| 2002.07.02 |
Enforcement Rules for the Act Governing Bills Finance Business
[Chinese]
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Enforcement Rules for the Act Governing Bills Finance Business
1. Full 10 articles adopted and promulgated 2 July 2002 per Order No. Tai-Tsai-Rong-(IV)-0910026761 of the Ministry of Finance; for enforcement from the date of issuance
Article 1
These Enforcement Rules are adopted pursuant to Article 73 of the Act Governing Bills Finance Business ("the Act").
Article 2
"Rating by a credit rating agency" in Article 5 and Article 28, paragraph 1, of the Act means the issuer of short-term bills or bonds, or a financial institution that guarantees or accepts short-term bills or issues bonds, engages an institution recognized by the Competent Authority or approved by the competent securities authority to operate a credit-rating enterprise to carry out the rating, and obtains the rating results from the fiscal year of issuance or the preceding fiscal year.
Article 3
The term "nominee" in Article 10, paragraph 2, of the Act means where any of the following circumstances exists:
1. Direct or indirect provision of shares to another person, or the provision of funds to another person for the purpose of purchasing shares.
2. Possessing authority to manage, utilize, or dispose of stock held by another person.
3. Retention of the profits and losses, in part or in whole, of shares held by the other person.
Article 4
When a bills finance company engages in brokering or dealing of short-term bills or bonds or other business as authorized by the Competent Authority as specified in Article 21, paragraph 1, subparagraphs 3 to 5 and 8 of the Act with a first-time client, it shall check the relevant identification documents to verify that the transaction is conducted in person by the client or its responsible person. However, if the client or its responsible person is unable to conduct the transaction in person, it may authorize in writing a third party to conduct the transaction on its behalf. The bills finance company shall confirm the authenticity of the Power of Attorney document and authorization matters.
The provisions of the preceding paragraph apply mutatis mutandis to a financial institution concurrently operating bills finance business that is engaging in brokering or dealing of short-term bills business with a first-time customer.
Article 5
"Bid and offer prices" in Article 24, paragraph 1, of the Act means the bid and offer reference prices.
Article 6
"Traded or held" as specified in Article 28 of the Act do not include underwriting on a best efforts basis or acting as an intermediary in trading.
Article 7
When a bills house underwrites, guarantees, or endorses commercial paper issued by a state-owned enterprise or institution not organized as a company, it shall conduct a detailed and accurate credit assessment of the issuing state-owned enterprise or institution, verify its issuance plan and repayment funding sources, and obtain a financial statement and audit report audited and certified by a certified public accountant, or a final accounts audit report from an audit institution, provided that these restrictions do not apply where the underwriting of commercial paper is guaranteed by another financial institution.
Article 8
"Net worth" in Article 40, paragraphs 3 and 5, of the Act means net worth after the closing of the books in the previous fiscal year, minus the amount approved by the Competent Authority for investment in other enterprises.
A cash capital increase by a bills finance company during the fiscal year may be reflected in net worth calculations, with the date upon which the certificate of capital verification is received as the calculation record date. The amount of cash dividends disbursed by a bills finance company during a fiscal year shall be subtracted from its net worth from the date of distribution.
Article 9
"Real estate for its own use" in Article 40, paragraph 3 of the Act means a bills finance company's business locations and its non-operating offices established with the approval of the Competent Authority in accordance Article 16, paragraph 3, of the Act.
"Real estate other than for its own use" in Article 40, paragraph 4, of the Act means real estate other than real estate for its own use under the preceding paragraph.
"A substantial portion of the real estate is for its own use" in Article 40, paragraph 4, subparagraph 1, of the Act means real estate in which the area for its own use is 50 percent or higher. Where real estate is originally purchased for its own use and a portion of that real estate is subsequently changed to non-own-use, it shall also comply with the aforesaid ratio.
"In the near future" in Article 40, paragraph 4, subparagraph 2, of the Act means within one year of the date of ownership transfer. However, where for special reasons a concrete plan for its own use and relevant verifying documents are submitted to the Competent Authority and approved by it, the period may be extended to a maximum of 2 years.
"Major shareholder" in Article 40, paragraph 6, of the Act means those holding 1 percent or more of the shares issued by a bills finance company; when a major shareholder is a natural person, calculation of the natural person's shareholdings shall include the holdings of their spouses and minor children.
"Interested party of the bills finance company's responsible person" in Article 40, paragraph 6, of the Act means where any of the following circumstances exists:
1. A spouse, relative by blood within the third degree of relationship, or relative by marriage or affinity within the second degree of relationship, of the responsible person of a bills finance company.
2. A business in which the responsible person of a bills finance company or an interested party under the preceding subparagraph is the sole proprietor or a partner.
3. A business in which the shareholdings, individually or in aggregate, of the responsible person of a bills finance company and interested parties under subparagraph 1 exceed 10 percent of the total number of shares issued by the company or of its [paid-in] capital.
4. An enterprise in which the responsible person of a bills finance company or an interested party under subparagraph 1 is a director, supervisor, or managers; provided that this restriction shall not apply where the position of director, supervisor, or manager is held concurrently for investment reasons and with the approval of the Competent Authority.
5. A juristic person or other organization in which the responsible person of a bills finance company or an interested party under subparagraph 1 is the representative or administrator.
Article 10
These Rules shall enter into force from the date of promulgation.