The Financial Supervisory Commission (hereinafter the “FSC”) has expressly provided that securities investment trust enterprises (hereinafter “SITEs”) and investment consulting enterprises (hereinafter “SICEs”) shall not get involved or assist others in obtaining or consolidating the management rights.Considering that the funds used by SITEs and SICEs to conduct business are come from general public investors and clients, in order to make the use of their funds in line with investment purposes and to protect and safeguard the rights and interests of the public, such funds shall not be allowed to be used to get involved in any battles for the management rights.
Hence, on March 22, 2022, the FSC issued the decree Jin-Guan-Zheng-Tou-Zi No. 1110380579, specifying that when SITEs and SICEs operates securities investment trust business or full fiduciary discretionary investment business, the securities investment trust funds or fiduciary investment assets they use in investment shall not get involved in the disputes over management rights of the investees itself or the business which is directly or indirectly invested by the investee, or assist anyone in obtaining or consolidating the management rights. (Subparagraph 20 of Paragraph 1 of Article 10 and Subparagraphs 9 & 10 of Paragraph 1 of Article 54 of the Regulations Governing Securities Investment Trust Funds; Subparagraph 9 of Paragraph 1 of Article 14 of the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises).
If an SITE or SICE is under the aforementioned circumstances, the FSC indicated that depending on the circumstances of the violation, it will impose any of the following dispositions in accordance with the Securities Investment Trust and Consulting Act: an official reprimand, a warning, order to dismiss directors or managers from their office, suspend the whole or part of the business operations, or, the most severe dispositions, revoke the business permission of the company.
Based on the above, before using their funds or fiduciary investment assets for investment, SITEs and SICEs must pay attention to research and analyze in advance that if there is any disputes of the management rights regarding the investees itself and the business which is directly or indirectly invested by the investee. After the decision of the investment, they should also periodically review, evaluate, and manage such investment to avoid being involved in the disputes over the management rights or prevent the investment from assisting others in obtaining and consolidating the management rights.
