
11.Refusing designation by the Competent Authority as a successor without legitimate reason in violation of Article 96, paragraph 2.
12.Failing to produce financial or business reports or other related materials within the time limit, or evading, impeding, or refusing inspection, in violation of Article 101, paragraph 1.
Article 113-1
If a person or entity that violates Article 70-1, paragraph 3 is notified to remove an advertisement, restrict the browsing of it, cease broadcasting it, or take other necessary measures and fails to do so by the deadline under the notification, the judicial
police authority that gave the notification shall impose an administrative fine of not less than NT$120,000 and not more than NT$600,000 and order it to make corrections within a specified period; if it fails to make corrections within such period, consecutive
administrative fines of two to five times that amount may be imposed for each instance of failure until such time as corrections have been made.
Article 114
If the Securities Investment Trust and Consulting Association violates provisions of the regulations prescribed by the Competent Authority under Article 86 concerning regulation or supervision of Securities Investment Trust and Consulting Association business,
it shall be fined an administrative fine of not less than NT$120,000 and not more than NT$1.2 million, and ordered to make corrections within a specified period; if it fails to make corrections within such period, consecutive administrative fines of two to
five times that amount may be imposed for each instance of failure until such time as corrections have been made.
Article 115
If a fund custodian or a director, supervisor, managerial officer, or employee thereof violates Article 7, paragraph 1 or 2, Article 8, paragraph 1 or 2, Article 21, Article 23, paragraph 1, Article 24, paragraph 1, or Article 40, paragraph 1, the Competent
Authority may suspend its execution of fund custody business for not less than one month to not more than two years, depending on the severity of the violation.
Article 116
If an administrative fine imposed under this Act is not paid by a deadline set for its payment, it will be duly referred for compulsory execution in accordance with law.
Article 117
With respect to where a juristic person is subject to penalty for violating any administrative law obligation under this Act, any deliberate or negligent [act or omission] of a responsible person, associated person, or other employee of such juristic person
is deemed a deliberate or negligent [act or omission] of the juristic person.
Article 118
Where a juristic person violates a provision of Articles 105 to 110, the punishment shall be imposed on its responsible person.
Article 119
Where a criminal fine assessed for an offense under this Act is NT$50 million or more and the offender lacks the ability to pay it in full, it shall be commuted to labor for a period of not more than two years, to be calculated by the ratio of the total amount
of the fine to the number of days in two years; where the fine assessed is NT$100 million or more and the offender lacks the ability to pay it in full, it shall be commuted to labor for a period of not more than three years, to be calculated by the ratio of
the total amount of the fine to the number of days in three years.
Article 120
For purposes of trying criminal cases involving violations of this Act, a court may establish a special tribunal or designate a particular person(s) to handle the case.
Chapter VIII Supplementary Provisions
Article 121
From the date this Act enters into force, the regulations governing securities investment trust enterprises and securities investment consulting enterprises referred to in Articles 18 and 18-1 of the Securities and Exchange Act, and Articles 18-2 and 18-3 of
the Securities and Exchange Act will no longer apply.
Article 122
Any operation of a securities investment trust enterprise or securities investment consulting enterprise already underway before this Act enters into force, where not in compliance with any provision of this Act, shall be brought into compliance with this Act
within one year from the date this Act enters into force.
Article 123
Enforcement Rules to this Act shall be prescribed by the Competent Authority.
Article 124
This Act shall enter into force on the date prescribed by an order of the Executive Yuan.
The amended articles of this Act shall enter into force from the date of promulgation.
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