| Article 1 |
These Guidelines have been promulgated in accordance with Paragraph 2, Article 50 of the Rules Governing Offshore Funds, Article 6 of the Regulations Governing the Securities Investment Trust and Consulting Association, and Article 7 of the Self-discipline Rules Governing Members of this Association.
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| Article 2 |
When a general agent or its appointed sales agent conducts business for the sale and offering of offshore funds and undertakes advertisements, road shows and other promotional activities, it should abide by the Securities Investment Trust and Consulting Act, Rules Governing Offshore Funds, these Guidelines and relevant laws so as to maintain its professional image and assure the investors that their rights will be honored.
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| Article 3 |
Investment consulting business of offshore funds must be carried out by authorized securities investment consulting enterprises. All advertisement and business activities for the offshore mutual fund consulting services conducted by such companies shall be in compliance with the provisions of these Standards for Offshore Mutual Fund Advertisement and Promotional Activities.
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| Article 4 |
In the event that a sales agent appointed by a general agent violates the provisions herein while undertaking advertisements, road shows and other promotional activities, the general agent and sales agent shall be responsible for any liabilities according to the relevant laws and rules.
A general agent or its delegated institution may engage other entities to undertake advertisement and promotional activities while handling the offering and sale of offshore funds. However, the general agent or sales agent may not be exempted from any legal liability in the event that the entities violate any of the provisions herein.
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| Article 5 |
The "advertisement" mentioned herein refers to the delivery, distribution or dissemination to non-specific parties, through the following media in connection with the offering and sale of offshore funds:
- Newspapers, magazines and other publications;
- DMs, advertisement letters, prospectuses, leaflets and other publications;
- TV, movies, slides, broadcasting stations, running texts, etc;
- Posters, bulletin boards, banners, advertisements on buses or other transportation vehicles;
- Automatic telephone systems, websites, e-mails, or any other electronic broadcasting methods;
- Press releases; or
- Other formats of advertisement.
The "Sales Documents" referred to herein refer to the instructions to investors, the Chinese translation of prospectus, or any other materials provided along with the aforementioned documents to the investors. The materials contain summarized information relating to the purchase of the fund.
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| Article 6 |
The "Promotional Activities" referred to herein refer to the promotion to un-specified parties or solicitation in connection with offering and sale of offshore funds through road shows, seminars or any other business promotional activities.
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| Article 7 |
When a general agent or a sales agent conducts the business of offering and sale of offshore funds, warning statements are not required when posting information relating to the professional knowledge of the investment management or services that aims at improving the image of offshore fund institutions, groups or companies where the information posted is unrelated to the advertisement of offshore funds
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| Article 8 |
While engaging in advertisements, road shows and any other promotional activities, a general agent or its sales agent is not permitted to do the following:
- Use the approval by the Financial Supervisory Commission (the "FSC") or report of effectiveness of the offshore fund as a verification of the application content or a guarantee of the offshore fund's value for the purpose of promotion;
- Mislead others to believe the security of principal or profitability. This shall not apply to the warranty on the security of principal protected funds that have fully disclosed the warranty content in the prospectus;
- Offer gifts or any other benefits to entice others to purchase offshore funds;
- Exaggerate past business records or carrying out advertisements attacking other market players;
- Act falsely, in deceit, or in serious violation of facts or with the intention to mislead others;
- Carry out advertisements, road shows, or other promotional activities for offshore funds that are not yet approved by the FSC or reported for effectiveness;
- Use content that is in violation of laws, licensing agreements of relevant offshore fund institutions, or prospectus;
- Advertise for fund managers;
- Conduct any prediction in connection with changes in the NT Dollar exchange rate;
- Use content that may disparage the reputation of the entire trade;
- Use content that contains incorrect information, or words, art or images that are inconsistent with the content of sales documents;
- Advertise open-end funds by using wording such as "No-discount Risk";
- Aim at contributing sales or management income or use language unrelated to investors' rights;
- Use newspaper or magazine content for advertising purposes;
- Use profits as a way of advertisement but fail to report the risks involved;
- Fail to state the parties and content in the tax-exempt statement;
- Use credit rating of funds (including funds authorized by the FSC but not yet established) as advertisement or content of promotion material but fail to clearly state the nature of the credit rating or, in the case that a fund has not been established, fail to state that the fund has not yet been established; or
- Conduct any other activities that would have a negative impact on the investors' rights.
Principal Protected Funds can be divided into guaranteed funds and protected funds, depending on whether there is a guaranteeing institution or not. When carrying out advertisements, public conferences and promotional activities, one shall follow the following principles in addition to those mentioned in the preceding paragraph:
- Sales Documents must disclose the following matters:
- Relevant information of guaranteeing institution of the guaranteed fund: Name of the guaranteeing institution, nature of business and relevant financial status (for example: principal, total net asset value or shareholder capital), and other credit ratings or other relevant information.
- Relevant guarantee information of the guaranteed fund: Guarantee clause, including guarantee scope and effectiveness, and events that may lead to the termination of such guarantee. Examples must be provided to clearly illustrate the method of guarantee and the calculation method for potential return that could be higher than the guaranteed amount.
- Protected funds without a guaranteeing institution shall note that such mutual funds do not have a mechanism of institutional guarantee and are to achieve the protection of principal through investment tools and shall not use wording such as warranties, security, risk-free or similar wording.
- Detail illustration of relevant investment linked products.
- The possible difference between the actual participation rate and the reference ratio shall be noted, and the time when the actual participation rate can be determined and how investors shall be informed shall be illustrated.
- The ratio of protected principal and type of fund (guarantee type or protected type) in notable form in the notice to investors and the Chinese translation for the prospectus.
- Content of advertisement shall use obvious colors and fonts to disclose the following items:
- Based on the type of mutual fund
- Guaranteed fund: Type of fund, name of guaranteeing institution, period of guarantee and ratio of protected principal.
- Protected fund: Type of fund, period of guarantee, ratio of protected principal and language of "This fund offers a mechanism of institutional guarantee to protect principal through investment tools."
- Depending on the type of fund the warning language as stipulated in Item 3, Paragraph 1 of Article 9 shall be added.
- If a reference is made to the reference ratio, it shall list the reference date and note that there may be a difference between the actual participation ratio and the reference ratio.
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| Article 9 |
While advertising for the offering and sale of offshore funds by a general agent or its sales agent, one shall not only abide by the rules set forth above but also state the following warning language in notable form:
- Except for principal protected funds, print advertisement must include: "This offshore fund has been approved by the FSC or has been reported for effectiveness for domestic offering and sale. There is no guarantee that it is free of risk. The past performance of a fund manager does not guarantee a minimum investment return. Investors should read through the prospectus before purchasing."
- In the event of advertising through broadcasting, television, movies or other similar means using images or sound, one shall disclose: "Investing in funds is not risk-free. The past performance of a fund manager does not warrant a minimum investment return. Investors should read through the prospectus carefully before purchasing." Principal protected funds shall also note: "and understand the risk and characteristics of the fund." While broadcasting, it shall disclose the content through sound. For other mediums, it shall use other easily identifiable characters and broadcast for at least five (5) seconds.
- While advertising for principal protected funds, one shall disclose the following warning content using notable colors and fonts according to the type of funds:
- If the principal protected fund is the guarantee type, it shall print the following: "This offshore fund has been approved by the FSC or has been reported for effectiveness for the offering and sale. There is no guarantee that it is risk-free.. Investors holding such offshore funds until the expiration date will enjoy a ___% principal return guarantee. Investors redeeming before the expiration date or there is a circumstance under which the fund will be closed according to the prospectus are not covered by the guarantee scope. Investors shall bear all fees incurred during the investment period and calculate the redemption price according to the net value at that time. Investors shall understand that the net value of this offshore fund may fluctuate due to market factors before the expiration. Prior to making an investment, investors shall understand the risk and characteristics of this offshore fund."
- If the principal protected fund is the protected type, it shall print the following: "This offshore fund does not offer any mechanism of institutional guarantee. The principal is protected through investment tools. This fund has been approved by the FSC or has been reported for effectiveness for domestic offering and sale. There is no guarantee that it is risk-free. Investors holding this fund until the expiration date will enjoy a ____% guarantee of the return of principal. Investors redeeming before the expiration date or there is a circumstance under which the fund will be closed according to the prospectus are not covered by such guarantee. Investors shall bear all fees incurred during the investment period and calculate the redemption price according to the net value at that time. Investors shall understand that the net value of this offshore fund may fluctuate due to market factors before the expiration. Because protection does not mean guarantee, breach of the agreement by the issuer of the investment or the occurrence of credit risks would make it impossible to protect the principal. Investors shall fully understand the risks and characteristics of such funds before making any investment." The last part of the warning shall be printed in enlarged fonts in bold or noted in different colors.
The font size of the warning stipulated in the aforementioned Items 1 and 3 of the preceding paragraph cannot be smaller than the smallest characters on the same advertisement and shall be noted in bold so as to make it noticeable while being read along with other relevant advertisement content.
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| Article 10 |
In the event that offshore fund performance and sales numbers have been used as advertisement or promotional content, one shall abide by, not only the aforementioned two articles, but also the following principles:
- Any fund performance and sales numbers (including awards and rankings) shall note the source and date of information used. But in the event that a principal protected fund requires complicated calculations, in order to explain to investors in detail the calculation mechanism, offshore fund institutions shall use hypothetical numbers and clearly state that the numbers are only for illustration purposes and do not, in any way, indicate the actual profits to be gained by investors.
- If the performance of the fund has been used as advertisement content, the performance for at least the last three years shall be posted. For funds that are established for less than three years, the performance since establishment shall be posted and shall not cut out the performance from any specific period of time.
- In the event that there is a comparison with another fund, the statistics or analysis of the same domestic or foreign institution shall be used, and shall be of the same type of mutual fund using the same method of calculation.
- No forecast of the investment performance of offshore funds can be made.
- All graphics and images shown in the advertisement must allow the content to be clearly shown without distortion.
- For advertisements using sales numbers other than that of the mutual fund performance, the statistics or analysis of domestic and foreign institutions can be used. But for the comparison of the same type of mutual fund, only a single source is allowed.
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| Article 11 |
The information composed for advertisement, road shows and other promotional activities relating to offshore funds by a general agent or its delegated sales agents shall first be approved internally before public use to ensure that the content is appropriate, accurate or not in violation of the provisions herein or relevant laws. In addition, the general agent shall report the advertisement materials, road shows and other promotional activities to the Association within ten (10) days after the occurrence of the aforementioned activities.
The promotional information, advertising materials, and any other information in connection with the advertisement, road shows and other promotional activities shall be kept for two years.
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| Article 12 |
If the information of the advertisement, road shows, and other promotional activities of a general agent or its sales agent,, upon examination by this Association, is found to be in violation of the provisions herein, it shall be reported to the disciplinary committee of this Association for consideration. the disciplinary committee finds that a violation has indeed occurred, the Association shall, according to the severity of the violation by a general agent, handle the incident in accordance with the Handling Procedures Governing Violation by Association Members. there is also a violation of Paragraph 1 of Article 50 of the Rules Governing Offshore Funds, such a violation shall be reported to the FSC by this Association at the end of each month for its handling. there is a violation of Article 9 of the Rules Governing Offshore Funds, the incident shall be reported to the Central Bank of China.
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| Article 13 |
These Guidelines will take effect after they have been approved by the board of this Association and approved by the Financial Supervisory Commission for implementation. Any amendments thereafter must be handled in the same manner.
(The English translation has been provided by courtesy of Lexcel Partners, Attorneys-at-Law at the engagement by the Securities Investment Trust and Consulting Association.)
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