Offshore Vs Onshore: What Is the Difference?

With Lee and Li currently being the largest law firm in Taiwan, Lawyer Monthly speak with the Partner of the firm’s Banking and Capital Department, Grace Wang. With Grace and her team ensuring each of their clients are well looked after, their best efforts often provide the best legal services. She speaks below on the differences between onshore and offshore funds, as well as issues she often overcomes.

What are common issues you deal with in relation to funds, in the investment sector? How does your firm overcome this?

Sometimes the clients are not sure whether the regulator would challenge the investment scope or the investment objective and policy of the new fund, when they are applying for the regulator’s approval of such new fund.  We assist clients by discussing with the regulator and understanding the regulator’s opinion, so that when the applications are submitted to and reviewed by the regulator, it would be accepted.

You assist onshore and offshore mutual funds: is there any legal difference between the two?

Under Taiwan laws, there is legal difference in several aspects between onshore funds and offshore funds.

Firstly, from the aspect of the establishment process and fund structure, onshore funds are organised and established by a securities investment trust enterprise (SITE) incorporated in Taiwan, under a trust agreement executed between a SITE and the custodian bank. Onshore funds in Taiwan are not structured as a corporate entity and they are not legal persons, whereas we understand many offshore funds are structured as a company (such as UCITS). Secondly, the conditions for an onshore fund to be eligible for registration with a Taiwan regulator are different from the offshore funds’ registration. Thirdly, Taiwanese laws and regulations categorise the onshore funds into several types and prescribe different requirements for each type of fund; while the laws and regulations impose requirements that are generally applicable to all offshore funds.

What are three things clients should know when dealing with the applications of onshore and offshore funds in Taiwan?

Clients should be aware about:

• The most updated regulatory requirements and applicable laws, and the regulator’s policy in relation to management, administration and sale of the offshore funds and onshore funds.
• The information contained in the prospectus, and the other filing documents should be true and correct.
• The investors’ interest should be protected.

Grace Wang

Partner

Lee and Li

www.leeandli.com

“I am the main partner in the asset management practicing area.  Most of my practice focuses on asset management related legal matters (including onshore funds and offshore funds registration and discretionary investment business, applications for asset management licenses, securities investment trust license, securities investment consulting license, discretionary investment approval, regulatory compliance matters for asset management companies and applications for new businesses or products for asset management company.) I also provide advice on issues in relation to asset management business and assist in making regulatory filings and relevant applications. I assist asset management clients during M&A projects, and construct research reports and template contracts in relation to trust and asset management business retained by the self-regulatory association of the asset management business, the trust association, the stock exchange and the securities regulator.  I have also handled some derivative legal matters (including structured products and other derivatives) and other banking and securities matters.”

Being a full-service law firm, Lee and Li has retained a reputation as being leaders in each of its 28 practice areas performed by experts in each area in its five business departments: the corporate and investment, banking and capital market, litigation and alternative dispute resolution, patent department and trademark department.  Asset management related legal practice is part of the capital market practicing areas, where Lee and Li has extensive experience, which covers mainly onshore and offshore mutual funds, securities investment trust business, securities investment consulting business, discretionary asset management business and trust business.