| 2001.12.27 |
Regulations Governing Investments by Bills Finance Companies in Other Enterprises
[Chinese]
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Regulations Governing Investments by Bills Finance Companies in Other Enterprises
1. Full 12 articles adopted and promulgated 27 December 2001 per Order No. (90)-Tai-Tsai-Rong-(IV)-0904000345 of the Ministry of Finance
Article 1
These Regulations are adopted pursuant to Article 40, paragraph 1, of the Act Governing Bills Finance Business ("the Act").
Article 2
In addition to investments approved by the Competent Authority before the enforcement of the Act, a bills finance company may, to coordinate with economic development plans or financial policies of the government, file an application hereunder with the Competent Authority to invest in a finance-related enterprise or an enterprise closely related to the business of a bills finance company.
Article 3
The term "finance-related enterprise" as used herein means a bank, securities firm, securities investment trust enterprise, securities investment consulting enterprise, or such other enterprise as may be determined by the Competent Authority to be a finance-related enterprise.
The term "enterprise closely related to the business of a bills finance company" as used herein means a short-term bills central depository and clearing agency or such other enterprise as may be determined by the Competent Authority to be an enterprise closely related to the business of a bills finance company.
Juristic-person shareholders of bills finance companies are excluded from the scope of the preceding two paragraphs.
Article 4
Where a single bank holds 20 percent or more of the total issued shares of a bills finance company, such bills finance company may apply to invest only in enterprises in which the bank has invested. This restriction, however, shall not apply to an investment that is made for purposes of coordinating with financial policies of the government.
Article 5
The total amount of a bills finance company's investments in other enterprises may not exceed 40 percent of the company's total paid-in capital less accumulated deficit, as computed at the time of investment.
Article 6
A bills finance company may invest in no more than one other enterprise in any given industry, except as otherwise approved by the Competent Authority for purposes of coordinating with financial policy.
Unless otherwise provided by another law or the Competent Authority, a bills finance company may decide, in its sole discretion within the ceiling on its total investments in other enterprises, its shareholding ratios in individual finance-related enterprises; its investment in an enterprise closely related to the business of a bills finance company may not exceed 5 percent of the paid-in capital of such investee enterprise.
Article 7
A bills finance company filing an application to invest in another enterprise shall comply with the following requirements:
1. The ratio of equity capital less the amount of investments in other enterprises (including the current investment) to risk-based assets shall be at least 8 percent.
2. Paid-in capital less both accumulated deficit and the amount of investments in other enterprises (including the current investment) shall be at least NT$2 billion.
3. The guaranteed advances ratio for the nearest quarter is below the industry average.
4. Both reserve for guarantee liabilities and allowance for bad debts are sufficiently allocated.
5. No sanction has been imposed for violation of any financial law or regulation in the preceding fiscal year and up to the time of the application.
6. There is no major defect in internal controls.
7. The average net income for the last three years shows no deficit.
8. There is no other material event of non-compliance with any financial policy requirement.
When filing an application to invest in another enterprise, a bills finance company shall re-compute the ratio set out in subparagraph 1 of the preceding paragraph if the previous financial review or an examination by the Competent Authority shows any new increase in accumulated deficit or insufficient allocation of reserve for guarantee liabilities and allowance for bad debts.
Article 8
When filing an application to invest in another enterprise, a bills finance company shall submit the documents listed below, as well as a self-assessment form (format as per attachment) in compliance with the provisions of Article 5 and the preceding Article:
1. Board meeting minutes.
2. A statement explaining that the investment is made in line with the economic development plans or financial policies of the government.
3. The investment plan (specifying, inter alia, with respect to the investee enterprise, the shareholder structure, management team members, business scope, business principles and policies, business development plan, financial forecasts for the coming three years, and analysis of the likelihood of positive return on investment).
4. Assessment of the impact of the investment on the overall future business and development strategies and business performance of the bills finance company.
5. Management and risk assessment mechanisms with respect to the investee enterprise.
6. Confidentiality policies to ensure protection of customer information in dealings between the bills finance company and the investee enterprise or any third party.
7. Internal rules in place to govern conflicts of interest and prevent insider dealings in business activities between the bills finance company and the investee enterprise.
8. Rules in place to ensure compliance with arm's length transaction requirements in business activities between the bills finance company and the investee enterprise.
9. Such other assessment information as may be additionally required depending on the characteristics of the investee enterprise.
A bills finance company applying to invest in an enterprise closely related to the business of a bills finance company shall, in addition to submitting the documents required by the preceding paragraph, provide a specific description explaining how the enterprise to be invested in is closely related to its business.
Article 9
A bills finance company and an investee enterprise lawfully engaging in any joint marketing efforts towards customers shall obtain the customer's consent for any use of the customer's identity information.
Article 10
Where after obtaining approval by the Competent Authority of an investment in another enterprise, a bills finance company suspends the investment or transfers or sells its shares in the investee enterprise, it shall report the matter to the Competent Authority for recordation within 10 days from the date of occurrence of the event.
Article 11
Where a bills finance company is in non-compliance with any provision of Article 5 or 6 as a result of a merger or consolidation, it may maintain its original investment amount subject to the approval of the Competent Authority.
Article 12
These Regulations shall enter into force from the date of promulgation.
Bills Finance Company Self-assessment Form for Application for Investment in Another Enterprise
Applicant Name
Responsible Person
Paid-in capital
Amount of investment in other enterprises (including the current investment)
Name of the proposed investee enterprise
Dollar amount of the proposed investment
Self-
assessment items for investment in another enterprise
Item No. Assessment particulars Compliance (check) Non-
compliance (check)
1. Total investments in other enterprises may not exceed 40 percent of total paid-in capital less accumulated deficit, as computed at the time of investment.
2. The ratio of equity capital less the amount of investments in other enterprises (including the current investment) to risk-based assets is at least 8 percent (the ratio of equity capital to risk assets is determined based on the most recent filing).
3. Paid-in capital less both accumulated deficit and the amount of investments in other enterprises (inclusive of the current investment) is at least NT$2 billion.
4. The guaranteed advances ratio for the nearest quarter is below the industry average.
5. Both reserve for guarantee liabilities and allowance for bad debts are allocated sufficiently (as determined by the result of the most recent financial review).
6. No sanction has been imposed for violation of any financial law or regulation in the preceding fiscal year and up to the time of the application.
7. There is no major defect in internal controls.
8. The average net income for the past three years shows no deficit.
9. There is no other material event of non-compliance with any financial policy requirement.
Name of submitted documents (1) Board meeting minutes.
(2) A statement that the investment is made in line with the economic development plans or financial policies of the government.
(3) The investment plan (specifying, inter alia, with respect to the investee enterprise, the shareholder structure, management team members, business scope, business principles and policies, business development plan, financial forecasts for the coming three years, analysis of the likelihood of positive return on investment).
(4) Assessment of the impact of the investment on the overall future business and development strategies and business performance of the bills finance company.
(5) The management and risk assessment mechanisms with respect to the investee enterprise.
(6) Confidentiality policies for ensuring protection of customer information in dealings between the bills finance company and the investee enterprise or any third party.
(7) Internal rules in place to govern conflicts of interest and prevent insider dealing in business activities between the bills finance company and the investee enterprise.
(8) Rules in place to ensure compliance with arm's length transaction requirements in business activities between the bills finance company and the investee enterprise.
(9) Such other assessment information as may be additionally required depending on the characteristics of the investee enterprise.
(10) A bills finance company applying to invest in an enterprise closely related to the business of a bills finance company shall, in addition to submitting the documents required by the preceding paragraph, provide a specific description explaining how the enterprise to be invested in is closely related to its business.
總經理：General Manager: 總稽核：Chief Auditor: