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Title	Taiwan Depository and Clearing Corporation Directions for Discretionary Investment Book-Entry Operations CH
Date	2021.10.13 ( Amended )

Article Content

Chapter I General Principles

Article 1	The following Directions have been established in accordance with Articles 90, 91-1 to 91-3, and 101 of the Operating Rules of the Taiwan Depository & Clearing Corporation (the TDCC Operating Rules).
Article 2	The term "discretionary investment shareholder" shall refer to a shareholder of an issuer who has mandated shares of that company under discretionary investment.

Chapter II Opening of and Filing of Discretionary Investment Deposit Accounts

Article 3	The following procedures apply to principals who intend to engage an investment trust enterprise/investment consulting enterprise/managed futures enterprise/futures broker/futures trust enterprise/securities firm/securities trust enterprise (hereinafter, "the discretionary investment manager") for the management of their investments, and where assets are mandated under the custody of separate custodians: The principal shall submit identity documents and sign a discretionary investment agreement with the discretionary investment manager, and sign a custodian agreement with the custodian to which assets are mandated. The principal shall then open a discretionary investment deposit account at the custodian and complete two copies of the "Securities Ownership Register Consent Form." Once the custodian has correctly verified all relevant information, it shall perform an "Account Opening" transaction (transaction code 140) to input data such as the principal's basic profile (the account name shall be the principal's name; if the mandated assets are held in trust, the account name shall be the name of the withholding tax collector that the tax authority has assigned to the trust relationship), the business ID of the investment trust/investment consulting enterprise, and account type (70 for domestic individuals, 72 for domestic institutions, 73 for foreign individuals, and 74 for foreign institutions). However, the mailing address of such accounts shall be input as the address of the custodian. Once the above is completed, the custodian shall perform a "Trust/Discretionary Investment/English Account Name Maintenance" transaction (code 179) to input the number and name of the custodian account as "Discretionary investment account of ○○○ managed by ○○ Company;" where the mandate comprises entrusted properties, the account shall be named "Entrusted properties of ○○○ under fiduciary management of ○○ Company." Once the custodian has completed the account setup, it shall submit the "Securities Ownership Register Consent Form" and relevant information to the principal's securities brokerage, where the discretionary investment deposit account will be opened. Once the securities brokerage has verified all information correctly, it shall perform a "Custodian Relationship" transaction (code 156) to input the principal's basic profile (the account name shall be the principal's name; if the mandate comprises entrusted properties, the account name shall be the name of the withholding tax collector that the tax authority has assigned to the trust relationship), the business ID of the investment trust/investment consulting enterprise, the custodian account number, and account type (which should be 71). If the principal is a qualified institutional investor, as defined in "Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises of Securities Investment Trust and Consulting Association of the ROC", the mandate agreement described in Subparagraph 1 of the preceding Paragraph may be replaced by a legal opinion (drafted in Chinese) issued by the principal's lawyer.
Article 4	The following procedures shall apply for trust enterprises that simultaneously engage in discretionary investment services and hold custody of entrusted assets: If the trust enterprise is a TDCC participant: The trust enterprise needs to create a custodian account according to the nature of the underlying agreement, will, public trust or service arrangement, and perform an "Account Opening" transaction (code 140) to input account information (the account name shall be the name of the withholding tax collector that the tax authority has assigned to the trust relationship), business ID of the investment trust/consulting enterprise, account type (which should be 72) along with other relevant data. The trust enterprise shall then perform a "Trust/Discretionary Investment/English Account Name Maintenance" transaction (code 179) to input the number and name of the custodian account as "○○○ in its capacity as master custodian of ○○○ trust account (under fiduciary management)," or "○○○ in its capacity as master custodian of ○○○ general trust account (under fiduciary management)." Accounts that are used for public trust or are under collective management shall be specified as "(under fiduciary management)." The trust enterprise shall perform a "Trust Remarks and Related Party Maintenance" transaction (code 540, transaction type 1: Trust Remarks) to place trust remarks according to the details of the submitted "Trust Account Opening Application." For accounts that are opened based on special agreements, wills or public trusts, the trust enterprise also needs to perform a "Trust Remarks and Related Party Maintenance" transaction (code 540, transaction type 3: Add) to input information of all related parties of the trust arrangement, such as the names, date of birth/date of incorporation, and personal/business ID of the mandate, the principal, and the beneficiary. Once this has been done, the trust enterprise shall perform a "Trust Account Basic Inquiry" transaction (code 541) to print out a change inquiry form for verification. Once the trust enterprise has completed the account setup, it shall submit a photocopy of the trust agreement (or summary agreement) or will, along with the "Trust Account Opening Application," the "Securities Ownership Register Consent Form" (not required if owners have placed securities in separate trust accounts) and other relevant information, to the securities brokerage where the discretionary investment deposit account will be opened. Accounts that have been opened as public trusts but are without trust agreements shall be evidenced by a photocopy of the approval letter issued by the competent authority. Once the securities brokerage has verified all information correctly, it shall perform a "Custodian Relationship" transaction (code 156) to input the basic profile of the trust enterprise (the account name shall be the name of the withholding tax collector that the tax authority has assigned to the trust relationship), the business ID of the investment trust/investment consulting enterprise, the custodian account number and account type (which should be 71), and add the necessary trust remarks as stipulated in Item B. If the trust enterprise is not a TDCC participant: The trust enterprise shall submit a photocopy of the trust agreement (or summary agreement) or will, along with the "Trust Account Opening Application," the "Securities Ownership Register Consent Form" (not required if owners have placed securities in separate trust accounts) and other relevant information, to the securities brokerage where the discretionary investment deposit account will be opened. Accounts that have been opened as public trusts but that do not have trust agreements in place shall be evidenced by a photocopy of the approval letter issued by the competent authority. Once the securities brokerage has verified all information is correct, it shall perform an "Account Opening" transaction (code 140) to input the basic profile of the trust enterprise (the account name shall be the name of the withholding tax collector that the tax authority has assigned to the trust relationship), the business ID of the investment trust/investment consulting enterprise, and the account type (which should be 98), and perform a "Trust/Discretionary Investment/English Account Name Maintenance" transaction to input account number and name as described in Subparagraph 1, Item A. Once the securities brokerage has finished setting up the account, it shall add trust remarks and input information of all related parties of the trust relationship into the system as described in Subparagraph 1, Item B, and print out a change inquiry form for verification.
Article 5	The following procedures apply to principals who intend to engage a discretionary investment manager for the management of their investments, and where assets are entrusted under the custody of separate custodians: Based on the terms of the discretionary investment agreement and trust agreement that the principal has established with the discretionary investment manager, the custodian shall perform an "Account Opening" transaction (code 140) to input its basic profile (the account name shall be the name of the withholding tax collector that the tax authority has assigned to the trust relationship), the business ID of the investment trust/consulting enterprise, account type (which should be 72) along with other relevant data. The custodian shall then perform a "Trust/Discretionary Investment/English Account Name Maintenance" transaction (code 179) to input the number and name of the custodian account as "Entrusted properties of ○○○ under fiduciary management of ○○○ Company." The custodian shall add trust remarks and input information of all related parties of the trust relationship into the system as described in Subparagraph 1, Item B. Once the custodian has completed the account setup, it shall submit the "Securities Ownership Register Consent Form" (not required if owners have placed securities in separate trust accounts) and relevant information to the securities brokerage where the discretionary investment deposit account will be opened. Once the securities brokerage has verified all information correctly, it shall perform a "Custodian Relationship" transaction (code 156) to input the basic profile of the custodian (the account name shall be the name of the withholding tax collector that the tax authority has assigned to the trust relationship), the business ID of the investment trust/investment consulting enterprise, the custodian account number and account type (which should be 71), and add the necessary trust remarks as described in Subparagraph 1, Item B. If the principal is a qualified institutional investor, as defined in "Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises of Securities Investment Trust and Consulting Association of the ROC," the trust agreement described in Subparagraph 1 of the preceding Paragraph may be replaced by a legal opinion (drafted in Chinese) issued by the principal's lawyer.
Article 6	The following procedures shall apply if the principal is a trust enterprise or any FSC-approved business seeking to engage a discretionary investment manager for the management of its investments, and where assets are held in custody by the principal itself: If the principal is a TDCC participant: Based on the terms of the discretionary investment agreement and trust agreement that the principal has established with the discretionary investment manager, the principal shall perform an "Account Opening" transaction (code 140) to input its basic profile (the account name shall be the principal's name; if the mandated assets are held in trust, the account name shall be the name of the withholding tax collector that the tax authority has assigned to the trust relationship), the business ID of the investment trust/investment consulting enterprise, and the account type (which should be 72). Additionally, the principal shall perform a "Trust/Discretionary Investment/English Account Name Maintenance" transaction (code 179) to input the number and name of the custodian account as "Discretionary investment account of ○○○ managed by ○○ Company;" where the mandate comprises of entrusted properties, the account shall be named "Entrusted properties of ○○○ under fiduciary management of ○○ Company." If the mandate comprises entrusted properties, the trust enterprise shall add trust remarks and input information of all related parties of the trust relationship into the system as described in Article 4, Subparagraph 1, Item B. Once the principal has completed the account setup, it shall submit the "Securities Ownership Register Consent Form" (not required if owners have placed securities in separate trust accounts) and relevant information to the securities brokerage where the discretionary investment deposit account will be opened. Once the securities brokerage has verified all information correctly, it shall perform a "Custodian Relationship" transaction (code 156) to input the principal's basic profile (the account name shall be the principal's name; if the mandate comprises entrusted properties, the account name shall be the name of the withholding tax collector that the tax authority has assigned to the trust relationship), the business ID of the investment trust/investment consulting enterprise, the principal's custodian account number and account type (which should be 71. Mandates that comprise entrusted properties should also have trust remarks added in accordance with Article 4, Subparagraph 1, Item B. If the principal is not a TDCC participant: The principal shall submit a copy of the discretionary investment agreement that it has signed with the discretionary investment manager, along with the "Securities Ownership Register Consent Form" (not required if owners have placed securities in separate trust accounts) and relevant information, to the securities brokerage where the discretionary investment deposit account will be opened. Once the securities brokerage has verified all information correctly, it shall perform an "Account Opening" transaction (code 140) to input the principal's basic profile (the account name shall be the principal's name; if the mandate comprises entrusted properties, the account name shall be the name of the withholding tax collector that the tax authority has assigned to the trust relationship), the business ID of the investment trust/investment consulting enterprise, and account type (which should be 98), and perform a "Trust/Discretionary Investment/English Account Name Maintenance" transaction to input account number and name as described in Subparagraph 1, Item B. If the mandate comprises entrusted properties, the securities brokerage is also required to add trust remarks and input information of all related parties of the trust relationship into the system as described in Article 4, Subparagraph 1, Item B, once it has completed the account setup. A change inquiry form needs to be printed out for verification.
Article 6-1	An investment trust/investment consulting enterprise or securities firm that engages in trust-type discretionary investment services shall mandate a custodian to hold custody of the assets, and proceed according to the following procedures: The investment trust/investment consulting enterprise or securities firm shall submit the discretionary investment and trust agreement it signed with the principal, the "Trust Account Opening Application", and the custody agreement signed with the custodian, and open a discretionary investment deposit account at the custodian. It additionally shall submit the "Securities Ownership Register Consent Form" in duplicate (not required if it has provided the trust sub-account number to the custodian for file creation). Once the custodian has verified all relevant information, it shall perform an "Account Opening" transaction (transaction code 140) to input the basic profile of the investment trust/investment consulting enterprise or the securities firm (the account name shall be the name of the tax withholding entity that the tax authority has assigned to the trust relationship), the business ID of the investment trust/investment consulting enterprise, and the account type (which should be 72). However, the mailing address of such accounts shall be input as the address of the custodian. Once the above is completed, the custodian shall then perform a "Trust/Discretionary Investment/English Account Name Maintenance" transaction (code 179) to input the number and name of the custodian account as "○○○ in its capacity as master custodian of ○○○ trust account (under fiduciary management)". Accounts that are under collective management shall be specified as "(under fiduciary management)" following the name of the tax withholding entity. The custodian shall add trust remarks and input information of all related parties of the trust relationship into the system as described in Article 4 Subparagraph 1, Item B. Once the custodian has completed the account setup, it shall submit the "Securities Ownership Register Consent Form" (not required if it has already established a trust sub-account number) and relevant information to the principal's securities brokerage, where the discretionary investment deposit account will be opened. Once the securities brokerage has verified all information, it shall perform a "Custodian Relationship" transaction (code 156) to input the investment trust/investment consulting enterprise or securities firm's basic profile (the account name shall be the name of the tax withholding entity that the tax authority has assigned to the trust relationship), the business ID of the investment trust/investment consulting enterprise, the custodian account number, and the account type (which should be 71), and add the necessary trust remarks as described in Article 4, Subparagraph 1, Item B.
Article 7	Changes to discretionary investment deposit account information shall proceed according to the following procedures: In cases where the principal engages a discretionary investment manager for discretionary investment, and mandates a separate custodian to hold custody of the assets: the principal shall approach the custodian for a change of account information by submitting a "Customer Profile Amendment Request" stamped or signed with the original seal/signature-of-record. Once the custodian has correctly verified the information provided, it shall perform a "Customer Profile Maintenance" transaction (code 146) to make the requested changes and then submit all relevant documents to the principal's securities brokerage where the relevant changes will be made to discretionary investment deposit account information. Once the securities brokerage has correctly verified all submitted information, it shall perform a "Custodian Relationship Maintenance" transaction (code 157) to make the change. In cases where a trust enterprise concurrently engages in discretionary investment services and holds custody of entrusted properties on its own, or where a trust enterprise engages another discretionary investment manager for discretionary investment services but holds custody of investments on its own, or where a principal engages a discretionary investment manager for discretionary investment and entrusts a separate custodian to hold custody of the assets: If the trust enterprise or custodian is a TDCC participant, changes of profile information shall proceed according to Subparagraph 1, applied mutatis mutandis. If the trust enterprise is not a TDCC participant, the trust enterprise shall make the changes by submitting all relevant documents to the securities brokerage. Changes to the profiles or identities of the principal, the beneficiary or any party relevant to the trust relationship shall proceed in accordance with the TDCC Directions for Securities Trust and Book-entry Operations. In cases where the principal is an FSC-approved business that has engaged an discretionary investment manager for the management of its investments, while holding custody of assets on its own: Proceed as described in Subparagraph 1, applied mutatis mutandis, if the business is a TDCC participant. Approach the securities brokerage and submit all relevant documents if the business is not a TDCC participant. When an investment trust/investment consulting enterprise or securities firm engages in trust-type discretionary investment services, and mandates a custodian to hold custody of the assets, changes of profile information shall proceed according to Subparagraph 1, applied mutatis mutandis.

Chapter III Book-Entry Transfer

Article 8	If the mandate involves securities held in central custody by TDCC, the principal may request to have non-mandated securities transferred to the custodian's discretionary investment deposit account at the securities brokerage. Upon receiving such request, the securities brokerage shall perform a "Securities Transfer" transaction (code 130) to complete the transaction.
Article 9	In cases where the principal has entrusted its assets to the custody of a trust enterprise, a custodian, an investment trust/consulting enterprise, or a securities firm, the securities brokerage shall transfer the principal's non-mandated securities to the discretionary investment deposit account opened with the trust enterprise, custodian, investment trust/consulting enterprise, or securities firm in a manner that complies with the TDCC Directions for Securities Trust and Book-Entry Operations. Doing so will require the performance of a "Trust Transfer" transaction (code 543).
Article 10	Should the principal's mandate agreement with the custodian cease to exist due to expiry, withdrawal, termination or any other reason, the custodian shall perform a "Securities Transfer" transaction (code 130) to transfer securities held in its discretionary investment deposit account to another custodian account designated by the principal.
Article 11	Should the principal's trust agreement with the trust enterprise, custodian, investment trust/consulting enterprise, or securities firm cease to exist due to expiry, withdrawal, termination or any other reason that requires delivery of entrusted securities, the trust enterprise/custodian/securities brokerage shall transfer securities held in its discretionary investment deposit account to another custodian account of the principal, the beneficiary, or a third party in a manner that complies with TDCC Directions for Securities Trust and Book-Entry Operations. Doing so will require performance of a "Trust Transfer" transaction (code 543).
Article 12	Unless otherwise stipulated by law or by the trust agreement, securities held by the same principal under different trust agreements and discretionary investment deposit accounts cannot be exchanged in the settlement of transactions.

Chapter IV Stock Affairs

Article 13	In the event that an issuer announces its book closure date, TDCC shall prepare its securities ownership register by remarking all positions that have been subjected to discretionary investment, and by consolidating different accounts under the unified owner. Account consolidation shall proceed according to the following principles: If a discretionary investment shareholder has multiple discretionary investment deposit accounts opened with a participant, then TDCC's securities ownership register shall consolidate all of that shareholder's accounts into the discretionary investment deposit account with the latest correspondence address. If a discretionary investment shareholder has discretionary and non-discretionary investment deposit accounts opened at the same time, then TDCC's securities ownership register shall consolidate all of that shareholder's accounts into the non-discretionary investment deposit account with the latest correspondence address.
Article 14	When the issuer distributes cash dividends to discretionary investment shareholders, payments to non-discretionary investment accounts shall be handled according to existing practices, whereas payments to discretionary investment accounts may be handled in one of the following ways: The issuer may calculate separately the amounts payable to various discretionary investment deposit accounts held by the shareholder, and make separate payments to the shareholder or into accounts held with the custodian. The issuer may pay cash dividends to TDCC and have it redistribute amounts into various discretionary investment deposit accounts: When cash dividend advices are being sent to the discretionary investment shareholder, the issuer needs to disclose clearly the amount payable on shares that have been subjected to discretionary investment, and inform the shareholder that the payment will be made through TDCC to the various accounts held by the shareholder. The issuer will be required to inform TDCC of the book closure date, the dividend payment date, the amount payable per thousand shares, the total amount of cash dividends payable, and other relevant information at least 7 business days before the scheduled payment date. In addition, the list of discretionary investment deposit accounts that cash dividends are distributable to shall also be given to TDCC in electronic format. TDCC shall calculate the amount of cash dividends payable to each account (to the nearest dollar) based on the number of shares that the shareholder holds in various discretionary investment deposit accounts as at the book closure date. The following processes also apply for cash dividend distributions: TDCC will not distribute payments if the amount advised by the issuer (after-tax for non-residents) is different from the sum of the amounts distributable to the various discretionary investment deposit accounts. In which case, the issuer will be notified to resolve the discrepancy. Any residual amount that remains after the distributable sum has been allocated to various discretionary investment deposit accounts shall be paid to the first discretionary investment deposit account (sorted by account number in ascending order). If payment cannot be made into the first discretionary investment deposit account (e.g. due to account closure), then it shall be paid into the second account on the list. Amounts payable to each account shall be made net of remittance charges. If a payment is insufficient to cover the necessary costs, the difference shall be charged to the first discretionary investment deposit account. If payment cannot be made into the first discretionary investment deposit account (e.g. due to account closure), then it shall be paid into the second account on the list. The issuer is required to transfer the full sum of cash dividends payable to the discretionary investment shareholder to TDCC's collection account (at the issuer's expense) on the morning of the business day preceding the scheduled payment date. Once TDCC has verified the amount, it will notify its bank to distribute the sum from the collection account into the shareholder's accounts or accounts held with custodians on the scheduled payment date. On the scheduled payment date, the discretionary investment shareholder or its custodian shall perform a "Cash Dividend Distribution Inquiry" transaction (code 571) to print out details of the cash dividend distribution and the actual amounts paid into various accounts for verification.
Article 15	In the event of the issuer conducts a rights issue, subscription rights attributable to non-discretionary investment accounts shall be handled according to existing practices, whereas subscription rights attributable to discretionary investment accounts may be handled in one of the following ways: The issuer may first calculate the number of subscription rights attributable to the shareholder under various discretionary investment deposit accounts and then mail the subscription form along with all relevant information to the discretionary investment shareholder and the custodians involved. The issuer may provide TDCC with details regarding subscription rights attributable to discretionary investments, and allow TDCC to notify the discretionary investment shareholder, the custodian, or the securities brokerage involved: The subscription form and other information sent by the issuer to the discretionary investment shareholder must contain details regarding the number of subscription rights the shareholder is entitled to exercise on shares that have been subjected to fiduciary management, while informing the shareholder that further correspondence will be conveyed through TDCC to the shareholder, the custodian or the securities brokerage involved. The issuer will be required to inform TDCC of the book closure date, the subscription ratio per thousand shares held, the payment start date, the payment due date, the subscription price per share, the total number of shares available for subscription and any relevant information at least 2 business days before the payment start date. In addition, the list of discretionary investment shareholders who are entitled to subscribe to the rights issue shall also be given to TDCC in electronic format. TDCC shall calculate the number of subscription rights available to each account (to the nearest full share) based on the number of shares that the shareholder holds in various discretionary investment deposit accounts as at the book closure date. The following processes also apply for rights issues: TDCC will not perform any calculation if the number of subscription rights advised by the issuer is different from the sum of subscription rights that each discretionary investment deposit account is entitled to. In which case, the issuer will be notified to resolve the discrepancy. Any residual right that remains after all subscription rights have been allocated to the various discretionary investment deposit accounts shall be added to the first discretionary investment deposit account. If allocation cannot be made into the first discretionary investment deposit account (e.g. due to account closure), then it shall be allocated into the second account on the list. In cases where TDCC is unable to advise the shareholder, the custodian or the securities brokerage involved of the rights issue due to closure of the discretionary investment deposit account or for any other reason, TDCC shall notify the issuer by producing a Rights Issue Error Report, and therefore allow the issuer to notify the discretionary investment shareholder of the ongoing rights issue. Information on the rights issue will be notified by TDCC to every discretionary investment shareholder or their custodian or securities brokerage on the payment start day. Discretionary investment shareholders and their custodians may check TDCC's daily bulletin for information on rights issues. To subscribe to the rights issue, the "Rights Issue Inquiry" transaction (code 570, Option: 2) needs to be performed to print out four copies of the subscription form (the 1st copy is to be retained by the bank, the 2nd by the issuer, the 3rd by TDCC, and the 4th by the discretionary investment shareholder or the custodian; if the discretionary investment shareholder is not a TDCC participant and has opted to hold custody of assets on its own, this document can be printed out by the securities brokerage that the shareholder engages with). The discretionary investment shareholder or the custodian will be required to pay subscription proceeds to the bank designated by TDCC at least one business day before the payment due date specified by the issuer. If the bank is unable to operate on the business day before the payment due date because of force majeure events such as natural disaster, the discretionary investment shareholder or the custodian must pay subscription proceeds to the bank designated by TDCC no later than the morning of the payment due date specified by the issuer. On the payment due date, TDCC will consolidate all subscription proceeds collected on various accounts of the discretionary investment shareholder and transfer them to the payment account specified by the issuer (if the bank is unable to operate one business day before the payment due date because of force majeure events such as natural disaster, TDCC will transfer subscription proceeds to the account specified by the issuer one business day after the payment due date). On the second business day after the payment due date, TDCC will provide the issuer with a detailed list of subscription proceeds made on discretionary investment. The second copy of the subscription form will be handed over to the issuer after TDCC has collected them from all accounts. On the business day following the payment due date, the discretionary investment shareholder or the custodian will be able to perform a "Rights Issue Inquiry" transaction (code 570, Option: 1) to verify whether the number of shares subscribed matches the amount of subscription proceeds paid. Any shortage of subscription payments shall be claimed directly by the issuer from the various discretionary investment shareholders or their custodians. If there is a need to change the terms of the current rights issue, the issuer will be required to notify TDCC no later than the second business day after the issuer has been granted approval to do so. In which case, the issuer needs to submit to TDCC a Rights Issue Amendment Form for Discretionary Investment Shareholders along with all relevant information and follow the procedures described below: Withdrawal of rights issue: Any amount that TDCC has collected on the issuer's behalf will be subject to interest. The issuer shall provide TDCC with a file containing details of tax refund no later than 2 business days before the scheduled refund date, and transfer the amount of refund to TDCC's collection account (at the issuer's expense) no later than 10 a.m. one business day before the scheduled refund date. TDCC will then calculate amounts refundable to each discretionary investment shareholder, and instruct its bank to make the payments from TDCC's collection account net of transaction fees to shareholders' accounts or accounts held with custodians on the refund date. The amount of interest that the issuer has made will be distributed by TDCC to the various accounts held by the discretionary investment shareholder based on the proportion of subscription proceeds paid from each account. Extension of payment due date or change of subscription price per share: The issuer will be required to notify discretionary investment shareholders of the extension of payment due date or the change of subscription price per share, while informing shareholders that further correspondence will be conveyed through TDCC to the shareholders or their custodians or securities brokerages. Meanwhile, TDCC will notify the discretionary investment shareholder, the custodian or the securities brokerage regarding the new changes in the manner described in Subparagraph 2, Items C, D and E. Should the change of subscription price per share result in an excess amount of subscription proceeds being paid by the discretionary investment shareholder or the custodian, the issuer shall refund any excess amount to TDCC in the manner described in Subparagraph 2, Item H-a. TDCC will then refund the proceeds to the discretionary investment shareholder or the custodian in the manner described in Subparagraph 2, Items H-b and H-c.
Article 16	Allocation of securities shall proceed according to the following procedures: Stock dividends: Stock dividends to non-residents are subject to income tax. The discretionary investment shareholder needs to make a tax payment as advised by the issuer before stock dividends are distributed. The issuer will be required to inform TDCC of the book closure date, the distribution date, the number of stock dividends allocated per thousand shares, and the total quantity of stock dividends no later than 5:30 p.m., two business days before the scheduled allocation date. In addition, a computer file containing a list of securities beneficiaries shall also be given to TDCC. Once TDCC has credited the issuer's custodian account with additional shares as instructed, TDCC will calculate the number of shares that the discretionary investment shareholder is entitled to receive on each discretionary investment deposit account, and allocate them accordingly. Meanwhile, TDCC will prepare a Discretionary Investment Securities Allocation Report and distribute it to every TDCC participant. TDCC will not perform the book-entry transfer if the issuer does not provide the shareholder with a sufficient number of shares to be allocated into the various discretionary investment deposit accounts held, and will notify the issuer to resolve any discrepancy. Any quantity that remains after the shareholder has been allocated stock dividends in each of the discretionary investment deposit accounts held shall be kept in the issuer's custodian account. Rights issues: In cases where the issuer has opted to process allocation of shares subscribed through rights issues on its own, the issuer shall determine the number of shares to be allocated to the discretionary investment shareholder and into various custodian accounts held, and perform the book-entry transfer accordingly. In cases where the issuer has opted for TDCC to process the allocation of shares subscribed through rights issues, TDCC will first credit the issuer's custodian account with additional shares and then allocate them into the various discretionary investment deposit accounts held by the shareholder based on the quantities subscribed through each account. Meanwhile, TDCC will prepare a Discretionary Investment Securities Allocation Report and distribute it to every TDCC participant. TDCC will not perform the book-entry transfer if the issuer does not provide the shareholder with an adequate number of shares to be allocated into the various discretionary investment deposit accounts held, and will notify the issuer to resolve the discrepancy.

Chapter V Supplemental Provisions

Article 17	(Deleted)
Article 18	Correspondence that the issuer sends to discretionary investment shareholders or their custodians should be printed with the words "under fiduciary management" following the recipient's address.
Article 19	If securities become subject to trade restrictions imposed by TSEC or GTSM, the discretionary investment shareholder's subscription to the rights issues of that security may be processed according to Article 15 of these Directions. When securities are distributed, however, the issuer will be required to notify each discretionary investment shareholder and their custodians to collect the issued securities.
Article 20	Custodians are required to inform the principal immediately if they receive any interest or gains that do not arise from discretionary investment assets, or any information that is relevant to the principal.
Article 21	Any expenses incurred by the issuer or TDCC while processing cash dividend distributions or rights issue subscriptions shall be borne by discretionary investment shareholders. Discretionary investment shareholders or their custodians or securities brokerages will be required to make such payments to TDCC or to the issuer according to TDCC's guidelines.
Article 22	Trade settlement and exchange of information between securities brokerages and custodians, trust enterprises or any FSC-approved businesses may proceed according to the TDCC Directions for the Handling by Custodians of Central Custody and Book-Entry Operations for Securities.
Article 23	Any matters on which these Directions are silent shall be governed by the Operating Rules of the Taiwan Depository & Clearing Corporation and other applicable provisions.

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