Directions for Attending on Depository of Trust Fund Reserves of Investment and Trust Companies

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Title：

Directions for Attending on Depository of Trust Fund Reserves of Investmentand Trust Companies

Inactive Regulations

Announced Date： March 23, 1974

Amended Date： July 12, 2002

[Print]

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1.

1. The Central Bank of the Republic of China (Taiwan) (hereafter referred to as "the Bank") has established these Directions in accordance with Article 103 of the Banking Law of the Republic of China for the management of trust fund reserves deposited by investment and trust companies.

2.

2. Unless otherwise provided by other laws or regulations, each investment and trust company shall submit and deposit the trust fund reserve in accordance with these Directions for various trust funds based on Subparagraph 6, Article 101 of the Banking Law of the Republic of China.

The portion of the trust fund at the investment and trust company's discretion that exceeds the limit prescribed by laws or regulations redeposited at the Bank according to the regulations of Ministry of Finance, are exempt from the trust fund reserve requirements.

3.

3. The minimum reserve ratio for each type of trust fund shall be 15%. However, the minimum required reserve shall be no less than 20% of the company's total paid-in capital.

For those investment and trust companies newly commencing operation, the aforesaid required reserve shall be based temporarily on 20% of the company's paid-in capital for the first year. However, the basis shall be adjusted in accordance with the foregoing standard after the company has been in business for one year.

4.

4. The trust fund reserve shall be deposited in cash or in the following securities recognized by the Bank：

(1) All types of certificates of deposit issued by the Bank.

(2) Treasury bills.

(3) Government bonds and other securities issued by the government from all ranks.

(4) Bank debentures.

(5) Subordinated debentures issued by financial institutions rated at or above a certain issuer rating [level to be prescribed by a competent authority].

(6) Corporate bonds guaranteed by financial institutions rated at or above a certain rating [level to be prescribed by a competent authority].

(7) Corporate bonds at or above a certain issue rating [level to be prescribed by a competent authority].

(8) Other securities recognized by the Bank.

"Rated at/above a certain rating" as stated in Subparagraphs 5 to 7, preceding paragraph, shall mean one of the following situations:

(1) Rated at/above "A3" by Moody's Investors Service in long-term debt credit rating.

(2) Rated at/above "A-" by Standard & Poor's Corporation in longterm debt credit rating.

(3) Rated at/above "A-" by Fitch IBCA Ltd. in long-term debt credit rating.

(4) Rated at/above "twA-" by Taiwan Ratings Corp. in long-term debt credit rating.

5.

5. Where the trust fund reserve is deposited in the form of securitiesrecognized by the Bank, the valuation of securities shall be based on the face value.

6.

6. The trust fund reserve shall be audited and calculated monthly. The trust fund required reserve to be deposited for each month shall be the average daily balance of all trust funds multiplied by the reserve ratio provided in Direction 3.

The balances on the last business day shall be used to calculate the balances of various trust funds on a non-business day.

7.

7. The trust fund required reserve shall be attended on by month and the following statements shall be submitted to the Department of Banking of the Bank by each investment and trust company before the 10th day of the following month(shall be deferred to the next business day if it falls on a non-business day):

(1) Adjustment Formof Trust Fund Reserve(two copies, as in Format 1).

(2) Detailed Depository List of Recognizable Securities (five copies, as in Format 2).

(3) Calculation Table of Trust Fund for the entire month (as in Format 3)and two copies of daily journal for each business day.

8.

8. Each investment and trust company shall open either one or both the following trust fund reserve accounts at the Department of Banking of the Bank to deposit the trust fund reserve:

(1) Cash account.

(2) Securities account.

No interest shall be paid for either type of account stated in the preceding Paragraph.

9.

9. An investment and trust company shall report its annual financial statements to the Department of Banking of the Bank right after the statements have been submitted to and approved by the shareholders' meeting. This same procedure must be followed after the completion of any capital increase/decrease.

The limit on trust fund that each investment and trust company may take shall be temporarily based on the latest approved amount prior to the annual financial statements are reported.

10.

10. In the event that any investment and trust company fails to conduct depository of the trust fund reserve in accordance with these Directions, or the amount of trust fund actual reserve falls short of the statutory minimum standard, or any investment and trust company provides false information of a serious nature, the Bank may notify Ministry of Finance of the violation for disciplinary actions.