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(Template I)
Discretionary Investment Services Contract Template
Party A: _______________________ (Name/Title)
Party B : ________________Corp., a business entity which has been approved by the Financial Supervisory Commission , Executive Yuan (the “FSC”) to carry out securities discretionary investment business and is validly existing under the law of the R.O.C. (Business License Number: _____________)
Pursuant to the Securities Investment Trust and Consulting Act (the “SITC Act”), Party B has already interpreted and delivered the provisions of this Contract (as defined below) and the “Discretionary Investment Prospectus and Risk Disclosure Statement” attached hereto as Appendix 1 to Party A seven (7) days prior to the execution of this Contract. In addition, Party B has thoroughly understood the financial capability, investment experiences, objectives and requirements of Party A and informed Party A of the trading characteristics of securities-related products, possible risks or legal restrictions associated with it. Taking the above matters into consideration, Party B has also consulted with Party A and deliberated on the amount or price of mandated investment assets as well as basic guidelines for investment or trading and the scope of investment or trading with Party A circumspectly. After confirming and pre-reading the content of this Contract, Party A agrees that Party B, based on its professional investment judgment and within the scope of authorization provided by this Contract, is fully authorized to conduct securities investment and securities-related products trading for Party A in accordance with this Contract, relevant laws as well as relevant rules and regulations stipulated by the Securities Investment Trust and Consulting Association?of the R.O.C. (the “SITCA”);Furthermore, Party A agrees to place the discretionary investment assets under the custody of the custodian institution for the same to carry out the account-opening for securities investment or securities-related products trading, custody of funds and certificates, payment of margins and premiums, trading settlement, account management, and other relevant matters in accordance with this Contract and the Mandate Contract entered into with the custodian institution.Both parties hereby agree as follows (this “Contract”):
Article 1 (The Content, Amount or Price of Discretionary Investment Assets)
The minimum amount of discretionary investment assets initially accepted by Party B from Party A shall be no less than NTD five million provided that such restrictions shall not apply where the discretionary investment assets of Party A are assets in investment link insurance special account or assets in annuity insurance special account. The types, volume, amount or price of the same have been agreed by both parties, and are set forth in Appendix 2.
The discretionary investment assets referred to in the preceding paragraph, and any proceed and profit derived from the investment and application of such assets during the term of this Contract shall belong to discretionary investment assets.
For the assets referred to in the preceding two paragraphs other than in cash, its value shall be calculated in accordance with the “Standards for Calculation of Discretionary Investment Assets Value” stipulated by the SITCA and based on the asset value determination date specified in Appendix 2.
Article 2 (Agreement of Basic Guidelines for Investment or Trading and Investment or Trading Scope and its Change)
Party B shall execute the investment, trading and use of discretionary investment assets with full discretion in accordance with the basic guidelines for investment or trading and within the investment or trading scope and the scope of use of the idle funds stipulated in the Appendix 3.
During the term of this Contract, any change of the basic guidelines and the investment or trading scope referred to in the preceding paragraph upon consent of both parties shall be made in accordance with Article 18 hereof and shall be made an appendix hereto.
Article 3 (Granting and Restrictions of Investment or Trading Decision-making Right and Assets Application Instruction Right)
Unless otherwise restricted by this Contract or relevant laws and regulations, according to the basic guidelines for investment or trading and the scope of investment, trading and application specified in the preceding Article, Party A grants Party B the right of investment or trading decision-making and right of assets application instruction with respect to the discretionary investment assets referred to in Article 1 within the scope that such discretionary investment assets could be used and settled.
Within the scope of the authorization specified in the preceding paragraph, Party B may, for the benefit of Party A, conduct trading of securities or securities-related products, and application of idle funds on behalf of Party A with full authority and discretion. Party A shall be responsible to urge the custodian institution to handle it in accordance with the instructions of Party B and may not rescind, terminate or alter the above-mentioned authority of agency granted to Party B, or conduct other acts that hinder Party B’s decision-making on investment or trading. However, the above provisions shall not apply in the event of the rescission, termination or amendment of this Contract.
Within the scope of the authorization specified in the preceding paragraph, Party B has the right to instruct the custodian institution to conduct required settlement of funds and certificates or payment of margins and premiums with the discretionary investment assets. A separate consent or authorization from Party A is not required.
Article 4 (Designation and Change of Investment Manager)
Before executing this Contract, Party B has prepared information related to the education background and experience of each investment manager it retains to Party A for his reference and the investment manager and his deputy have been designated upon consent of both parties. Details thereof are provided in Appendix 4. During the term of this Contract, Party A may notify Party B in writing to renegotiate and change the designation of the investment manager.
When the investment manager leaves office or for some reasons cannot perform his/her duties, Party B shall notify Party A immediately and appoint the designated deputy to perform the duties of the investment manager before both parties designate another investment manager according to provisions of paragraph 1.
The investment manager and the deputy referred to in the preceding two paragraphs are assistants of Party B for performance of this Contract. The assistants shall be responsible for investment or trading analysis, judgment, decision making and other obligations related to the discretionary investment assets based on the basic guidelines of investment or trading and within the scope of investment or trading and application provided by this Contract, as well as based on his professional knowledge and exercising due care of a prudent person.
Article 5 (Designation and Change of Custodian Institution)
Party A designates ______________ as the custodian institution; Party A shall enter into a Mandate Contract with said custodian institution, and place the investment assets under the custody of the custodian institution in accordance with the SITC Act. Where the investment scope covers foreign securities, the custodian institution for discretionary investment assets may appoint a foreign financial institution as the foreign fiduciary custodian institution. Party A, Party B and the custodian institution shall enter into a Tripartite Agreement of Discretionary Investment. The above-mentioned Mandate Contract and the Tripartite Agreement of Discretionary Investment shall be attached as Appendix 5 and Appendix 6 of this Contract, and constitute a part of this Contract.
Where Party B has the relationship with the above custodian institution as specified in paragraph 3 of Article 11 of the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises (the “Management Regulations”), Party B has notified Party A of such relationship upon the execution of this Contract. See the Appendix 7 for details.
In the event that the custodian institution referred to in the first paragraph is unable to perform the Mandate Contract due to some reasons or unable to continue operating custody business due to the revocation, rescission or termination of the Mandate Contract, Party A or the custodian institution shall notify Party B immediately. The custodian institution shall be responsible for conducting the settlement, payment and collection of margins and premiums or clearance and settlement of trading that has already been completed prior to the receipt of notice by Party B in accordance with Mandate Contract. Any loss incurred due to failure of settlement, payment and collection of margins and premiums or clearance and settlement by the custodian institution shall be borne by Party A, and Party B shall have no responsibility thereto.
During the term of this Contract, Party A may change the custodian institution provided that Party A shall notify Party B in writing and proceed in accordance with paragraph 1 of this Article and Article 18 of this Contract. With respect to the transfer of discretionary investment assets and the decision-making of investment or trading and consignment of trading during the transition period, they shall be jointly deliberated and determined by Party A, Party B, the original custodian institution and the newly- appointed custodian institution.
Article 6 (Method of Custody of the Discretionary Investment Assets)
It shall be specified in the agreement between Party A and the custodian institution that the latter shall establish an account for each client separately and manage it accordingly. In the event Party A’s assets consigned to one custodian institution were managed by Party B and other investment trust or investment consulting enterprises, respectively, for discretionary investment, such investment assets under custody shall be divided according to the investment trust and investment consulting enterprises, and separate accounts shall be set up accordingly; the aforesaid shall be set forth clearly in the Mandate Contract.
The discretionary investment assets of Party A shall be placed under the custody of the custodian institution in its entirety during the term of this Contract; if they were securities, however, unless otherwise provided in other laws, they shall be placed under the custody of the centralized securities depository enterprises mandated by the custodian institution. Where the investment scope covers foreign securities, the same shall be handled in accordance with the Mandate Contract.
During the term of this Contract, Party A may not take back the discretionary investment assets at will. Party B and its representatives, employees, the persons performing the obligation for him, or other performance assistants may not be mandated to keep the discretionary investment assets under his custody or have any third party other than the custodian institution or the foreign fiduciary custodian institution to do so for any reason before the execution, after the termination or during the term of this Contract.
Article 7 (Opening of Discretionary Investment Account)
After entering into the Tripartite Agreement of Discretionary Investment with Party A and the custodian institution, Party B shall notify the custodian institution to enter into an account opening and brokerage agreement or other necessary contracts with the securities firm, futures commission merchant or any other trading counterparty (the “Trading Counterparty”) on behalf of Party A, and to open an investment trading or futures trading account. A centralized securities depository account, a savings account and a custodial investment account shall be opened through the custodian institution. Where the investment covers foreign securities, Party B shall, with assistance of the custodian institution, enter into an account opening and brokerage agreement with relevant trading counterparties in accordance with this Contract, local laws and regulations or market practice of the place where the investment is made.
Party B shall cooperate in the account opening, execution of contracts and other related procedures referred to in the preceding paragraph in accordance with the 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 R.O.C. (the “Operation Rules”). The account opening and brokerage agreement referred to in the preceding paragraph shall stipulate clearly the responsibility of Party B in the Ultra Vires Transactions as referred to in Article 10 of this Contract.
The opening of a discretionary investment account shall comply with the purpose and objective of the Operation Rules and this Contract. Party B may start the discretionarily investment or trading only after the procedures of contract execution and account-opening prescribed in each paragraph of this Article have been completed.
During the term of this Contract, Party A may not use the investment trading account and futures trading account referred to in paragraph 1.
Party A agrees that Party B may place an order via the omnibus account at the securities firm when engaging the securities firm to trade securities on behalf of Party A. Party A shall issue a power of attorney to the securities firm for its recordation.
Article 8 (Designation or Change of Trading Counterparty )
The Trading Counterparty referred to in the preceding Article shall be designated by Party A, and is not limited to one; if Party A does not make said designation, Party B may make the designation provided that Party B shall assess the financial ability, business and credit conditions of the designee and give due attention to appropriate diversification to avoid over-concentration when making the designation, and shall notify the custodian institution immediately after the designation. Where Party B and the designated securities firm have mutual investment or control and subordination relationship with each other, such fact has been disclosed and specified in Appendix 8.
During the term of this Agreement, Party A may change the Trading Counterparty, provided that Party A shall notify Party B in writing one month prior to said change and shall proceed in accordance with the preceding paragraph.
Party A agrees that Party B may engage companies providing foreign investment consulting service or the group enterprise of Party B providing centralized service to indirectly engage foreign securities firms for trading when trading foreign securities with discretionary investment assets.
Article 9 (Collection and Payment Instruction)
After confirming the content of transaction with the securities brokerage firm or other Trading Counterparty on the transaction day, Party B shall immediately issue the settlement instruction letter that specifies the Trading Counterparty, object, transaction day, time, method and terms of settlement, and the amount and volume of funds and certificates to be settled. The custodian institution shall promptly carry out the settlement accordingly within the scope of the funds and certificates of discretionary investment assets that could be utilized after the custodian institution confirms that there is no Ultra Vires Transaction after checking relevant settlement vouchers.
Where Party B engages in securities-related products transaction for which it has to deposit or withdraw margins, Party B shall issue an instruction letter of collection or payment to the custodian institution. Depending on the nature of the amount to be collected or paid, the instruction letter shall specify the number and title of the futures trading account, account number of client’s designated account for margins, Trading Counterparty, collection or payment date, amount receivable or payable etc. Party B shall submit a detailed list of the futures trading upon the day when the transaction is completed, which shall specify the Trading Counterparty, type, object, volume, settlement date and amount of the trading.
The Mandate Contract entered into by Party A and the custodian institution shall state clearly that in the event the custodian institution determines that there is an Ultra Vires Transaction on the settlement instruction letter referred to in paragraph 1 or there is a dispute over such Ultra Vires Transaction, the custodian institution shall immediately notify Party A and Party B in writing with reasons specified and shall handle it in accordance with the written instruction of Party A. If the custodian institution fails to notify or fails to receive Party A’s written instruction in time, and the dispute cannot be timely settled through negotiation, the custodian institution shall, before 11:00 AM of the next business day of the transaction day, issue an Ultra Vires Transaction notice, stating clearly the facts, reasons and details of the Ultra Vires Transaction, to notify Party A, Party B, the Trading Counterparty and SITCA of the same respectively.
The Mandate Contract entered into by Party A and the custodian institution shall state clearly that in the event that the custodian institution determines that there is an Ultra Vires Transaction on the detailed list of futures trading referred to in paragraph 2 or there is a dispute over such Ultra Vires Transaction, the custodian institution shall immediately notify Party A and Party B in writing with reasons specified and shall handle it in accordance with the written instruction of Party A. If the custodian fails to notify or fails to receive Party A’s written instruction in time, and the dispute cannot be timely settled through negotiation, the custodian institution shall immediately issue an Ultra Vires Transaction notice, stating clearly the facts, reasons and the details of the Ultra Vires Transaction, to notify Party A, Party B, the Trading Counterparty and SITCA of the same respectively.
Article 10 (Handling of Ultra Vires Transactions)
In the event of Ultra Vires Transactions by Party B when applying discretionary investment assets to trade securities or invest in other items approved by the FSC, except that Party A issues a written consent to settlement or trading and upon examination by the custodian institution that it complies with relevant laws, with respect to the securities, Party B shall be liable to perform the obligation arising therefrom. Party B shall allocate funds, certificates or amount to be paid for the transaction determined as ultra vires by the custodian institution to the investment custodian account before the settlement day for the custodian institution to handle the settlement of funds and certificates.
In the event of Ultra Vires Transactions by Party B when applying discretionary investment assets to engage in securities-related products trading, except that Party A issues a written consent to the transaction and upon examination by the custodian institution that it complies with relevant laws, Party B shall be liable to perform the obligation arising therefrom. Party B shall allocate the amount to be paid for the transaction determined as ultra vires by the custodian institution into the custodial investment account of Party A for the custodian institution to handle the follow-up payment of margins or clearance and settlement.
The securities borrowing procedure required by the Party B for the performance of securities allocation and payment duties referred to in paragraph 1 shall be processed in accordance with relevant laws and regulations. Required collateral and fees shall be provided and paid by Party B.
With respect to the funds and certificates or securities-related products purchased or sold in the Ultra Vires Transactions, Party B shall, upon the receipt of the Ultra Vires Transaction notice, conduct opposite sale or purchase to offset the same and shall settle the profits and loss in accordance with Article 60 of the Operation Rules. Party B is liable for the loss and related trading tax and expenses arising therefrom. All profits arising therefrom after deduction of relevant trading taxes and expenses shall belong to Party A, which will be deducted from the offset income; if there is any balance after said deduction, Party A shall be responsible to urge the custodian institution to return such balance to Party B after Party B completes the settlement and offset procedures in accordance with this Article; Party B shall be responsible for making up any deficiency for said deduction by depositing the same into the custodial investment account, or, the custodian institution may claim compensation against Party B on behalf of Party A according to the Mandate Contract.
Where Party A, Party B or the custodian institution has a dispute over the Ultra Vires Transaction, relevant parties shall still act in accordance with the contents of the Ultra Vires Transaction notice first. If it is confirmed or determined by a final arbitration award or judgment that the Ultra Vires Transaction is resulted from a mistake of Party B, the custodian institution or Party A or other events that could be obviously attributable to Party B, the custodian institution or Party A, such person shall return the profits obtained therefrom plus interest to the person who suffers damage, and shall be responsible for compensation for damage, if any.
If Party B fails to handle the Ultra Vires Transaction in accordance with provisions of this Article, which results in the failure of the custodian institution to complete the settlement, follow-up payment of margins or clearance and settlement, any liability arising therefrom shall be borne by Party B to Trading Counterparties. Party A shall bear no responsibility thereto.
Article 11 (Handling of Refunded Service Fee)
The service fee refunded from or other interests paid by the Trading Counterparties due to the application of discretionary investment assets to trade securities or securities-related products by Party B shall be used to deduct Party A’s transaction cost. Unless Party A and the Trading Counterparties have negotiated the service fee rate, Party B shall negotiate the service fee rate with Trading Counterparties for Party A based on the principle of fairness and faithfulness. Party A shall be responsible to urge the custodian institution to stipulate the refunding method of the service fee in the account-opening agreement entered into with the Trading Counterparties.
Party B shall disclose in the reports in connection with Party A’ discretionary investment assets the amount of service fee refunded from or other interests paid by the Trading Counterparties in Party A’s discretionary investment account with an individual account title.
Article 12 (Ownership of Proceeds and Profits of Discretionary Investment Assets and Exercise of Equity Rights)
During the term of this Contract, the proceeds and profits derived from Party A’s discretionary investment assets shall be all collected by the custodian institution, who shall notify Party B in writing. The aforementioned proceeds and profits, during the term of this Contract, belong to the discretionary investment assets.
Proceeds, share interest, dividends, bonus share or other interests derived from the securities of discretionary investment assets shall be distributed to each discretionary investment account by the issuer or the centralized securities depository enterprise in accordance with the regulations. Party A agrees that the right to subscribe securities with consideration or the right to convert securities, which are derived from discretionary investment assets, shall be exercised by Party B in accordance with the content of Appendix 9. However, if relevant laws and regulations provide otherwise, such laws and regulations shall apply.
The right to attend shareholder’s meeting and the right to vote of the stocks of the issuing company held by the custodial investment account shall be exercised by Party A. The right to attend shareholders’ meeting and to vote of the stocks issued by foreign companies, depending on the determination of Party B authorized by Party A, may be exercised by the custodian institution after the consent of Party B is obtained or be exercised by the foreign fiduciary custodian institution instructed by the custodian institution.
Relevant procedures with regard to title transfer and exercise of right of the securities shall be carried out by the custodian institution according to the Mandate Contract, relevant securities laws and regulations and rules governing the operation of the centralized securities depository enterprises of the place where the investment is made.
Article 13 (Due care of a Prudent Person and Confidentiality Obligations)
When conducting discretionary investment business of this Contract, Party B shall act in accordance with the principle of good faith and comply with relevant laws and regulations, and faithfully perform the obligations hereunder with due care of a prudent person.
Party B and its responsible persons, employees shall keep strict confidential with regard to the name (title) of Party A, discretionary investment assets and other relevant information learned from the execution and performance of this Contract, except for inquiry conducted in accordance with the laws or the Operation Rules. However, aforementioned provisions shall not apply if Party A provides a separate written consent to Party B each time for the latter to publicly disclose or use the above information, in which the scope, method and circumstances of the agreed use shall be specified.
Article 14 (Legal Obligations Associated with Change in Shareholding of Insiders of Public Company)
Party B has explained to Party A upon the execution of this Contract that if Party A is a director, supervisor, managerial officer, or shareholder holding more than ten percent of the shares of a public company (the "Insider”), Party A shall comply with provisions of Article 22-2, paragraphs 2 and 4 of Article 25, paragraph 6 of Article 28-2, paragraph 1 of Article 43-1, Article 157, Article 157-1 of the Securities and Exchange Law and other relevant provision governing change in shareholding .
Where Party B receives a written notice from Party A that he is the Insider, unless receiving a notice from Party A made according to the paragraph 3 afterwards, Party B shall notify Party A in writing of the proposed volume and time to purchase or sell the securities issued by the public company which Party A is subordinate to prior to the transaction when applying Party A’s discretionary investment assets to trade such securities. Upon receiving the written instruction from Party A, which approves or restricts the transaction, Party B shall trade in accordance with the content of said instruction, and report the volume transacted to Party A on the transaction day.
Party A shall immediately notify Party B in writing when Party A losses its status as the Insider after his delivery of the notice referred to in the preceding paragraph.
Matters to be paid attention to or to be handled by Party A according to relevant provisions of Securities and Exchange Law as referred to in paragraph 1 shall be handled by Party A itself. In addition, Party A shall also be responsible for the liability arising from the violation of said regulations by himself.
To comply with provisions of the Securities and Exchange Law referred to in paragraph 1, Party A may give a written notice to Party B to suspend or to continue trading of securities of the public company which Party A is subordinate to, and Party B shall proceed in accordance with Party A’s instructions .
Article 15 (Reporting Obligations)
Party B shall compile a monthly report and an annual report containing trading record and current status of the assets for Party A. The monthly report shall be delivered to Party A within 7 business days after the end of every month; the annual report shall be delivered to Party A within 15 business days after the end of every year.
Party B shall inspect changes of net value of Party A’s discretionary investment assets everyday. Upon the discovery that the impairment of net asset value reaches 20% or more of the original discretionary investment assets, Party B shall produce the trading record and current status report of assets and deliver it to Party A within two business days after the occurrence of the above situation. The same applies where the impairment of the net asset value of discretionary investment assets reaches10 percent or more of the net asset value recorded in the last impairment report. Provided, however, where the discretionary investment assets of Party A are assets in an investment link insurance special account or assets in an annuity insurance special account, in the event the impairment of the net asset value of each unit of said investment account reaches 5% or more of the same of the preceding business day (such percentage may be changed upon the written consent by Party A or in accordance with provisions of Article 18 of this Contract, provided that the percentage after change shall be no higher than 10%), Party B shall, within two business days after the occurrence of the event, produce a trading record and a current status report of the assets and deliver it to Party A.
The delivery referred to in the preceding two paragraphs, may be made by mail, facsimile and other methods as agreed by both parties.
Party A may inquire about assets trading status, the volume and amount of the discretionary investment assets in stock and open position of securities-related products of his discretionary investment account in writing or other methods as agreed by both parties, and Party B may not refuse it.
When receiving said inquiry, Party B shall firstly confirm that the application is made by Party A or his authorized agent before advising or providing required information. Party B shall also fill out an inquiry record for recordation.
Article 16 (Calculation, Method and Time of Payment of Remuneration for Mandate and Expenses)
The remuneration for mandate under this Contract shall be allocated and paid by the custodian institution in accordance with the method of calculation and payment and time of payment specified in the Appendix 10 of this Contract after receiving a notice from Party B. However, Party A does not need to pay any remuneration if Party A expresses its intent to terminate this Contract within seven days after signing the Contract.
If the Contract is terminated before the term hereof expires, Party B shall return remuneration paid or request remuneration receivable by proportion to or from Party A on the termination day based on the percentage of current remaining period for calculation of remuneration.
The transaction fee, taxes, and the other relevant expenses incurred due to the discretionarily investment shall all be borne by Party A and shall be deducted from the discretionary investment assets. Party A shall also be responsible to make up the deficiency.
Article 17 (The Effective Date and the Term of the Contract)
This Contract shall take effect upon the execution of the Contract by Party A and Party B. However, Party B may only exercise decision-making right of investment or trading, and assets utilization instruction right according to this Contract, and calculate remuneration of mandate referred to in the paragraph 1 of the preceding Article provided that the Mandate Contract as well as the Tripartite Agreement of Discretionary Investment referred to in paragraph 1 of Article 5 are valid and effective, and are able to be actually performed. The same applies to any amendment to either agreement aforementioned or changes of the custodian institution.
The term of this Contract shall be ____ years from to . If Party B advises Party A in writing that it intends to renew this Contract a month prior to the expiration of this Contract, and Party A does have any objection prior to the expiration of this Contract, this Contract shall be deemed as continuously valid for another one year with the same terms of this Contract. Same applies to subsequent expiration of this Contract.
Article 18 (Amendment to the Contract)
Unless otherwise provided by laws, the content of this Contract and its appendices may be amended in accordance with paragraph 1 of the preceding Article upon the written consent of both parties. However, in the event that the amended parts of this Contract involves matters requiring assistance and cooperation of the custodian institution or shall be handled by the same, the amendment shall be first negotiated by Party A, Party B and the custodian institution jointly and a written statement shall be issued to confirm that the amendment is not in violation of this Contract or the Mandate Contract and that parties undertake to cooperate in relevant procedures. Afterwards, the amendment may be processed. The above provisions shall be stipulated clearly in the Tripartite Agreement of Discretionary Investment.
Article 19 (Termination of Contract)
This Contract may be terminated by Party A within seven days after the execution of this Contract or be terminated upon written consent of both parties. The service fee, tax and relevant expenses of the transaction incurred prior to the termination of this Contract shall be borne by Party A.
When either Party breaches the provision of this Contract, and fails to rectify within the period prescribed by the other party in writing, the other Party may terminate the Contract before the expiration of this Contract.
Party B may terminate this Contract in the event the discretionary investment assets of Party A are seized or attached or subject to the compulsory enforcement proceeding by the order of court.
When Party A is dead, bankrupt or loses its legal capacity, unless Party B is notified by a third party or Party B has already known the fact, this Contract is deemed to be valid and effective. If such termination of this Contract would impair the interest of Party A, Party B shall continue handling the affairs before Party A, his successor or legal guardian could handle the affairs of this Contract.
Except for the events prescribed in the preceding four paragraphs, either party may terminate this Contract with a one-month written notification to the other party in advance. Provided however, if this Contract is terminated without legitimate reasons, the party terminating this Contract shall compensate the other party for the damage caused.
Article 20 (Handling Sanctions of Suspension of Business, Dissolution, Revocation or Abolishment of the Business License)
In the event Party B is unable to continue conducting the discretionary investment business due to dissolution, revocation or abolishment of permission, Party B shall inform Party A, the custodian institution and the Trading Counterparties immediately. This Contract will be terminated automatically upon Party B’s incapability to operate business.
In the event the FSC orders that this Contract be transferred to other securities investment trust enterprises or securities investment consulting enterprises due to Party B’s suspension, cessation or obviously bad operation of business, Party B shall notify Party A to ask whether Party A agrees to engage the new mandatory designated by the FSC. This Contract shall be deemed as automatically terminated if Party A disapproves the new engagement or does not make any expression of intent within ten days after the notification.
Article 21 (Obligations to Settle Pending Affairs after Termination of Mandate Relationship)
If the mandate relationship is terminated due to expiration of this Contract without renewal or according to provisions of the preceding two Articles, Party B shall settle the pending affairs immediately, compile a final report on current status of the discretionary investment assets and the loss or profit of investment and deliver it to Party A.
This Contract is deemed to be valid and effective within the scope of settlement of the pending affairs by Party B referred to in the preceding paragraph.
Article 22 (Provisions for Handling Breach of Contract)
Either party who breaches provisions of this Contract and fails to rectify it within the period prescribed by the other party in writing shall compensate the other party for the damage caused.
Article 23 (Notice of Change of Important Matters and the Method thereof)
In the event there is any change in the basic information provided by Party A, in addition to informing Party B of such change promptly, Party A or his authorized agent shall prepare relevant documentation to process relevant proceedings. Unless otherwise provided by this Contract, any notification or expression of intent made by both parties pursuant to this Contract shall be made in writing and delivered to addresses of parties set forth in this Contract.
Article 24 (Prohibition of Re-commission and Assignment)
Unless otherwise provided by laws and regulations, Party B may not, in entire or in part, re-commission any third party to perform this Contract, or assign its right hereof to any third party.
Article 25 (Special Provisions)
Both parties agree on the following with respect to subparagraph 6, paragraph 1 of Article 14 of the Management Regulations:
- Party B may invest in call (put) warrants issued by it with discretionary investment assets. ‥ Agree ‥ Disagree
- Party B may invest in shares, corporate bonds or financial bonds issued by an interested company of Party B with discretionary investment assets. ‥ Agree ‥Disagree
- Party B may invest in securities underwritten by an interested securities underwriter of Party B with discretionary investment assets. ‥ Agree ‥ Disagree
- Party B may engage in securities margin transactions with discretionary investment assets. ‥ Agree ‥ Disagree
- Party B may lend or borrow securities with discretionary investment assets. ‥Agree ‥ Disagree
Article 26 (Dispute Settlement, Arbitration and Jurisdiction of Litigation)
Both parties agree that any dispute arising out of this Contract shall be resolved in accordance with the regulations governing disputes mediation procedures stipulated by SITCA. If such mediation fails, both parties agree that the dispute shall be submitted to arbitration in accordance with the Arbitration Law of the R.O.C. If there is no arbitration award rendered or a litigation is filed by either party hereto against other party for revocation of the arbitral award or for a new trial of the dispute because the arbitration award has been revoked by the court, both parties agree that the District Court of the place where the delivery place of Party B set forth in this Contract is located shall be the court of the first instance to exercise jurisdiction.
Article 27 (The Governing Law and Supplementary Provisions)
This Contract shall be governed by the law of the R.O.C. The validity, interpretation, performance and other relevant matters hereunder shall be governed by the law of the R.O.C.
In the event there is any amendment to laws related to securities investment trust or consulting, futures-related laws, articles of incorporation of SITCA or other relevant rules or regulations after execution of this Contract, unless otherwise provided by this Contract, the rights and obligations between parties hereto shall be subject to the provisions of the amended laws.
Matters not provided herein shall be subject to the provisions of the SITC Act, Futures Trading Act, the Management Regulations, the Operation Rules, articles of incorporation of SITCA, and other related laws and regulations of the place where the investment is made; in the absence of such provision in the above-mentioned regulations, the matters shall be subject to the agreement that is negotiated between parties of this Contract in accordance with the principle of good faith.
Party A (Individual):__________________________________________
Identification Card Number:________________________________________
Address:___________________________________________________
Party A (Juridical Person):______________________________________
Representative:______________________________________________
Identification Card Number of the Representative:_______________________
Business Registration Number:_________________________________
Address:____________________________________________________
Party B:_____________________________________________________
Representative:_______________________________________________
Business Registration Number:_________________________________
Address:____________________________________________________
[Date:]
Appendix 1: Discretionary Investment Prospectus and Risk Disclosure Statement
Appendix 2: Content and Assessment Methods of the Discretionary Investment Assets
Appendix 3: Basic Guidelines for Investment or Trading, Scope of Investment or Trading and Scope of Use of Idle Funds
Appendix 4: Information of Designated Investment Manager and His Deputy Agreed by Both Parties
Appendix 5: Copy of Mandate Contract
Appendix 6: Tripartite Agreement of Discretionary Investment
Appendix 7: Explanation on Relationship between Party B and the Custodian Institution
Appendix 8: Designation of Trading Counterparties and Disclosure of Relationship between Party B and the Securities Firm
Appendix 9: Method of Subscription for Securities with Consideration or Conversion of Securities
Appendix 10: Calculation, Method and Time of Payment of Remuneration for the Mandate
(Template I)
Discretionary Investment Services Contract Template
Party A: _______________________ (Name/Title)
Party B : ________________Corp., a business entity which has been approved by the Financial Supervisory Commission , Executive Yuan (the “FSC”) to carry out securities discretionary investment business and is validly existing under the law of the R.O.C. (Business License Number: _____________)
Pursuant to the Securities Investment Trust and Consulting Act (the “SITC Act”), Party B has already interpreted and delivered the provisions of this Contract (as defined below) and the “Discretionary Investment Prospectus and Risk Disclosure Statement” attached hereto as Appendix 1 to Party A seven (7) days prior to the execution of this Contract. In addition, Party B has thoroughly understood the financial capability, investment experiences, objectives and requirements of Party A and informed Party A of the trading characteristics of securities-related products, possible risks or legal restrictions associated with it. Taking the above matters into consideration, Party B has also consulted with Party A and deliberated on the amount or price of mandated investment assets as well as basic guidelines for investment or trading and the scope of investment or trading with Party A circumspectly. After confirming and pre-reading the content of this Contract, Party A agrees that Party B, based on its professional investment judgment and within the scope of authorization provided by this Contract, is fully authorized to conduct securities investment and securities-related products trading for Party A in accordance with this Contract, relevant laws as well as relevant rules and regulations stipulated by the Securities Investment Trust and Consulting Association?of the R.O.C. (the “SITCA”);Furthermore, Party A agrees to place the discretionary investment assets under the custody of the custodian institution for the same to carry out the account-opening for securities investment or securities-related products trading, custody of funds and certificates, payment of margins and premiums, trading settlement, account management, and other relevant matters in accordance with this Contract and the Mandate Contract entered into with the custodian institution.Both parties hereby agree as follows (this “Contract”):
Article 1 (The Content, Amount or Price of Discretionary Investment Assets)
The minimum amount of discretionary investment assets initially accepted by Party B from Party A shall be no less than NTD five million provided that such restrictions shall not apply where the discretionary investment assets of Party A are assets in investment link insurance special account or assets in annuity insurance special account. The types, volume, amount or price of the same have been agreed by both parties, and are set forth in Appendix 2.
The discretionary investment assets referred to in the preceding paragraph, and any proceed and profit derived from the investment and application of such assets during the term of this Contract shall belong to discretionary investment assets.
For the assets referred to in the preceding two paragraphs other than in cash, its value shall be calculated in accordance with the “Standards for Calculation of Discretionary Investment Assets Value” stipulated by the SITCA and based on the asset value determination date specified in Appendix 2.
Article 2 (Agreement of Basic Guidelines for Investment or Trading and Investment or Trading Scope and its Change)
Party B shall execute the investment, trading and use of discretionary investment assets with full discretion in accordance with the basic guidelines for investment or trading and within the investment or trading scope and the scope of use of the id |