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On 6 January 2009 the Legislative Yuan passed an amendment bill to
the Real Estate Securitization Act, which was promulgated by the President on 21
January 2009. This is the first time
the Act has been amended since it took effect on 23 July 2003. |
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The purpose of the amendments is to allow the diversification of
real estate securitization products, in order to invigorate the real estate securitization
market and enhance the effectiveness of the use of funds, and also to improve market
regulation and thus enhance the protection of investors' interests.
Their main points are as follows: |
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Developmental real estate and
rights associated with developmental real estate may be securitized: |
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1. |
Developmental real estate and rights associated with developmental real estate are
defined as real estate and related rights for which development, construction, reconstruction,
or renovation is in progress or planned. The
amended Act allows developmental real estate and rights associated with developmental
real estate to be made the subject of securitization.
However, monies from a real estate investment trust (REIT) fund
may not be expended until after a construction permit has been obtained for developmental
real estate, and investments by a REIT fund in developmental real estate or rights
associated with developmental real estate may not exceed a certain proportion of
the property entrusted in the fund.
Such investments by a publicly-offered REIT fund are limited to urban renewal projects,
infrastructure projects within the meaning of the Act for Promotion of Private Participation
in Infrastructure Projects, and infrastructure projects in which participation is
approved by the central competent authority for the relevant economic sector. |
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Furthermore, such investments are limited to subjects of securitization
(1) in which not more than 10% of the total participating investments are from government,
enterprises in which the government has 20% or more shareholding, and funds or corporate
entities directly or indirectly controlled by the government; or (2) for which the
government has not undertaken to assume obligations or guarantee operating revenues.
(Article 17) |
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2. |
Real estate asset trust (REAT) beneficiary certificates resulting from the securitization
of developmental real estate or related rights may only be privately placed. (Article
30) |
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Enhanced protection of investors'
interests: |
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1. |
Definitions of promoter and arranger are introduced. (Article 4) |
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2. |
New provisions impose civil liability and criminal penalties on promoters, arrangers,
and trustee in the case of misrepresentation or concealment in documents relating
to the offering, issuance, or private placement of beneficiary certificates. (Articles
6, 44-1, 46-1 and 59) |
