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1 AIT-CCNAA BANKING AND SECURI- TIES CONSULTATIONS MAY 1,1991 MINUTES Securities 1. Securities Promotion Guidelines AIT raised its concerns regarding restrictions on the market-ing of offshore mutual funds. CCNAA expressed concern that f-raudulent promotions must be effectively policed. AIT and CC-NAA agreed that developing a regulatory structure that wouldadequately police fraudulent sales promotion schemes within the territory represented by CCNAA the regulation of would e-nhance the offshore mutual funds. 2. Restrictions on Foreign Institutional Investment in the StockMarket AIT raised its concerns regarding ceilings on foreign invest-ment in the stock of each issuer and on aggregate foreign in-vestment, restrictions on the entry and repatriation of inve-stment capital and earnings, and the requirement to place or-ders through local brokers. CCNAA stated that its goal is toensure the orderly entry of foreign investment, and indicatedits desire to ease these restrictions as market development permits. 3. Securities Branches for Foreign Firms AIT stated that qualifying criteria based on paid-in capitaland assets excludes qualified foreign firms. CCNAA stated th-at two foreign securities branches had been approved in Febr-uary 1990. CCNAA indicated its intention to evaluate the iss-ue, including the levels of initial capital, as relevant rul-es are tested over the near future. 4. Private Pension Fund Management AIT expressed its concern that foreign firms are not permitt-ed to manage private pension funds, and noted that foreign a-dvisors are permitted to manage pension funds in the territo-ry represented by AIT. AIT urged CCNAA to explore the possib-ility of opening this market to foreign firms. CCNAA stated that pension management is not regarded as securities busine-ss in the territory represented by CCNAA. AIT asked CCNAA toclarify the appropriate regulatory authority for such activities. 5. Registration of Foreign Securities AIT suggested that to avoid the difficulties inherent in theregistration of foreign securities in the territory represen-ted by CC NAA, CCNAA consider the development of American De-pository Receipt-like instruments. CCNAA replied that the de-velopment of Taiwan Depository Receipts (TDRs) as a means ofdealing with this issue should be studied. 6. Other Issues AIT and CCNAA agreed to postpone the discussion of new secur-ities investment trust licenses and the settlement time for securities transactions until the next consultation. There was no agreement on establishment of a timetable marketinternationalization. (Signed) July 8, 1991 Mr. C. S. Pan Director, Economic Division Coordination Council for North American Affairs 4301 Connecticut Avenue, NW Suite 420 Washington, DC 20008 Dear Mr. Pan: I refer to your letter of June 13 with which you enclosed a rev-ised draft of the Securities portion of the Minutes of the AIT- CCNAA Banking and Securities Consultations held on May 1, 1991. I have discussed the latest draft with the authorities concerned,and they suggest two further changes in paragraphs 1 and 6. A new draft is enclosed. Please review the new draft. If it is acceptable to the CCNAA s-ide, I will have two originals prepared for initialing. Thank you for your continuing cooperation. Sincerely, (Signed) Clarke N. Ellis Deputy Managing Director Enclosure : As stated. July 31, 1991 Mr. Clarke N. Ellis Deputy Managing Director American Institute in Taiwan 1700 North Moore Street, #1700 Arlington, VA 22209 Dear Mr. Ellis: I wish to refer to your letter of July 8,1991 regarding your fu-rther two changes in paragraphs 1 and 6 of our revised draft of the Securities portion of the Minutes of the AIT-CCNAA Banking and Securities Consultations held on May 1, 1991. Our authorities concerned have agreed to the two changes sugges-ted by you. Please, accordingly, send us two originals of the M-inutes for initialing. Thank you for your continuing cooperation. Sincerely yours, (Signed) Chia-sheng Pan Director September 3,1991 Mr. C.S. Pan Director, Economic Division Coordination Council for North American Affairs 4301 Connecticut Ave., N.W. Washington, D.C. 20005 Dear Mr. Pan: I refer to the AIT Consultations on Securities matters that wereheld on May 1, 1991. I have now prepared two originals of the M-inutes of those Consultations which have been initialed by the AIT side. Please have both copies initialed by the appropriate officials on the CCNAA side and return one original to me for o-ur records. Thank you for your continuing cooperation. Sincerely, (Signed) Clarke N. Ellis Deputy Managing Director Enclosures: As stated. 0766GJ/lmf