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

1. Investments in Financial Institution in Mainland China
(1) When a Taiwan bank, a third-area subsidiary bank, a financial holding company intends to make equity investment in a financial institution in Mainland Area, it should attend to relating affairs following Article 47 to 49 of Regulations Governing the Banking Activity and the Establishment and the Investment by Financial Institution Between the Taiwan Area and the Mainland Area.
(2) Except in the case where a financial enterprise makes investment in accordance with the laws and regulations governing the industry the financial enterprise belongs to, it is not allowed for a subsidiary company with more than 50 percent of total outstanding voting shares or capital owned by a Taiwan bank or an affiliated enterprises directly or indirectly controlled by a financial holding company to invest in a financial institution in Mainland China.

2. Investments in Finance Related Enterprises or Venture Capital Enterprises other than Financial Institution
(1) When a subsidiary company with 100 percent of total outstanding voting shares or capital directly or indirectly owned by a Taiwan bank or a financial holding company attempts to invest in a financial leasing company or a finance related enterprise ratified by the competent authorities other than financial institution, the shareholding should not be lower than 25 percent of the total outstanding voting shares owned by the investee enterprise.
(2) When a subsidiary company with 100 percent of total outstanding voting shares or capital directly or indirectly owned by a Taiwan industrial bank attempts to invest in a financial leasing company or a finance related enterprise ratified by the competent authorities or a venture capital enterprise other than financial institution, the shareholding should not be lower than 25 percent of the total outstanding voting shares owned by the investee enterprise.
(3) Those who make investments following the contents in the previous two paragraphs, the Taiwan bank, financial holding company, or industrial bank shall supervise the investee subsidiary company in Mainland Area to draft the risk management mechanism for investment in finance related enterprises. The mechanism should be incorporated into the bank or the financial holding group to control and manage the total risk tolerance in Mainland and also submitted to the board of the bank or the financial holding company for support.

3. Investments in Other Business in Mainland China
(1) A Taiwan bank, financial holding company is not allowed to make investments in business other than financial institution in Mainland China.
(2) When a subsidiary company with over 50 percent of total outstanding voting shares or capital owned by a Taiwan bank attempts to invest in businesses other than financial institution, finance relating enterprises, venture capital enterprises in Mainland, the investment amount in each business should not exceed its paid capital or 5 percent of the total issued shares of the investee business.
(3) The shareholding rate of a subsidiary company belonging to a financial holding company which makes investments in a business other than a financial institution, finance relating enterprises, venture capital enterprises in Mainland China shall be governed by paragraphs 5 and 6 of Article 37 of Financial Holding Company Act.
(4)
A. A Taiwan industrial bank makes indirect investments in a Mainland producing business through a third-area, or makes investments in a Mainland producing business through an affiliated company directly or indirectly owned by the industrial bank shall be governed by Article 9 of Regulations Governing The Establishment Criteria and Administration of The Industrial Bank, Article 35 of Act Governing Relations Between People Of The Taiwan Area And The Mainland Area, and Regulations Governing Investment or Technical Cooperation in Mainland Area of the Ministry of Economic Affairs.
B. The direct investment balance of a Taiwan industrial bank which makes investments in any producing business in Mainland China through a third-area indirect investment or an affiliated enterprise directly or indirectly controlled by the industrial bank shall not exceed 5 percent of net value after the final settlements in last accounting year and 20 percent of issued shares or total capital of the producing business.

4. The Maximum of Total Investment Amount in Mainland China
(1) When a Taiwan bank or its third-area subsidiary bank applies to establish a branch or subsidiary bank, or make equity investment in Mainland Area, or a subsidiary company with over 50 percent of total outstanding voting shares or capital owned by Taiwan bank makes investments in Mainland Area, the cumulative allocated operating capital and total amount of investment therefore combined shall not exceed 15 percent of the bank's net worth at the time of application.
(2) When a Taiwan financial holding company applies to make equity investment in Mainland Area, or affiliated companies directly or indirectly controlled by the financial holding company (excluding a Taiwan bank, a subsidiary company with over 50 percent of total outstanding voting shares and capital owned by the bank, and a third-area subsidiary bank) intend to make investment in Mainland Area, their total investment amount shall not exceed 10 percent of the financial holding company's net worth at the time of application.

5. Application Procedure
(1) A Taiwan bank should represent a subsidiary company, with 100 percent of total outstanding voting shares or capital owned by it, to apply for investments in finance related enterprise other than financial institution to the Financial Supervisory Commission following the regulations in Conditions to Be Met and Documents to Be Submitted by Commercial Banks Investing in Other Enterprises (the bank should also attach the documents concerning risk management mechanism, the group's total risk tolerance control on Mainland investments regulated in paragraph 3 of Point 2). The bank shall make the application to the Investment Commission only after obtaining the permission from the Financial Supervisory Commission.
(2) If a subsidiary company with over 50 percent of total outstanding voting shares or capital owned by a Taiwan bank makes investments in other enterprises in Mainland Area, it is not necessary to submit the application to the Financial Supervisory Commission and should apply at the Investment Commission following the Regulations Governing Investment or Technical Cooperation in Mainland Area of the Ministry of Economic Affairs. When the Investment Commission asks for comments from the Financial Supervisory Commission, the latter will make examination based on these regulatory principles.
(3) A financial holding company should represent a subsidiary company, with 100 percent of total outstanding voting shares or capital owned by it, to apply for investments in finance related enterprise other than financial institution to the Financial Supervisory Commission following the regulations in Paragraph 4, Article 36 of Financial Holding Company Act and Regulations Governing the Investing Activities of a Financial Holding Company (the company should also attach the documents concerning risk management mechanism, the group's total risk tolerance control on Mainland investments regulated in paragraph 3 of Point 2). The company shall make the application to the Investment Commission only after obtaining the permission from the Financial Supervisory Commission.
(4) If a subsidiary company of financial holding company makes investments in other enterprises in Mainland Area, it is not necessary to submit the application to the Financial Supervisory Commission and should apply at the Investment Commission following the Regulations Governing Investment or Technical Cooperation in Mainland Area of the Ministry of Economic Affairs. When the Investment Commission asks for comments from the Financial Supervisory Commission, the latter will make examination based on these regulatory principles.