The Financial Supervisory Commission (hereinafter, the "FSC") issued the Jin-Guan-Tou-1040009628 Circular of March 27, 2015 (hereinafter, the "Circular") to communicate that if the amount of an offshore fund invested by domestic investors is obviously incomparable to the scale and depth of the asset management business operated by such offshore fund institution in Taiwan, a general distributor's application for placing and distributing offshore funds may be rejected or denied in accordance with Article 30, Subparagraph 8 of the Administrative Rules for Offshore Funds.

Article 30, Subparagraph 8 of the Administrative Rules for Offshore Funds provides: "A general distributor applying (reporting) to place and distribute offshore funds may be rejected or denied by the Commission in any of the following circumstances: …(8) other circumstances deemed necessary by the Commission for the protection of public interest." 」

According to the Circular, for a general distributor retained by an offshore fund institution to act as its agent for the placement and distribution of its funds within the territories of the Republic of China, if the amount of its offshore funds (the offshore funds of its affiliates will be combined for calculation) invested by domestic investors reaches a specific percentage of all offshore funds invested by domestic investors, such offshore fund institution shall set up its asset management presence in Taiwan with a specific scale and depth of its asset management business to strengthen the protection of Taiwan's offshore fund investors.

It was further pointed out in the Circular that if the amount of offshore funds invested by domestic investors is obviously incomparable to the scale and depth of the asset management business of the offshore fund institution in Taiwan and no rectification is made within a period requested by the FSC, the FSC may reject or deny the placement and distribution application (reporting) for its offshore funds for the sake of protecting public interest in accordance with Article 30, Subparagraph 8 of the Administrative Rules for Offshore Funds.