2022-09-12

The FSC Plans to Amend the Threshold for Trust Enterprises' Compulsory Concurrent Discretionary Investment Business

On August 25, 2022, Taiwan's Financial Supervisory Commission (金融監督管理委員會, "FSC")  announced that it will be extending the scope for trust enterprises to manage and apply the entrusted assets. It plans to amend the Article 2 of the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises (證券投資信託事業證券投資顧問事業經營全權委託投資業務管理辦法, “Regulations”) by raising the  threshold for trust enterprises' compulsory concurrent discretionary investment business (強制信託業申請兼營全權委託投資業務門檻) from NT$10 million to NT$15 million.
 
According to the Article 2, paragraphs 4 and 5 of the Regulations present, if a trust enterprise (1) undertakes discretionary use of trust assets (全權決定運用標的) as described in the latter part of Article 18, paragraph 1 of the Trust Enterprise Act (信託業法), (2) invests those assets in the securities named in Article 6 of the Securities and Exchange Act (證券交易法) , and (3) the trust assets are individually managed or collectively managed through the trust enterprise and the amount are equal of higher than NT$10 million, then the trust enterprise shall apply to the FSC to concurrently conduct discretionary investment business (申請兼營全權委託投資業務) in accordance with the Standards Governing the Establishment of Securities Investment Consulting Enterprises (證券投資顧問事業設置標準).
 
In other words, if a trust enterprise is entrusted with discretionary use of trust assets as described in Article 2 of the Regulations and the amount of trust assets is not less than NT$10 million, the trust enterprise shall follow more and stricter regulations regarding discretionary investment business. This practice is considered a restriction of developing the trust enterprises.
 
For the above reasons, the FSC, with consideration of financial development and the impact on relevant enterprises, plans to amend Article 2 of the Regulations. In this amendment, the threshold for trust enterprises' compulsory concurrent discretionary investment business from NT$10 million to NT$15 million. Under the new regulations, the trust enterprise will not need to apply to concurrently conduct discretionary investment business if the trust assets are less than NT$15 million. This is believed to contribute to the development of the trust enterprises.
 
The FSC stated, a draft amendment will be announced in the near future and will solicit opinions from all parties at the same time.
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