AMENDED AND RESTATED INVESTMENT CONTRACT
AMONG
INTERNATIONAL INVESTMENT TRUST COMPANY LTD.
CENTRAL TRUST OF CHINA
AND
THE R.O.C. TAIWAN FUND
November 20, 2000
AMENDED AND RESTATED INVESTMENT CONTRACT
----------------------------------------
WHEREAS, The Taiwan (R.O.C.) Fund (the "Fund") exists pursuant
to a securities investment trust contract, effective September 29, 1983, as
twice supplemented, among International Investment Trust Company Ltd. and the
Central Trust of China (the "Securities Investment Trust Contract"), which
defines the rights and obligations of the unitholders of the Fund; and
WHEREAS, pursuant to an extraordinary resolution adopted on
April 18, 1989, the unitholders of the Fund authorized that the Fund be
reorganized pursuant to which The R.O.C. Taiwan Fund, a Massachusetts business
trust and an investment company registered under the United States Investment
Company Act of 1940, as amended (the "Unitholder"), became the unitholder of the
Fund; a Massachusetts business trust is an association of persons organized by
the execution of a declaration of trust under which the beneficial interest is
divided into transferable interests for the purpose of carrying on a common
project for gain; and
WHEREAS, pursuant to such reorganization, an Amended and
Restated Investment Contract superseded the Securities Investment Trust
Contract; and
WHEREAS, pursuant to extraordinary resolutions adopted on May
28, 1991, the Unitholder authorized the reduction of the fee payable to
International Investment Trust Company Limited (the "Manager") out of the assets
held in the Fund and the entry into of an Amended and Restated Investment
Contract, dated July 15, 1991 (the "1991 Investment Contract"), by and among the
Unitholder, the Manager and Central Trust of China (the "Custodian"), pursuant
to which such fee reduction was effected; and
WHEREAS, pursuant to resolutions adopted by the Board of
Trustees of the Unitholder on June 2, 1993, the Unitholder authorized the
amendment of the 1991 Investment Contract with respect to certain aspects of the
relationship between the Custodian and the Fund; and
WHEREAS, pursuant to extraordinary resolutions adopted on May
31, 1996, the Unitholder authorized the further reduction of the fees payable to
the Manager and the Custodian out of the assets held in the Fund and the entry
into a new investment contract (the "1996 Investment Contract"); and
WHEREAS, pursuant to resolutions adopted by the Board of
Trustees of the Unitholder on February 22, 2000, the Unitholder authorized the
further reduction of the fees payable to the Manager and Custodian out of the
assets of the Fund and the amendment of the 1996 Investment Contract in order to
reflect such changes; and
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WHEREAS, pursuant to resolutions adopted by the Board of
Trustees of the Unitholder on September 15, 2000, the Unitholder authorized the
further amendment of the 1996 Investment Contract in order to reflect certain
regulatory changes relating to custodial matters, and the Custodian has agreed
to such changes;
NOW, THEREFORE, this Amended and Restated Investment Contract
is hereby amended and restated to read in its entirety as follows:
1. INTRODUCTION AND POLICY
1.1 The Taiwan (R.O.C.) Fund (the "Fund") is a securities
investment trust fund established on October 27, 1983 under the laws of the
Republic of China (the "R.O.C."), and reorganized and approved by the Securities
and Exchange Commission, which is now the Securities and Futures Commission (the
"R.O.C. SFC"), of the Ministry of Finance of the R.O.C. on May 19, 1989 for the
exclusive benefit of The R.O.C. Taiwan Fund, a Massachusetts business trust (the
"Unitholder"), and a registered investment company under the United States
Investment Company Act of 1940, (the "1940 Act"), on the basis of this amended
and restated securities investment trust contract (the "Amended and Restated
Investment Contract") among International Investment Trust Company Limited (the
"Manager") of 00xx Xxxxx, 000 Xx Xxxxx Xxxxx Xxxx, Xxxxxx, Xxxxxx, R.O.C.,
Central Trust of China (the "Custodian") of 49 Xx Xxxxx Street, Section 1,
Taipei, Taiwan, R.O.C., and the Unitholder of c/o Citigate Dewe Xxxxxxxx New
York, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Xxxxxx Xxxxxx of America. This
Amended and Restated Investment Contract, together with relevant laws and
regulations of R.O.C., shall govern the relationship, which is contractual (the
Fund not being a separate legal entity), among the Manager, the Custodian and
the Unitholder.
1.2 The Fund's investment objective is long-term capital
appreciation through investment primarily in publicly traded equity securities
of R.O.C. issuers. The Fund intends to spread risk by investing in various
industries and issuers. The Fund may also invest in debt securities of R.O.C.
issuers (including the R.O.C. government). It is an investment policy of the
Fund that normally at least 70% of the total assets held in the Fund will be
invested in securities of R.O.C. issuers (including the R.O.C. government). For
temporary defensive purposes during periods in which changes in economic,
financial or political conditions make it advisable, the Trust may ask the
Manager to reduce its holdings in equity securities and increase its holdings in
(i) long-term or short-term debt securities issued by the R.O.C. government, its
agencies or instrumentalities, or other private issuers in the R.O.C., (ii)
certificates of deposit issued by banks or other financial institutions in the
R.O.C. or (iii) cash, or any combination of the foregoing, in each case to the
extent deemed prudent by the Manager.
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2. BASIC OBLIGATIONS AND RIGHTS
2.1 The Manager shall:
(a) be obliged to manage the investment of the
assets constituting the Fund held by the Custodian for the exclusive benefit of
the Unitholder in good faith and to the best of its ability and without gaining
any advantage for itself or any of its Connected Persons (as defined in Article
17 below) thereby except as expressly provided in this Amended and Restated
Investment Contract, in accordance with the investment objective and
restrictions as provided in Article 10 below and subject to and in accordance
with any directions or guidelines made or established by the Unitholder which
are not in contravention of the R.O.C. laws and regulations;
(b) be obliged to account to the Unitholder for
any loss in value of assets held in the Fund where such loss has been caused by
its wilful misfeasance, bad faith or gross negligence in the performance of its
duties or its reckless disregard of its obligations and duties under this
Amended and Restated Investment Contract;
(c) be responsible to the Unitholder for the
acts and omissions of all persons to whom it may delegate any of its functions
as Manager as if they were its own acts and omissions;
(d) promptly report to the R.O.C. SFC and to the
Unitholder any matter which in the opinion of the Manager is an actual or
anticipated breach by the Custodian of any of the provisions of this Amended and
Restated Investment Contract or of any relevant provisions of the laws and
regulations of the R.O.C.;
(e) to the extent permitted by the laws and
regulations of the R.O.C., take such action to enforce the obligations of the
Custodian, on behalf of and for the benefit of the Unitholder, under this
Amended and Restated Investment Contract as it shall think fit or as shall from
time to time be required by the R.O.C. SFC or the Unitholder;
(f) perform its obligations under this Amended
and Restated Investment Contract so as to (i) comply with all laws and
regulations of the R.O.C. and of the United States applicable to the Manager and
the Unitholder and (ii) permit the Unitholder to qualify as a regulated
investment company under the applicable provisions of the United States Internal
Revenue Code of 1986, as amended (the "Code"), and to take such steps as the
Unitholder may deem necessary or desirable pursuant to such provisions of the
Code (including, without limitation, the making of distributions); and
(g) (i) issue certificates in respect of units
issued and cancel certificates in respect of units redeemed and (ii) implement
the procedures for issuing and
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redeeming units, all in accordance with the relevant provisions of this Amended
and Restated Investment Contract and the laws and regulations of the R.O.C.
2.2 The Custodian shall:
(a) (i) be responsible absolutely and without
qualification to the Unitholder for the safekeeping of all assets held in the
Fund (aside from the assets which are entrusted to a central securities
depository company for safekeeping in accordance with Article 2.2(e) below) at
all times and of all amounts from time to time set aside out of the assets held
in the Fund and held for the purposes of distribution in accordance with Article
13 of this Amended and Restated Investment Contract, (ii) shall indemnify the
Unitholder in the event of any loss of such assets and amounts resulting from a
breach of its duties hereunder and (iii) shall insure such assets and amounts
adequately against loss, but the Custodian shall not be responsible for the
willful or negligent default (including non-payment or failure to deliver
securities) by securities brokers or other persons selected by the Manager and
dealt with by the Custodian, unless such default is contributed to by the
Custodian;
(b) comply with the instructions of the Manager
on behalf of the Unitholder given from time to time pursuant to this Amended and
Restated Investment Contract in relation to the disposition of the assets held
in the Fund from time to time and the exercise of rights attaching thereto
except where, in the opinion of the Custodian, to do so would or might involve a
breach of this Amended and Restated Investment Contract or of any relevant
provisions of the laws and regulations of the R.O.C., in which case the
Custodian shall immediately notify the Manager and the Unitholder;
(c) collect and present for payment on a timely
basis and hold as part of the assets held in the Fund all dividends and other
payments and assets which the Fund shall be entitled by applicable law or custom
or otherwise;
(d) promptly report to the R.O.C. SFC and to the
Unitholder any matter which in the opinion of the Custodian is an actual or
anticipated breach by the Manager of any of the provisions of this Amended and
Restated Investment Contract relating to R.O.C. laws and regulations or of any
relevant provisions of the laws and regulations of the R.O.C.; and
(e) be at liberty to open an account with the
central securities depository company incorporated with the approval of the
Ministry of Finance (the "Depository Company") and to entrust the Depository
Company with the safekeeping of the securities held in the Fund in accordance
with the Custodian's obligations herein. The safekeeping costs chargeable by the
Depository Company shall be paid by the Custodian, PROVIDED, HOWEVER, that the
Custodian shall not be held responsible for losses to the Fund resulting from a
willful or negligent default by the Depository Company unless the Custodian
contributed to such default, but shall on behalf of the Fund claim the
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indemnity for such losses, with the expenses incurred from the claim to be
reimbursed out of the assets held in the Fund. The Custodian has provided the
Unitholder and Manager with an analysis of the custody risks associated with
maintaining assets with the Depository Company and shall monitor such risks on a
continuing basis and shall promptly notify to the Manager and, if requested, the
Unitholder of any material change with respect thereto, including but not
limited to: (1) the Depository Company's obligation to the Fund to indemnify the
Fund and insure the Fund's assets held through the Depository Company in the
event of loss; (2) the Fund's right that its assets not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the Depository
Company except a claim of payment for their safe custody or administration; (3)
the Fund's right that beneficial ownership of its assets in the hands of the
Depository Company will be freely transferable without the payment of money or
value other than for safe custody or administration; (4) the adequacy of the
Depository Company's records that are maintained to identify the assets
belonging to customers of the Custodian; and (5) the right of the Fund's public
accountants to be given access to the records or confirmations of the contents
of records of the Depository Company, the Depositary Company being obligated to
reply. In performing the duties specified in the preceding sentence, the
Custodian has exercised and shall exercise at least reasonable care, prudence
and diligence; and if the Custodian concludes, or is advised by the Manager or
the Unitholder that the Unitholder has concluded, that the custody arrangement
for maintenance of securities held in the Fund with the Depository Company no
longer provides reasonable safeguards against the custody risks associated
therewith, the Custodian shall withdraw, or arrange for the withdrawal of, such
securities from the Depository Company as soon as reasonably practicable.
The Custodian shall not be responsible for any investment loss
of assets held in the Fund and shall have no other responsibilities to the
Manager or the Unitholder other than those provided in this Article 2.2.
2.3 The Unitholder shall have the right at all times to
enforce against the Manager the obligations of the Manager, and against the
Custodian the obligations of the Custodian, under this Amended and Restated
Investment Contract.
2.4 The proper costs incurred by the Manager in enforcing
the obligations of the Custodian shall be borne out of the assets held in the
Fund. The Manager shall be entitled to an indemnity out of the assets held in
the Fund against any claims incurred or suffered by it as a result of its acting
as the Manager under this Amended and Restated Investment Contract which are not
attributable to its wilful misfeasance, bad faith or gross negligence in the
performance of its duties or its reckless disregard of its obligations and
duties under this Amended and Restated Investment Contract ("Disabling
Conduct"), but only to the extent that such claims are not borne by any person
other than the Manager, and only to the extent that there has been (1) a final
decision on the merits by a court or other body before whom the proceeding was
brought that the Manager was not liable by reason of Disabling Conduct or (2) in
the absence of
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such a decision, a reasonable determination, based upon a review of the facts,
that the Manager was not liable by reason of Disabling Conduct by (a) the vote
of a majority of a quorum of trustees of the Unitholder who are neither
"interested persons" as defined in Section 2(a)(19) of the 1940 Act nor parties
to the proceeding or (b) an independent legal counsel in a written opinion.
2.5 The Custodian shall be indemnified by the Fund
against any claims incurred or suffered by it as a result of its acting as the
Custodian under this Amended and Restated Investment Contract which are not
attributable to its wilful misfeasance, bad faith or gross negligence in the
performance of its duties or its reckless disregard of its obligations and
duties under this Amended and Restated Investment Contract, but only to the
extent such claims are not borne by any person other than the Custodian.
2.6 The assets held in the Fund will not be subject to
any right, charge, security interest, lien or claim of any kind in favor of the
Custodian or its creditors; beneficial ownership of the assets held in the Fund
will be freely transferable to another Custodian without payment of money or
value to the Custodian; the Custodian will maintain adequate records identifying
the assets held in the Fund as being held for the benefit of the Unitholder; the
Unitholder's independent public accountants will be given access to such records
during normal business hours upon request; and the Manager (acting on behalf of
the Unitholder) will receive periodic reports from the Custodian with respect to
the safekeeping of the assets held in the Fund, including, but not limited to,
notification of any transfer of assets to or from the Fund.
2.7 The Custodian represents and warrants to the Manager
and the Unitholder that it is a banking institution established under R.O.C.
law, is regulated as such by the R.O.C. government or an agency thereof, and had
shareholder's equity in excess of the New Taiwan Dollar equivalent of
US$200,000,000 as of the close of its fiscal year ended June 30, 1996.
3. FUND ASSETS
3.1 All assets held in the Fund shall at all times be
held by the Custodian and, where in registered form, shall be registered in the
name of "Special Account for The R.O.C. Taiwan Fund under the Custody of the
Central Trust of China" or in such other name as may be consented to by the
R.O.C. SFC, the Unitholder and the Manager.
3.2 After the reorganization of the Fund, a new
certificate evidencing units of the Fund (the "Units") was issued to the
Unitholder to evidence its acquisition of the entire beneficial interest in the
assets constituting the Fund and to replace the units issued to the unitholders
of the Fund. The number of Units issued to the Unitholder was equal the number
of units thus replaced.
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3.3 The provisions of Article 18-2 of the Securities and
Exchange Law of the R.O.C. shall apply to the assets held in the Fund, and such
assets shall not form part of the assets of the Custodian or of the Manager. To
the extent that legitimate claims made by third parties against the assets
constituting the Fund exceed the value of those assets, the satisfaction of such
claims shall be the responsibility of the Unitholder and not the Manager or
Custodian.
3.4 The Custodian shall not dispose of assets held in the
Fund except:
(a) in accordance with instructions received by
it from the Manager in relation to:
(i) the investment or realization of
assets for the account of the Fund;
(ii) the payment or discharge of other
amounts or liabilities properly
payable or dischargeable out of the
assets held in the Fund in
accordance with the provisions of
this Amended and Restated Investment
Contract;
(iii) the payment of amounts due to the
Unitholder by way of any
distribution in accordance with the
provisions of this Amended and
Restated Investment Contract,
including but not limited to any
distribution referred to in Article
2.1(f)(ii) above; or
(iv) the payment of amounts due to the
Unitholder upon due redemption of
Units;
(b) to the Unitholder upon liquidation and
distribution of assets held in the Fund; or
(c) as otherwise required by any mandatory
provision of law.
4. UNITS
4.1 Ownership of the assets constituting the Fund by the
Unitholder shall be evidenced by beneficial certificates representing one or
more Units (the "Certificates") in the form approved by the R.O.C. SFC and
signed by the Manager and the Custodian.
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4.2 The initial Certificate issued to the Unitholder
after the reorganization indicates the number of Units issued to the Unitholder
in accordance with Article 3.2 above.
4.3 Each Unit issued in accordance with Article 3.2 above
represents the Net Asset Value (as determined in accordance with Article 5
below) per unit of the Fund as of the close of business on May 19, 1989.
4.4 The Manager and the Custodian shall each be
responsible for the maintenance of a record of the number of Units held from
time to time by the Unitholder, in accordance with the relevant provisions of
this Amended and Restated Investment Contract and the laws and regulations of
the R.O.C.
4.5 Subsequent to the initial issuance of Units in
accordance with Article 4.3 above, each additional Unit issued shall, subject to
Article 7 below, be issued at a price per Unit (the "Net Asset Value per Unit")
calculated, as at the Valuation Date (as defined in Article 5.2 below)
immediately following the date of receipt by the Manager of the application for
the issuance of such additional Unit, by dividing (a) the Net Asset Value of the
Fund by (b) the number of outstanding Units (as determined in accordance with
Article 5.2(g) below).
4.6 Payment for each Unit shall be made in cash to the
Custodian in advance of the issuance of such Unit.
4.7 Units shall not he transferable by the Unitholder
except by redemption in accordance with Article 6 below.
5. VALUATION
5.1 The "Net Asset Value" of the Fund shall be the value
of the assets held in the Fund less its liabilities (including such provisions
and allowances for contingencies as the Manager may think appropriate in respect
of the costs and expenses payable out of the assets held in the Fund in
accordance with Article 8 below).
5.2 The Net Asset Value of the Fund and the Net Asset
Value per Unit shall be calculated by the Manager as at each business day in
Taipei (a "Valuation Date") by reference to (INTER ALIA) the following criteria:
(a) the value of assets held in the Fund, other
than cash or assets (not specified in (i) to (iv) below) considered by the
Manager to be the effective equivalent of cash, shall be determined:
(i) where the assets are listed and
dealt in on the Taiwan Stock
Exchange, by reference to the last
dealt price on such Exchange on the
relevant Valuation Date or, if there
is no last dealt price on
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such Exchange on that date, the last
dealt price on such Exchange
immediately before the relevant
Valuation Date;
(ii) where the assets are bonds,
debentures or financial instruments
not listed and dealt in on the
Taiwan Stock Exchange, by reference
to the valuation thereof on the
relevant Valuation Date or the
latest available valuation by the
Stock Brokers' Association of
Taipei, or, if there is no such
valuation, at their par value plus
interest accrued but unpaid to the
relevant Valuation Date;
(iii) where the assets are money market
instruments, at cost plus interest
accrued but unpaid from the date of
purchase to the relevant Valuation
Date; and
(iv) in all other cases, by reference to
valuation procedures adopted by the
Unitholder and consistent with
guidelines from time to time laid
down by the R.O.C. SFC;
(b) in the case of any interest-bearing
investment or other investment on which income is accruing, not included within
(a)(ii) or (a)(iii) above, there shall be included in the value thereof all
interest or other income accruing up to the Valuation Date;
(c) cash, the effective equivalent of cash,
accounts receivable and accounts prepaid shall be included at the full face or
market value thereof;
(d) there shall be made such allowance (if any)
as the Manager may consider appropriate in the case of any asset that the
Manager considers may not be fully recoverable;
(e) unperformed or partially performed
agreements for the acquisition or disposition of assets shall be valued as if
they had been completely performed;
(f) liabilities shall include the amount of any
fee payable to the Custodian or the Manager in accordance with Article 9 below
and accrued at or accruing to the relevant Valuation Date but remaining unpaid;
(g) the number of outstanding Units shall
include Units scheduled to be redeemed by reference to the relevant Valuation
Date but shall exclude Units scheduled to be issued by reference to that
Valuation Date;
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(h) there may be excluded from the value of any
assets in respect of the acquisition or disposition of which brokerage, duties
and other similar costs would be paid out of the assets held in the Fund if such
assets had been acquired or disposed on the relevant Valuation Date an amount
not exceeding the Manager's bona fide estimate of the amount of such costs which
would have been so payable; and
(i) currency conversion between U.S. Dollars and
N.T. Dollars shall be made at the closing exchange rate in the R.O.C. on the
relevant Valuation Date.
If in any respect extraordinary circumstances render it
impracticable or inappropriate to conduct a valuation on the basis prescribed
herein, the Manager shall to the extent necessary follow other valuation
procedures consistent with guidelines from time to time laid down by the R.O.C.
SFC.
6. REDEMPTION OF UNITS
6.1 The Unitholder may (subject to Article 7 below and
relevant laws and regulations of the R.O.C. governing foreign investment and
foreign exchange control) redeem all or any of its Units by delivering the
Certificate(s) in respect of the relevant Unit(s) together with an appropriate
request for redemption to the Manager at its principal office in Taipei. The
redemption price shall be the Net Asset Value per Unit (calculated in accordance
with Article 4.5 above) as at the next Valuation Date immediately following the
date of receipt by the Manager of the relevant redemption request and
Certificate(s).
6.2 Redemption proceeds shall (subject to Article 7
below) be paid out not later than five days after the next Valuation Date
following the date of receipt by the Manager of the relevant redemption request
and Certificate(s).
6.3 When the Unitholder requests redemption of only part
of the Units comprised in a Certificate, the Manager shall (subject to Article 7
below), in addition to paying out the redemption proceeds in accordance with
Article 6.2 above, issue a new Certificate in respect of the relevant Units not
redeemed not later than 14 days after the next Valuation Date following the date
of receipt by the Manager of the relevant redemption request and the relevant
Certificate.
7. SUSPENSION OF VALUATION, ISSUES,
REDEMPTIONS AND PAYMENTS
7.1 The Manager may, subject to R.O.C. SFC approval,
temporarily suspend valuation of the assets held in the Fund and calculation of
the Net Asset Value in the following events:
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(a) when the Taiwan Stock Exchange or the R.O.C.
foreign exchange market is closed otherwise than for ordinary holidays;
(b) in the case of breakdown of the means of
communication normally used for the valuation of any material portion of the
assets held in the Fund;
(c) where currency exchange or securities
trading is restricted; or
(d) other special events preventing the
acceptance of redemption requests or payment of redemption price.
7.2 During any period when valuation is suspended, no
issuance or redemption of Units shall be made, and no payment shall be made of
any redemption proceeds payable but unpaid in respect of any Units already
redeemed.
8. EXPENSES
8.1 The following items shall be the only costs and
expenses payable out of the assets held in the Fund:
(a) the acquisition price and brokerage, stamp
duty and similar direct acquisition costs of assets acquired for the account of
the Fund;
(b) brokerage, stamp duty and similar direct
disposition costs arising on the disposition of assets held in the Fund;
(c) all stamp and similar duties and charges
payable from time to time in respect of assets held in the Fund;
(d) all necessary or appropriate expenses
incurred in relation to the registration of any assets in the name of the
Custodian for the benefit of the Fund;
(e) all necessary or appropriate expenses
incurred in the collection and distribution of income derived from assets held
in the Fund;
(f) all fees and expenses of any auditors or
legal counsel of the Fund;
(g) all taxes payable in respect of income
(including stock dividends) of, the holding of or dealings with assets held in,
the Fund;
(h) all necessary or appropriate expenses,
including postage, telex and telephone costs, incurred by the Custodian in
connection with the acquisition or disposition of any assets held in the Fund;
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(i) any compensation payable to the Manager or
the Custodian in accordance with Article 9 below;
(j) legal fees and expenses incurred in
connection with the interpretation, amendment or enforcement of this Amended and
Restated Investment Contract;
(k) costs relating to the publication of Net
Asset Value per Unit or the Net Asset Value, and the printing, mailing and
similar costs for any regular report sent to the Unitholder;
(l) all attestation fees incurred in connection
with the issuance of Certificates;
(m) all necessary or appropriate expenses
incurred by the Unitholder in connection with its organization and initial
receipt of Units, any public offering of its shares to investors in the United
States or elsewhere, the listing of its shares on any stock exchange, its
registration and operation as a management investment company under the 1940 Act
and its qualification as a regulated investment company under the Code; and
(n) all other necessary or appropriate costs,
fees and expenses incurred by the Manager or the Custodian on behalf of the Fund
or the Unitholder in the course of performing their respective duties (including
indemnification costs, the payment of which is provided for in Articles 2.2(e),
2.4 and 2.5); PROVIDED that the Manager and the Custodian shall each bear all
expenses associated with the performance of its duties hereunder (including
employee salaries and overhead) other than expenses to be paid out of the assets
held in the Fund as specifically provided in this Article 8, and the Manager
shall bear the proper fees and expenses of those officers and trustees of the
Unitholder that are "interested persons" (as defined in the 0000 Xxx) of the
Manager.
9. CUSTODIAN AND MANAGEMENT FEES
9.1 The remuneration payable to the Custodian and the
Manager, respectively, out of the assets held in the Fund shall be fees accruing
on a daily basis at the applicable rates as set forth below, accruable on the
Net Asset Value as determined on each Valuation Date, payable in NT$ in arrears
on the last Valuation Date in each calendar month.
9.2 From and after July 1, 2000, the amount of
remuneration payable to the Manager shall be calculated at the following
applicable rates:
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AMOUNT OF NET ASSET VALUE PERCENTAGE FEE
--------------------------------------------------------------------------------
Up to NT$6,000,000,000 1.35%
--------------------------------------------------------------------------------
In excess of NT$6,000,000,000 up to NT$8,000,000,000 1.15%
--------------------------------------------------------------------------------
In excess of NT$8,000,000,000 up to NT$10,000,000,000 0.95%
--------------------------------------------------------------------------------
In excess of NT$10,000,000,000 0.75%
--------------------------------------------------------------------------------
9.3 From and after July 1, 2000, the amount of
remuneration payable to the Custodian shall be calculated at the following
applicable rates, provided that the minimum remuneration per annum shall be no
less than NT$2,400,000:
--------------------------------------------------------------------------------
AMOUNT OF NET ASSET VALUE PERCENTAGE FEE
--------------------------------------------------------------------------------
Up to NT$6,000,000,000 0.15%
--------------------------------------------------------------------------------
In excess of NT$6,000,000,000 up to NT$8,000,000,000 0.13%
--------------------------------------------------------------------------------
In excess of NT$8,000,000,000 up to NT$10,000,000,000 0.11%
--------------------------------------------------------------------------------
In excess of NT$10,000,000,000 0.09%
--------------------------------------------------------------------------------
10. OBJECTIVE AND RESTRICTIONS
10.1 In accordance with the investment objective set forth
in Article 1.2 above, the assets held in the Fund shall be invested in
securities and money market instruments denominated in NT$ and in NT$ cash and
banking and similar accounts and, if and when permitted by the laws and
regulations of the R.O.C., in such money market instruments or cash or banking
or similar accounts, denominated in foreign currencies, as may be available in
the R.O.C.
10.2 The Manager shall ensure that the Fund shall not:
(a) invest in equity securities which, at the
time the investment is made, are not listed and traded on the Taiwan Stock
Exchange, except that the Fund may invest in such securities if R.O.C. law is
changed to so permit;
(b) invest in partnership interests;
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(c) effect any transaction of securities between
the trust funds under its management;
(d) apply the assets of the Fund to purchase
beneficial certificates issued by the Manager unless the beneficial certificates
are redeemed by investors or repurchased for the purpose of closing the Fund;
(e) invest in securities issued by securities
investment trust funds in the R.O.C.;
(f) borrow money (except to the extent that
amounts advanced by the Manager in connection with the reorganization referred
to in the preamble might be considered borrowing money) or pledge its assets
held pursuant to the Amended and Restated Investment Contract;
(g) engage in short sales of securities, write
put and call options or engage in purchases of securities on margin;
(h) make any loan (other than by bank deposits
or by investment in debt securities or in repurchase agreements) or enter into
any guaranty of any loan;
(i) purchase any security (other than
obligations of the United States government or its agencies or
instrumentalities), if as a result of such purchase (i) as to 75% of the total
assets held under the Amended and Restated Investment Contract (taken at their
then current value), more than 5% of the total assets held under the Amended and
Restated Investment Contract (taken at their then current value) would then be
invested in the securities of a single issuer, (ii) as to the remaining 25% of
the total assets held under the Amended and Restated Investment Contract (taken
at their then current value), more than 10% of the total assets held under the
Amended and Restated Investment Contract (taken at their then current value)
would then be invested in the securities of a single issuer (except that the
Fund may invest up to 25% of its assets in obligations of the R.O.C. or its
agencies or instrumentalities), (iii) more than 10% of the outstanding equity
securities of any issuer (at the time of purchase) would be beneficially held by
the Fund or (iv) 25% or more of the assets held in the Fund (taken at their then
current value) would be invested in a single industry;
(j) underwrite the issue or sale of any
securities;
(k) invest in securities issued by any person
(except the R.O.C. government) who beneficially owns more than 5% of, or takes
any significant active role in the management of, the Manager;
(l) issue senior securities, except as permitted
by paragraph (d) above;
15
(m) buy or sell real estate or real estate
mortgage loans;
(n) buy or sell commodities or commodity
contracts, including futures contracts on a contract market or other futures
market, except that the Fund may invest in currency forward contracts to hedge
against currency fluctuations if R.O.C. law is changed to so permit; or
(o) invest (i) in securities of R.O.C. issuers
the issuance of which has not been approved by or registered with the R.O.C. SFC
for offering to the public or (ii) in unregistered securities of United States
issuers that must be registered before being publicly offered under the United
States Securities Act of 1933.
10.3 The Manager shall ensure that investments of assets
held in the Fund will meet the requirements of section 851(b), (c) and (d) of
the Code and any corresponding future provisions of the Code or any successor
legislation thereto. Subject to the immediately preceding sentence, nothing in
Article 10.2 above shall require the realization of any assets held in the Fund
where any of the restrictions therein is breached as a result of any event
outside the control of the Manager and occurring after such investment is made
(including but not limited to redemptions of Units or securities, any
reorganization or amalgamation of any issuer and the suspension of any listing),
but no further assets shall be acquired for account of the Fund until the
relevant restriction can again be complied with, except pursuant to the exercise
of subscription rights to purchase securities of an issuer at a time when the
Fund's portfolio holdings of securities of such issuer would otherwise exceed
the limits set forth in Article 10.2(i) above, where after the announcement of
such rights and prior to its exercise, the Manager sells at least the number of
securities which it subsequently purchases through the exercise of the
subscription rights.
10.4 To not less than the extent (if any) from time to
time required by the R.O.C. SFC, a proportion of the assets held in the Fund
shall be retained at all times in liquid form in assets of a type specified by
the R.O.C. SFC.
10.5 Cash shall be deposited with the Custodian or such
other banks meeting the requirements set forth in the 1940 Act, or be invested
in money market instruments.
10.6 To the maximum extent possible, all transactions for
account of the Fund shall be carried out through stock exchanges and other
officially designated markets. Subject to any limitations which may be imposed
under R.O.C. laws or regulations or the 1940 Act and any rules and regulations
promulgated thereunder, transactions for account of the Fund may be carried out
through a broker who is a Connected Person (as defined in Article 17 hereof) of
the Manager to such extent as the Manager may think fit; provided that the cost
thereof to the Fund is not greater than it
16
would have been had the transactions been carried out through a broker who was
not a Connected Person of the Manager.
10.7 The Manager may from time to time, with the consent
of the Unitholder and the R.O.C. SFC, adopt further investment restrictions in
order to comply with applicable laws and regulations.
11. DURATION, CHANGES IN MANAGER
AND CUSTODIAN AND TERMINATION
11.1 Subject to the provisions of this Amended and
Restated Investment Contract, the Fund is established for an unspecified period.
11.2 The Fund shall terminate if:
(a) the R.O.C. SFC by notice in writing to the
Manager and the Custodian so requires;
(b) the Manager notifies the Unitholder, the
Custodian and the R.O.C. SFC that in its opinion further operation of the Fund
in accordance with this Amended and Restated Investment Contract is illegal,
impracticable or inadvisable having regard solely to the interests of the
Unitholder; or
(c) the Unitholder is adjudicated a bankrupt.
11.3 This Amended and Restated Investment Contract shall
become effective in accordance with Article 19 below and shall continue in
effect as provided in Section 11.4 below, PROVIDED that a majority of the
Unitholder's Trustees as a whole shall annually review the continuance of the
arrangements with the Custodian under this Amended and Restated Investment
Contract as consistent with the best interests of the Unitholder and its
shareholders.
11.4 (a) If not sooner terminated this Amended and
Restated Investment Contract shall continue in effect for successive periods of
12 months each after the first anniversary of July 1, 2000, PROVIDED that each
such continuance shall be specifically approved annually by (i) the vote of a
majority of the Trustees of the Unitholder who are not parties to this Amended
and Restated Investment Contract or "interested persons" (as defined in the 0000
Xxx) of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) either (x) the vote of a majority of the
outstanding voting securities of the Unitholder or (y) the vote of a majority of
the Unitholder's Trustees as a whole. The Unitholder shall notify the Manager
and the Custodian of the continuance (or discontinuance) annually.
(b) Notwithstanding Article 11.4(a) above, this
Amended and Restated Investment Contract may be terminated at any time by the
Unitholder, without
17
the payment of any penalty, upon a vote of a majority of the Trustees as a
whole, or a majority of the outstanding voting securities of the Unitholder,
upon 60 days written notice to the Manager and the Custodian.
(c) As used in this Article 11.4, the phrase
"majority of the outstanding voting securities" shall have the meaning set forth
in the 1940 Act.
(d) This Amended and Restated Investment
Contract shall automatically terminate in the event of its assignment (as
defined in the 1940 Act). Any transfer or other disposition (other than by
redemption in accordance with Article 6 above) of any of the Units by the
Unitholder shall also constitute an assignment of this Amended and Restated
Investment Contract.
11.5 (a) The R.O.C. SFC may order that a new Manager
or Custodian be appointed within six months if the R.O.C. SFC considers that the
Manager or the Custodian, as the case may be, is incapable of carrying out its
functions properly.
(b) The Manager or the Custodian may be removed
by the Unitholder upon 60 days notice to the other parties hereto.
(c) If either the Manager or the Custodian goes
into liquidation or bankruptcy or if its permit to act as Manager or Custodian
has been revoked, it shall be deemed to have been forthwith removed as Manager
or Custodian, as the case may be.
(d) If the Manager or Custodian is removed, or
resigns in accordance with Article 11.5(e) below, the Unitholder may appoint a
new Manager or Custodian and, subject to Article 16 below, enter into a new
investment contract containing substantially the same terms and conditions as
this Amended and Restated Investment Contract, and this Amended and Restated
Investment Contract shall automatically terminate. The appointment of a new
Manager shall be approved by the Custodian and by the R.O.C. SFC, and the
appointment of a new Custodian shall be approved by the Manager and by the
R.O.C. SFC, PROVIDED that if the R.O.C. SFC has, in the circumstances specified
in the Regulations Governing the Administration of Securities Investment Trust
Funds (effective August 10, 1983), as from time to time amended, required the
appointment of a new Manager or a new Custodian and the Unitholder has not
appointed a new Manager or a new Custodian within three months after the R.O.C.
SFC has so required, the R.O.C. SFC may require the liquidation and distribution
of the assets held in the Fund as provided in Article 11.6 below.
(e) The Manager or the Custodian may resign at
any time by giving 60 days notice to the other parties hereto. If, at the end of
such 60-day period, no appointment of a replacement has been made and approved
and the Fund must be terminated, the Manager or the Custodian which has resigned
shall discharge such
18
responsibilities hereunder as may be required for the liquidation and
distribution of the assets held in the Fund in accordance with Article 11.6
below.
11.6 Upon the termination of this Amended and Restated
Investment Contract, the Manager shall, within three months after the effective
date of termination, liquidate the assets held in the Fund at reasonable prices,
satisfy any liabilities relating to the Fund and distribute the available
balance, if any, to the Unitholder.
12. ACCOUNTS AND STATEMENTS
12.7 The Manager shall maintain in its principal office in
Taipei sufficient accounts and records to enable a complete and accurate view to
be formed of the assets and liabilities and the income and expenditures of the
Fund, all transactions for account of the Fund and amounts received by the Fund
in respect of the issuance of Units and paid out by the Fund on redemptions of
Units and by way of distributions.
12.8 The Manager shall prepare financial statements of the
Fund (a) for each annual accounting period commencing immediately after the end
of the preceding period and ending on December 31 in each year (the "Final
Statements"), and (b) as at and for each calendar month ending on the last day
of such calendar month, such financial statement to be in such respective form
and containing such information as may be required by the R.O.C. SFC.
12.9 The Manager shall:
(a) cause the Final Statements to be audited by
a person or firm authorized under the laws of the R.O.C. and the regulations of
the R.O.C. SFC (the "Auditors");
(b) submit each Final Statement together with
such report as the Manager may intend to make in relation thereto to the
Unitholder and the Auditors' report thereon to the R.O.C. SFC for comment and
approval within two months after the end of the relevant accounting period;
(c) comply with such requirements as the R.O.C.
SFC may make in relation to each such Final Statement and report within two
weeks after the date on which such requirements are made;
(d) send to the Unitholder and to the R.O.C. SFC
copies of all Final Statements and monthly statements; and
(e) assist and cooperate with the Unitholder in
preparing such reports and statements, including, without limitation, the
calculation of the net asset value of the Unitholder, as may be required of the
Unitholder under the 1940 Act, the United States Securities Exchange Act of 1934
(the "1934 Act"), the rules and regulations
19
promulgated under the 1934 Act and 1940 Act, and the rules and regulations of
the New York Stock Exchange, or such other stock exchanges on which the
securities of the Unitholder may be listed.
12.10 The Manager shall sign and the Custodian shall
countersign all Final Statements.
12.11 The Auditors' report on the Final Statements of the
Fund shall be in the form required by the R.O.C. SFC and where relevant shall
indicate the extent to which such a report cannot be given and the reasons
therefor.
13. DISTRIBUTIONS
13.12 Distributions of income in respect of each accounting
period ended December 31 will be made to the Unitholder not later than March 31
in the next following year. Distributions to the Unitholder may be made out of
income, realized capital gains, proceeds from the sale of dividends, or such
other items as may from time to time be permitted under the laws and regulations
of the R.O.C. The Manager in conjunction with the auditors shall determine what
is income and what is capital, except that stock dividends and gains (realized
or unrealized) on investments shall not be regarded as income and realized
discounts on debt securities and money market instruments may be regarded as
income. Costs and expenses payable out of the assets held in the Fund may be set
against income or capital as the Manager in conjunction with the Auditors may
determine; PROVIDED that the allocation of such costs and expenses to income or
to capital shall be consistent from year to year. Where expenses are set against
capital, they may be amortized on a straight line basis over a period not
exceeding five years.
13.13 The aggregate amount of each distribution shall be
credited to a separate account in the name of the Custodian, and such amount
shall thereupon cease to form part of the assets held in the Fund, but interest
earned on such amount pending distribution to the Unitholder shall be paid into
and form part of the assets held in the Fund.
14. CURRENCY
The accounts and records of the Fund shall be maintained in
NT$. Payments into the Fund upon issuance of the Units and out of the Fund on
the redemption of Units or by way of distributions shall be made in NT$. The Net
Asset Value and the Net Asset Value per Unit of the Fund shall be calculated in
NT$. The financial statements of the Fund shall be prepared in NT$.
20
15. INFORMATION AND NOTICES
15.14 There shall be held available for inspection by any
person without charge at the principal office of the Manager in Taipei at all
reasonable business hours copies of:
(a) this Amended and Restated Investment
Contract, as from time to time amended;
(b) the current sales prospectus (if any) in
relation to shares of the Unitholder; and
(c) all final and monthly statements, together
with any relevant Auditors' reports and reports of the Manager in relation
thereto, for the two latest annual accounting periods of the Fund, and all
accounts and records for such periods in relation to the matters referred to in
Article 12.1 above.
15.15 All notices to the Unitholder shall be sent by hand,
by airmail or by telex or facsimile transmission to its registered address and
shall become effective upon receipt by the Unitholder.
15.16 The Manager shall at all times maintain an office or
offices in Taipei and shall notify the Unitholder in accordance with Article
15.2 above of any change in the address of its principal office in Taipei.
16. AMENDMENTS
This Amended and Restated Investment Contract may be amended
only with the prior written agreement of the Unitholder, the Manager and the
Custodian, and subject to any approval required by applicable United States and
R.O.C. laws and regulations, including but not limited to the approval of the
R.O.C. SFC.
17. CONNECTED PERSONS
For the purpose of this Amended and Restated Investment
Contract, and subject to such amendments as the R.O.C. SFC may require, a person
is a "Connected Person" of another if:
(a) together with any person acting in concert
with it in this connection, it owns or otherwise controls for its own account,
directly or indirectly, an interest, whether or not a voting interest, of more
than 5% (or, in the case of an interest of the Custodian, 10%) of that other; or
(b) it is a director or supervisor, or takes any
significant active role in the management, of that other.
21
18. GOVERNING LAW, JURISDICTION AND LANGUAGE
18.17 The Fund, this Amended and Restated Investment
Contract and the Certificates shall be governed by, and this Amended and
Restated Investment Contract and the Certificates shall be construed in
accordance with, the laws of the R.O.C.
18.18 Any dispute arising out of or in respect of the Fund,
this Amended and Restated Investment Contract or the Certificates shall be
subject to the non-exclusive jurisdiction of the courts of the R.O.C. having
original jurisdiction and, in the case of any action against the Manager or the
Custodian, any court having original jurisdiction in the place where the Manager
or the Custodian has its principal office.
18.19 The governing language of this Amended and Restated
Investment Contract shall be Chinese, but documents issued in relation to the
Fund may be in either the Chinese or the English language.
19. EFFECTIVE DATE
This Amended and Restated Investment Contract shall become
effective upon the date of the approval thereof by the R.O.C. SFC. Subsequent
amendments to this Amended and Restated Investment Contract shall be effected in
the same matter unless the R.O.C. SFC provides to the contrary.
22
IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Investment Contract to be executed as of the date set forth
below.
INTERNATIONAL INVESTMENT TRUST COMPANY LTD.
By /s/ Jevons Hu
--------------------------------------------
Name: Jevons Hu
Title: President
CENTRAL TRUST OF CHINA
By /s/ Xxxx X. Xxxxx
--------------------------------------------
Name: Xxxx X. Xxxxx
Title: President
THE R.O.C. TAIWAN FUND
By /s/ Xxxxxxx Xxxx
--------------------------------------------
Name: Xxxxxxx Xxxx
Title: President
"The R.O.C. Taiwan Fund" (the "Unitholder") means and refers
to the Trustees from time to time serving under a Declaration of Trust of the
Unitholder dated May 8, 1989, a copy of which is on file with the Secretary of
The Commonwealth of Massachusetts. The execution of this contract has been
authorized by the Trustees of the Unitholder and this contract has been executed
on behalf of the Unitholder by an authorized officer of the Unitholder acting as
such and not individually, and neither such authorization by such Trustees nor
such execution by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the assets and property of the Unitholder as provided in the
Declaration of Trust.
November 20, 2000
TABLE OF CONTENTS
PAGE
----
1. INTRODUCTION AND POLICY 2
2. BASIC OBLIGATIONS AND RIGHTS 3
3. FUND ASSETS 6
4. UNITS 7
5. VALUATION 8
6. REDEMPTION OF UNITS 10
7. SUSPENSION OF VALUATION, ISSUES, REDEMPTIONS AND PAYMENTS 10
8. EXPENSES 11
9. CUSTODIAN AND MANAGEMENT FEES 12
10. OBJECTIVE AND RESTRICTIONS 13
11. Duration, Changes in ManagerAND CUSTODIAN AND TERMINATION 16
120 ACCOUNTS AND STATEMENTS 18
130 DISTRIBUTIONS 19
140 CURRENCY 19
150 INFORMATION AND NOTICES 20
160 AMENDMENTS 20
170 CONNECTED PERSONS 20
180 GOVERNING LAW, JURISDICTION AND LANGUAGE 21
190 EFFECTIVE DATE 21
i
