Fund Companies to Play an Important Role in Tender Offer

Securities Investment Trusts Companies (i.e. Fund Companies) will play an important role in tender offers. The Financial Supervisory Commission ("FSC") announced on November 15, 2006 that a fund company is now allowed to accept a tender offer and sell the stocks they hold, and is no longer required to conduct trading through centralized stock exchanges. Article 5(2) of Regulations Governing Securities Investment Trust Funds provides that, except where law or regulations otherwise, when a the securities investment trust company purchase and/or sell listed securities, it must authorize a licensed securities broker to execute the transaction through centralized stock exchanges. The recent announcement by the SFC has removed the obstacle that a fund company cannot dispose of holdings in response to a tender offer.