Banking Bureau, Financial Supervisory Commission, R.O.C.: Laws and Regulations Retrieving System of the Banking Bureau

Amended Article 4 of Act for the Establishment and Administration of the Financial Restructuring Fund
Promulgated on July 8, 2009

Article 4
The term “distressed financial institutions” depicted in the Act herein shall mean a financial institution having one of the following situations:
(1) The adjusted net worth is negative after an examination by the competent authority or the central competent authority for agriculture finance, or an audit by an accountant.
(2) Unable to repay its debts.
(3) Significant deterioration in businesses or financial status as stipulated in Paragraph 1, Article 62 of the Banking Act that the financial institution becomes unable to repay its debts when due or the depositors’ interests might be damaged, or sustaining losses exceeding one third of its capital and failing to improve within a prescribed time period as provided in Article 64 of the Banking Act, and being determined by the competent authority and the Management Committee of the Fund to be incapable of continuing operations.
The Fund will give precedence to handling distressed community financial institutions, while maintaining the principle of equal treatment whether in form or in substance. The Fund shall set aside 20% of increased funds generated subsequent to the promulgation of the amended Act on June 22, 2005 for pay-offs of farmers’ and fishermen’s associations without being subjected to the operating period of the Fund. The aforesaid fund shall be deposited in a special account; regulations governing the utilization and administration of said account shall be set forth by the Executive Yuan.
The benefits of members of the distressed credit cooperatives that have been placed under superintendence or conservatorship by the competent authority pursuant to the Credit Cooperatives Act and are included under the Fund prior to the promulgation of the amended Act on June 22, 2005 shall be safeguarded by blank guarantee in accordance with the principle of equal treatment in the preceding paragraph. Their claims shall be paid off in full by financial institutions that assume the assets of the aforesaid credit cooperatives. In the event that the assuming financial institution defaults on pay-off, the Fund will pay the claims of the members in full.
CDIC may apply for utilization of the Fund when acting pursuant to Paragraph 1, Article 15 and Paragraph 2, Article 17 of the Deposit Insurance Act to pay off in full the deposits and non-deposit debts of a distressed financial institution. The Fund shall assume the assets of such financial institutions without being restricted by the maximum coverage as stipulated in Article 9 of the Deposit Insurance Act and the provision of cost being less than the loss arising from cash pay-offs as stipulated in Paragraph 2, Article 15 and Paragraph 2, Article 17 of the same Act.　
Subsequent to the promulgation of the amended Act on June 22, 2005, when the competent authority or the central competent authority for agriculture finance handles a distressed financial institution, non-deposit debts of said institution will not be paid off. Notwithstanding the foregoing, non-deposit debts of such institutions that had been incurred before the promulgation of the amended Act on June 22, 2005 or bank debentures of such institutions that had been approved by the competent authority and their offering period spanned across the date of promulgation of the amended Act will be covered.
The claims of the shareholders or members of a distressed financial institution that has been placed under superintendence or conservatorship by the competent authority pursuant to the Banking Act or the Credit Cooperatives Act and has been included under the Fund subsequent to the promulgation of the amended Act on June 22, 2005 shall be forfeited except for entitlement to distribution of remaining properties. The competent authority shall notify such shareholders or members of the same by means of public announcement.
The Fund shall draw up regulations governing the disposal of distressed financial institutions and submit to the competent authority for approval and promulgation.