| 2008.03.17 |
Articles 4, 6 and 8 of the Regulations Governing Issuance of Bank Debentures by Banks
[Chinese]
|
Articles 4, 6 and 8 of the Regulations Governing Issuance of Bank Debentures by Banks
Article 4 Unless it is otherwise provided in Paragraphs 2 and 3 hereof, a bank may not apply to issue Bank Debentures if any of the following circumstances exist:
1. Provisions for bad loans are insufficient and such an insufficiency has not been improved;
2. A bank’s average non-performing loan ratio for the past three (3) months reaches five (5) percent or up when the bank applies to issue Bank Debentures and the ratio has not been improved.
3. Within one (1) year preceding the year when the bank applies for issuance of Bank Debentures, the number of penalty imposed on the bank by the competent authority reaches three (3) or up or the cumulative penalty amount imposed on the bank by such an authority reaches NT$ 10 million (NT$10,000,000) or up because of the bank’s violation of laws and orders; provided that the bank has not corrected its act.
4. The ratio of the bank’s self-owned capital to risk-weighted assets” (hereinafter referred to as the “capital adequacy ratio”) at the time of the bank’s application for issuance of Bank Debentures is less than eight (8) percent.
5. The negative value received by the bank after deducting the unamortized loss on the disposal of non-performing loans from the latest accumulated profit or loss which was reviewed and then certified by an accountant or has been inspected by the competent authority.
6. The negative value received by the bank after deducting the unamortized loss on the disposal of non-performing loans from the latest net worth which was reviewed and then certified by an accountant or has been inspected and then adjusted by the competent authority; or such a deficit of capital has not been corrected by the bank within a prescribed period of time as ordered by the competent authority pursuant to Article 64 of the Banking Act of the Republic of China.
For the purposes of improving a bank’s financial constitution, capital adequacy, the bank whose capital adequacy ratio mentioned in Subparagraph 4 of the preceding Paragraph is less than eight (8) percent but more than four (4) percent (including four (4) percent) or which has a situation which falls under the circumstance mentioned in Subparagraph 5 can issue Bank Debentures with minimum par value of NT$10 million (NT$10,000,000) after the approval of the competent authority. In addition, buyers and transferees of Bank Debentures are limited to banks, bill finance companies, trust enterprises, insurance companies, securities firms, specific persons who participate in capital consolidation plans, companies or funds whose total assets as recorded in the latest financial reports reviewed or perused by accountants exceed NT$ 50 million (NT$ 50,000,000), or trust property mentioned in a trust agreement concluded with a trust enterprise exceeds NT$ 50 million (NT$ 50,000,000). For the purposes of improving a bank’s financial constitution and after the approval of the competent authority, the bank whose capital adequacy ratio mentioned in Subparagraph 4 of Paragraph 1 is less than four (4) percent or which has a situation which falls under the circumstance mentioned in Subparagraph 6 of the same Paragraph can issue convertible Bank Debentures recorded in the item under its capital consolidation plan, with minimum par value of NT$10 million (NT$10,000,000). In addition, buyers of convertible Bank Debentures are limited to specific persons who participate in capital consolidation plans, and transferees are limited to persons listed in Paragraph 2.
The bank which issues Bank Debentures shall exhaust the responsibility to reasonably investigate the qualifications of persons or funds which comply with each of the aforesaid requirements.
Article 6 The issue amount of Bank Debentures plus the amount of outstanding previously issued financing bonds shall not exceed two (2) times the bank's net worth as of the end of the preceding fiscal year; provided that subject to compliance with other requirements for the issuance of Bank Debentures by industrial banks, the above issue amount limit shall not apply to industrial banks.
Bank Debentures issued by a bank shall have been rated by a credit rating agency sanctioned by the competent authority, unless with the approval of the competent authority, the bank has reasonable explanations for not having such a credit rating.
For the issuance and the sale of Bank Debentures, a bank shall inform investors of the following:
1. Credit rating: The credit rating of the Bank Debenture;
2. Investment risk: It includes the fact that a Bank Debenture is non-deposit and not insured by the Central Deposit Insurance Corporation;
3. Major terms and conditions: They include whether the Bank Debenture is cancelable, callable or redeemable, and conditions thereto;
4. In the case of a subordinated bank debenture, explanations to the priority of claim and the legal effect of subordination; and
5. Other material terms and conditions with respect to issuance of Bank Debentures.
For the offering and the issuance of Bank Debentures, a bank shall follow the provisions of the Regulations Governing Information to be Published in Financial Institution Prospectuses for Offering and Issuance of Securities.
If a bank commissions an underwriter to issue its Bank Debentures, the bank shall enter an agreement with the said underwriter, requiring the said underwriter to perform the obligation of disclosure as provided in the preceding paragraph.
Article 8 Bank Debentures may be freely transferred and provided as security. However, the transfer of registered Bank Debentures shall require recordation with the issuing bank or other authorized agent organization.
A bank which issues Bank Debentures shall not use its assets as security.
A bank which handles secured credit and issue Bank Debentures shall not use such Bank Debentures as collateral.
The prescription of Bank Debentures and the loss, theft or destruction thereof shall be handled in accordance with the relevant provisions of R.O.C Civil Code or other regulations governing the issuance thereof.