February 2024
Jane Tsai and Astrid Chou
In light of the continuous growth in the size of offshore funds and to encourage further development of offshore funds in Taiwan, as well as to foster the healthy expansion of the fund market, the Financial Supervisory Commission (the “FSC”) revised the Regulations Governing Offshore Funds (the “Regulations”) on December 14, 2023. The amendment aims to enhance case review efficiency, increase review schedule transparency, and adopt differentiated management measures. The amendment provides clear definition for ‘approval’ and ‘effective registration,’ while also making adjustments to the registration process, subjects, and qualifications of sub-distributors. The key points are as follows:
1. In the past, the Regulations lacked clear definitions for ‘approval’ and ‘effective registration,’ resulting in misunderstandings during the practical review process, uncertainties regarding subjects and content, and issues related to the unclear applicability scope. The amendment now explicitly defines these terms to enhance the precision of the review system regulations. (Article 2 of the Regulations)
2. The amendments provide that the offering or sale of offshore fund cases handled by the master agent that an offshore fund institution recognized by the FSC as meeting certain conditions appointed is applicable to the effective registration system. In principle, the effective date shall be 45 business days from the date the FSC receives the application documents. If the application documents are found to be incomplete, and the applicant voluntarily makes corrections before receiving notification from the FSC, the effective date shall be 45 business days from the date the FSC receives the corrected documents. If the master agent’s application documents are found to be incomplete, or insufficient for the required necessary disclosures, or if the FSC deems it necessary to protect the public interest, the FSC may suspend the effectiveness of the application. (Article 27, Article 27-2, and Article 27-3 of the Regulations)
3. The amendment incorporates a provision wherein the FSC may commission the Taiwan Depository and Clearing Corporation (TDCC) to handle the offering and sales of offshore funds, aiming to enhance the efficiency of reviews and foster the healthy development of the fund market. In addition, there are amendments to the qualifications of sub-distributors, with a relaxation allowing banks to utilize capital adequacy as a financial condition for serving as fund sub-distributors. (Article 2-1 and Article 19 of the Regulations)
Overall, after the revision of the Regulations, the offering and sale of offshore funds have become more convenient and favorable than they were previously. Especially under specific conditions, the effective registration system becomes applicable, rendering the review schedule more transparent. This is advantageous for the master agent to respond to market changes and timely launch fund products that better meet the investment needs of investors, providing a more suitable selection of products.
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