Mandate Contract Template
Party A : (Name/Title)
Party B : ______Bank, (Business License Number: ______), a financial institutionthat has been approved by the Financial Supervisory Commissionof theExecutive Yuan (”FSC”)to carry out custodian business, and has a credit rating at or above a prescribed level issued by an FSC-recognized credit rating agency.
WHEREAS, Party A intends to discretionarily entrust the ______Securities Investment _____Co., Ltd.(the “Investment Agent”),which had entered into a Discretionary Investment Services Contract with Party A, to make investment in securities in accordance with the “Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises” (“Management Regulations”).
THEREFORE, Party A agreesto mandate Party B, in accordance with the aforementioned Management Regulation, as a custodian institution for discretionary investment funds (assets) in accordance with thiscontract and relevant laws and regulations, and to open securities investment account, take custody of funds and certificates, trade and settle securities, conduct bookkeeping, exercise equity right, and conduct other relevant activities on behalf of Party A. After carefully reviewing this contract, both parties hereby agree to enter into and follow this contract as follows pursuant to the aforementioned Management Regulations, relevant laws and regulations:
Article 1 (The Discretionary Investment Funds (Assets))
The content of Party A’s discretionary investment funds (assets), including the type, volume, amountor the price has been confirmed by both parties and attached herein as Attachment 1. The aggregate value or amount is NT$______.
The value of the discretionary investment funds (assets) shall be calculated in accordance with the regulations provided by the Securities Investment Trust and Consulting Association(“SITCA”).
Party A shall entrust the total amount of discretionary investment funds (assets) to Party B for custody in one time when entering into this contract; the same rule applies when increasing the amount of the discretionary investment funds (assets). The discretionary investment funds (assets), and any yields and interests resulting from investing and utilization of such funds (assets) during the terms of this contract shallbelong to mandated investment funds (assets), and shall be placed under Party B’s custody in accordance with thiscontract.
Unless otherwise provided in this contract, Party A may notretrieve the discretionary investment funds(assets)at will at any time during the terms of this contract.
Article 2 (Investment and Utilization of Discretionary Investment Funds (Assets))
Except wherelaws and regulations provide otherwise, the investment objectives, the basic investment policy, the scope of investment, the scope of use ofthe idle funds，trading method, the authorization and limitation of the investment decisions, the authorization and limitation of instruction right of assets application, and other limitation shall all be stipulated under the Discretionary Investment Services Contract and attached hereto as the Attachment 2. The same rule applieswhen an amendment to the Discretionary Investment Services Contractis made.
Each transaction made under Discretionary Investment Services Contract shall be conducted by the Investment Agent as the trade agent for Party A, and the Investment Agent shall handle such transaction directlywith entrusted trading securities brokers or other transaction counterparties(the “Transaction Counterparties”).
Article 3 (Custody of Discretionary Investment Funds (Assets))
The discretionary investment funds (assets) shall be kept separately and independently from Party B’s property.
For custody of discretionary investment funds (assets), Party B shall set up an investment custodian account in accordance with relevant laws and regulations, state clearly in writingthe name of Party A and the Investment Agent, and establish the account name and the identification number. Party B shall segregate the funds (assets)and establish separate accounts for each discretionary investment funds (assets).
Unless otherwise provided by laws and regulations, with respect to the securities under Party B’s custody, Party B shall entrust the Centralized Securities Depository Enterprisesfor safekeeping of such securities.
Article 4 (The account-opening of the investment trading account)
The Transaction Counterparties with which the investment trading accountis opened forutilizationof discretionary investment funds (assets)shall be appointed by Party A or the Investment Agent in accordance with the Discretionary Investment Services Contract; more than one Transaction Counterparties may be appointed, and such opening shall be made by Party C and the Investment Agent together.
The opening of theinvestment trading account and theexecution of the “Account Opening and Brokerage Agreement” shall be conducted in Party A’s name; Party A authorizes Party B to carry out the above actions and deliver and accept each expression of intents and notifications on Party A’s behalf. The same rule shall apply if anamendment, cancellation, revocation or termination of the contract described under this Paragraph is made.
The content of the contract mentioned in the preceding Paragraph shall be negotiated by Party B, the Transaction Counterparties and the Investment Agent according to relevant laws and regulations; the same rule shall apply toanamendment or an termination by agreement of such contract.
Party B shalldeliver the copy of the contract to Party A after Party B completed the procedure of account-opening. The same rule shall apply when an amendment to the contract is made.
Article 5 (Change of the Transaction Counterparties)
Party A may give a one-month written notice to Party B and the Investment Agent of the change to the Transaction Counterparties; Party B shall carry out the related matter together with the Investment Agent according to provision of the preceding Article.
When the Transaction Counterparties is unable to continue the business due to a cancellation, revocation and termination of the Account Opening and Brokerage Agreement, asuspension or cease of business, a dissolution, a cancellation or abolishment of the license, or other reasons, Party B shall notify Party A and the Investment Agent immediately after knowing, unless the Investment Agent was already aware. When Party A and the Investment Agent designate other Transaction Counterparties in accordance with the Discretionary Investment Services Contract, the preceding Article shall apply.
Article 6 (Tradingsettlement)
Each trade that is carried out by the Investment Agent according to Article 2, within the scope of the types, quantity, amount and other restriction of the investment target stated in Attachment 2, shall be settled by Party B on behalf of Party A in accordance with this Article. The Investment Agent shall confirm the content of the deal with the Transaction Counterparties at the day of closing in order to issue a settlement instruction letter and notify Party B to carry out the settlement and clearance work; the settlement instruction letter shall clearly state the Transaction Counterparties, the trading target, theclosing time, the settlement time, method and conditions, the amount and quantity of settlement, and other matters for Party B to confirm the settlement voucher issued by the Transaction Counterparties. After confirmation by Party B that it is without error and it corresponds with the scope specified in Attachment 2, Party B shall carry out the settlement immediately and accordingly within the scope of utilizable fundsand certificates of the discretionary investment funds (assets). The abovementioned settlement voucher issued by the Transaction Counterparties shall be preserved by Party B on behalf of Party A.
If there are different investment trading accounts for the discretionary investment funds (assets) of Party A because such funds (assets) are mandated to different Investment Agents, suchfunds and certificates shall not be transferredamong different accounts when handling trade settlement.
Article 7(The handling of ultra vires trading)
When Party B considers that the content indicated in the settlement instruction letter of the preceding Article exceeds the limitation on the scope of settlementset out in Attachment 2(the “Unauthorized Trading”) or is subject to a dispute, Party B shall notify Party A immediately and follow Party A’s written notification. If Party B is unable to timely notify Party A or to receive the written instruction of Party A on time, and such dispute cannot be solved througha timely negotiation, Party B shall issue unauthorized trading noticesfor the unauthorized portion, stating clearly the reason and the detail content of the unauthorized trading, to Party A, the Investment Agent and the Transaction Counterparties, respectively,before 11:00 AM of the next business day of the deal closing day, and notify STICA as well.
With respect to the required funds and certificates for settlement of the Unauthorized Trading, the Investment Agent is responsible to remit such funds and certificates to the investment custodian account before the settlement date for the portion that is considered by Party B as the Unauthorized Trading, in accordance with the Discretionary Investment Services Contract and the Rules Governing Operation 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“OperationRules”), for Party B to conduct the settlement.
For funds and certificates bought or sold through Unauthorized Trading, the Investment Agent shall proceed adverse sell or purchase to write off and settle profit and loss according to Article 56 of the Operation Rules; Party B is liable for any loss and related trading taxes and fees arisen therefrom and all benefits incurred therefrom shall belong to Party A, which will be deducted from the proceeds from write-off; if there is any surplus after deduction, Party B shall return such surplus to the Investment Agent after the Investment Agent completed settlement and write-off procedure; if there the proceeds are insufficient for the deduction, the Investment Agent shall be responsible for making up the deficiency, and transfer it to the investment custodian account. If the Investment Agent fails to compensate taxes, fees and other loss after the write-off, Party B shall seek compensation from the Investment Agent on behalf of Party A.
After Investment Agent performs its duties according to Party B’s notice, if evidence shows that the Investment Agentdid not conduct any Unauthorized Tradingand it is attribute to Party B, Party B shall be liable for the indemnity.
The relevant contractsentered into between Party B (on behalf of Party A)and the securities firm or other Transaction Counterparties shall state clearly the Investment Agent is responsible for settlement and performance of the Unauthorized Trading and breach of the contractand Party Adoes not have any responsibility.
Article 8 (The collection and establishment of data)
Party B shall establish and collect the following data for carrying out the settlement and clearance work of the discretionary investment account:
1. The bank account number, account name, number of trading account, and the identification of settlement personnel etc. of the Transaction Counterparties.
2. The sample of trading target, including the government bond, financial bond, corporate bonds and other securities.
3. The signature and seal sample of the bond deposit book issuer, the short-term financial bill certification institution and theauthorized personnelof the bank term deposit certificate.
4. The sample signature and seal of the authorized personnel of the Investment Agent or/andthepassword.
The establishment and gathering of the data under Subparagraphs 2 and 3 of the preceding Paragraph may be flexibly adjusted according to the practice and operation.
Article 9 (Accounting affairs)
Party B shall handle account serving for trading and assets variation of Party A’s discretionary investment funds (assets) every day according to rules of Financial SupervisoryCommission, STICA, and other relevant laws and regulations; based on needs of account serving and strengtheninginternal control, Party B shall also cooperate with the Investment Agent to compile or provide various kinds of books and tables.
Party B shall compile a detailed table of securities in stock in connection withParty A’s custodian account (including a list of the realization of stock dividends) and a table of the balance of the bank deposit as of the last business day on such day of every month, and deliver such tables to the Investment Agent within five business days of the next month. Besides, Party B shall cooperate with Party A and the Investment Agent‘s request to inquire or check the trading record of discretionary investment funds (assets) and the status of assets.
Article 10 (Ownership of yields and interests resulting from the discretionary investment funds (assets))
During the terms of this contract, anyyields, dividends, stock dividends, and free stock grantor other interests resulting from thediscretionary investment funds (assets)shall all becollected by Party B by means ofthe book-entry orremittance by the issuer or the Centralized Securities Depository Enterprisesin accordance with the Operating Rules, with a written notification to Party B.
The yields, dividends, stock dividends, and free stock grant or other interests resulting from the discretionary investment funds (assets) shall not be distributed during the terms of this contract.
Party B shall handle tax matters arisen fromthe proceeds of the preceding Paragraph according to relevant laws and regulations.
Party A agrees to the deduction of the expenses associated with the remittance of cash dividendsfrom the cash dividends.
Article 11 (The exercise of equity rights)
The right to attend the shareholders’ meeting and the right to vote arisen from the shares of the issuing company held by the investment custodial account shall be exercised by Party A.
If Party B receives documents relevant to the exercise of equity rights, such documents shall be delivered to Party A within three days after receipt.
Article 12(The care of a prudent person)
Party B shall exercise the care of a prudent person in performing this contract in accordance with this contract and relevant laws and regulations. The same rule applies for the period after the termination of this contract and before Party B’s returnof the discretionary investment funds (assets).
Party B shall notify Party A and STICA immediately when Party B discovers that the Investment Agent breaches the Discretionary Investment Service Contract.
When the discretionary investment funds (assets) mandated by Party A isattached, detained or subject to a compulsory enforcement based on a court order, Party B shall notify Party A and the Investment Agent immediately when Party B has knowledge of such event; except for the situation thatis attributable to the Investment Agent, Party A shallperform the obligation of settlement by itself.
Except for a breach of the obligation set forth in the preceding three Paragraphs, Party B has no responsibility for the profit or loss of the discretionary investment funds (assets).
Article 13 (Reporting Obligation)
Unless otherwise provided by laws,regulations or this contract, Party B shall deliver to Party A a detailed table of the trade securities and a table of the assets in stock in connection with the discretionary investment funds (assets) for the previous month, within five business days after the end of every month by means stated in Article 20.
Article 14 (Duty of Confidentiality)
Party B and its responsible persons or employees shall have the duty of confidentiality in connection with Party A’s materials and information; unless otherwise provided by relevant laws and regulations and this contract, such materials and information may not be disclosed to any third party.
Article 15(Compensation for Mandate)
The method of calculation of Party B’s compensation and the manner and time of payment are detailed in Attachment 3.
Article 16 (The expenses and fees related to the mandate)
The following expenses and fees shall be borne by Party A, and be paid from the discretionary investment funds by Party B:
1. Remunerations of the Investment Agent in accordance with the terms of the Discretionary Investment ServicesContract and the written instruction of the Investment Agent, examined and confirmed by Party B.
2. Party B’s compensation for mandate.
3. The service charge, securities transaction tax and other direct cost or necessary expenses associated with the acquisition or disposal of the discretionary investment funds (assets).
4. The taxes payable in connection with the discretionary investment funds (assets).
5. The debt undertaken by Party B for the discretionary investment funds (assets) or handling the mandated affairs.
6. Other necessary expenses and fees for performance of this contract.
Party B shall immediately notify Party A when Party B has any doubt aboutthe amount set forth in the preceding Paragraph and act in accordance with Party A’s instruction.
Article 17 (Lien)
When the discretionary investment funds (assets) are insufficient to pay off the compensation, fee, tax or debt prescribed in the preceding Article, Party B may request Party A to compensate or pay off the debt or provide appropriate guarantee, and may refuse to return the discretionary investment funds (assets) to Party A before its rights are satisfied.
Article 18 (Effective Date and Term of this Contract)
The Contract shall become effective whenParty A consigns the discretionary investment funds (assets) detailed in the Attachment 1to Party B. Provided, however, Party B may not conduct settlement in accordance with in Article 5 hereof until both the Discretionary Investment Services Contract and the Tripartite Agreement of Discretionary Investment are validly established and could be truly implemented.
The term of this contract shall be ____ years from____ to ____ . If Party B advises Party A in writing that it intends to renew thiscontract a month prior to the expiration of this contract, and Party A does not have any objection, this contract shall be deemed as continuously valid for another one year with the same terms. Same applies to subsequent expiration of this contract.
Article 19 (Currency)
All account books, income, expense, the total value of the discretionary investment funds (assets) and relevant statements and report for the discretionary investment funds (assets) shall be calculated or compiled in NT dollars, and the decimal under NT$1 shall be rounded off.