To protect the interests of investors and conduct sound management of offshore funds, the FSC amended the "Regulations Governing Offshore Funds" on 28 December 2022. Key points of the amendments include the following:
1.A new provision states that a master agent which handles the offering and selling of offshore funds in Taiwan shall not represent more than five offshore fund institutions, and a master agent that handles four or more offshore fund institutions shall post an additional operating bond, to be done within three months of the date on which this amendment enters into force. The amended Regulations also expressly provide that the amount of the operating bond shall be calculated based on the corporate group to which the offshore fund institution belongs.
2.With respect to companies that issue no-par-value shares in accordance with Article 156 of the "Company Act" acts as an offshore fund sub-distributor, the amended Regulations sets out a list of qualification requirements that the company must meet; also, to coordinate with amendments to the "Banking Act" and the "Futures Trading Act," the FSC has modified disqualification criteria that bar a party from acting as a master agent or sub-distributor of an offshore fund.
3.Considering that legislation in the jurisdiction where an offshore fund is registered differs from that of Taiwan, and an offshore fund institution may sometimes be sanctioned by host-country authorities for deficiencies in operations unrelated to asset management, resulting in restrictions on its domestic business. With these conditions in mind, the FSC's amendment states that any sanction imposed by a host-country authority on an offshore fund institution shall apply only to its asset management business, and only while the situation has not yet improved.