| Article 24 |
（Transfer of business operation）
With the approval of the competent authority, a financial institution may convert itself into a financial holding company by means of a "Transfer of Business Operation."
The term "Transfer of Business Operation " as used in the preceding paragraph, shall mean, upon the resolution of a shareholders' meeting, the sale by a financial institution of an entire business and its major assets and debts to another company, with the price being paid in acquiring newly issued shares of the company equal to the net book value of such assets and liabilities of the financial institution followed by a conversion of the financial institution into a financial holding company at the time such shares are acquired and simultaneous conversion of the company into a subsidiary [of the financial holding company]. The following shall apply to such conversion:
1.Articles 185 through 188 of the Company Act shall apply mutates mutandis to the procedures by which a resolution of a shareholders' meeting is adopted, to the rights of minority shareholders to require the company to buy back all of such shareholders' shares, the price paid for such buy-back and [circumstances in which] such rights are lost;
2. Article 156, Paragraphs 2 and 6, Article 163, Paragraph 2, Article 267, Paragraphs 1 to 3, and Article 272, of the Company Act, and Article 22-1, Paragraph 1, of the Securities and Exchange Act, shall not apply; and
3.The notification of transfer of claims may be done through a public announcement; the other company when assuming liabilities, need not obtain the consent of the financial holding company’s creditors; and Articles 297 and 301 of the Civil Code shall not apply.
If the other company is a newly established company, the shareholders' meeting of the financial institution shall be deemed the required promoters' meeting of such company; directors and supervisors of such other company may be elected at such shareholders' meeting; and articles 128 to 139, and Articles 141 to 155, of the Company Act shall not apply. The preceding paragraph shall also apply to shareholders' meetings held by a financial institution before the date of enforcement of this Act.
At the time the other company is converted into a subsidiary of a financial holding company, each competent authority in charge of the particular enterprise may directly issue the Subsidiary's business license and the provisions of the Banking Act, the Insurance Act, and the Securities and Exchange Act with respect to the establishment of a bank, insurance company and securities firm shall not apply.
If the shares bought back by a financial institution in accordance with Paragraph 2, Subparagraph 1, of this Article are not sold within six (6) months, the financial institution may, by a majority vote at a meeting of the board of directors attended by two-thirds or more of the directors, amend its articles of incorporation and cancel the registration of such shares. In such case, the restrictions of Article 277 of the Company Act shall not apply. |
| Article 25 |
（Transfer contracts and resolutions）
In conducting a transfer of business pursuant to the proceeding Article, if the referenced other company is an existing company, the financial institution shall enter into a transfer contract approved by the board of directors of such other company; if the referenced other company is a newly established company, the board of directors of the financial institution shall adopt a resolution for the transfer. Such contract or resolution shall be presented at a shareholders' meeting [of such financial institution].
The transfer contract or resolution for transfer referred to in the preceding paragraph shall include the following items and be sent to all shareholders together with the notice of the relevant shareholders' meeting and Article 172, the proviso to Paragraph 4, of the Company Act shall apply, mutatis mutandis:
1.The required amendment to the articles of incorporation of the existing company or the articles of incorporation of the newly established company;
2.The total number of shares, types of shares and number of shares to be newly issued by the existing company or issued by the newly established company;
3.The business and the type and quantity of major assets and liabilities to be transferred by the financial institution to the existing company or newly established company;
4.The relevant rules for cash payment to shareholders of financial institutions who will be allocated less than one share;
5.The scheduled date of the shareholders' meeting;
6.The date fixed for the transfer of the business;
7.The limit on the amount of dividend distributions prior to the date fixed for the transfer of the business by the financial institution;
8.In the case of a transfer contract, matters related to the continuing performance of duties of the incumbent directors and supervisors of the financial institution until the expiration of the term of the said directors and supervisors (where such terms expire after the transfer date) and, in the case of a resolution for transfer, the names of the directors and supervisors of the newly established company; and
9.If the financial institution and other financial institutions jointly transfer their businesses to establish a financial holding company, a resolution for transfer shall specify the matters related to such joint transfer. |
| Article 26 |
（Share exchange）
After obtaining the competent authority’s approval, a financial institution may be converted into a subsidiary of a financial holding company by share exchange.
The term "share exchange" referred to in the preceding paragraph shall mean the transfer, upon the resolution of a shareholders' meeting, of all outstanding shares of the financial institution to a financial holding company to be established, as the financial institution shareholders’ payment for subscribing the newly issued shares of the financial holding company or establishing the financial holding company as a promotor. The following shall apply:
1.The adoption of the resolution at a shareholders' meeting shall require the concurrence of shareholders representing more than one half of all shares held by such financial institution's shareholders present at a meeting attended by shareholders representing at least two-thirds of all outstanding shares. The above shall also apply if the financial holding company to be established is an existing company;
2.Article 317, the latter part of Paragraph 1 and Paragraph 2 of the Company Act shall apply, mutatis mutandis, to the shareholder appraisal right; and
3.Article 156, Paragraph 1, Paragraph 2 and Paragraph 6, Article 163, Paragraph 2, Article 197, Paragraph 1, Article 227, Article 267, Paragraph 1 through 3 and Article 272 of the Company Act and Article 22-1, Paragraph 1, Article 22-2 and Article 26 of the Securities Exchange Law shall not apply.
If the relevant other company is a newly established company, the shareholders' meeting of the financial institution shall be deemed the promoters' meeting of the financial holding company to be established. Directors and supervisors of such financial holding company may also be elected at such shareholders' meeting and articles 128 through 139, Articles 141 through 155 and Article 163, Paragraph 2, of the Company Act shall not apply.
The preceding paragraph shall also apply to a shareholders' meeting which has been convened by a financial institution prior to the date of enforcement of this Act.
If the shareholders' meeting is a shareholders meeting of a public company and the shareholders attending such shareholders' meeting represent less than the minimum number of shares prescribed in Paragraph 2, Subparagraph 1 of this Article, the resolution may be adopted by the concurrence of shareholders representing at least two-thirds of all shares present at the meeting attended by shareholders representing more than one half of the total outstanding shares. However, where stricter criteria are specified in the articles of incorporation of such company, the stricter criteria shall apply.
If, after a financial holding company has been established with the competent authority’s approval, the aggregate number of shares held by its directors or supervisor(s) at the time of election is less than the percentage required to be held by the directors or supervisors as prescribed by the Securities and Futures Commission in accordance with Article 26, Paragraph 2, of the Securities and Exchange Act, the directors or supervisor(s) shall collectively make up the deficiency within one (1) month after taking office.
If a financial institution does not re-sell the shares it buys back in accordance with Paragraph 2, Subparagraph 2 of this Article, within six (6) months after the date of buy-back, it may, with the concurrence of more than one half of directors present at a meeting attended by at least two-thirds of all directors, amend its articles of incorporation and cancel the registration of the [unsold] shares and article 277 of the Company Act shall not apply. |
| Article 27 |
（Exchange contracts and resolutions）
（Exchange contracts and resolutions）
In conducting an exchange of shares with another company pursuant to the preceding Article, if such other company to be converted into a financial holding company is an existing company, the financial institution shall enter into a transfer contract approved by the board of directors of such existing other company; if a financial holding company is to be newly established, the board of directors of such financial institution shall adopt a resolution authorizing the transfer. Such transfer contract or resolution shall be presented at the shareholders' meeting.
The transfer contract or resolution for transfer referred to in the preceding paragraph shall include the following items, and be sent to all shareholders together with the notice of the relevant shareholders' meeting and Article 172, the proviso to Paragraph 4, of the Company Act shall apply, mutatis mutandis:
1.The required amendment to the articles of incorporation of the existing company or the articles of incorporation of the newly established company;
2.The total number of shares, type of shares and number of shares to be newly issued by the existing company or issued by the newly established company;
3.The total number of shares, type of shares and quantity of shares to be transferred by the shareholders of the financial institution to the existing company or the newly established company;
4.The relevant rules for cash payment to shareholders of financial institutions who will be allocated less than one share;
5.The scheduled date of the shareholders' meeting;
6.The date fixed for the transfer of shares;
7.The limit on the amount of dividend distributions prior to the date fixed for the transfer of shares by the financial institution;
8.In the case of a transfer contract, matters related to the continuing performance of duties of the incumbent directors and supervisors of the financial institution until the expiration of the term of the said directors and supervisors (where such terms expires after the transfer date) and, in the case of a resolution for transfer, the names of the directors and supervisors of the newly established company; and
9.If the shareholders of a financial institution and other financial institutions jointly transfer their shares to establish a financial holding company, a resolution for transfer shall specify the matters related to such joint transfer. |
| Article 28 |
（Registration fees and tax incentives）
After being approved by the competent authority to convert into a financial holding company or a subsidiary of a financial holding company, a financial institution shall comply with the following provisions:
1.Amendments of the registration of real estate, other properties requiring registration, mortgages, pledges, liens and intellectual property rights are allowed and no registration fee shall be required so long as a certificate from the competent authority is provided. The establishment registration fee for company registration shall be calculated based on the net increase in capital after conversion;
2.When land directly used by the financial institution is to be transferred, the registration of transfer of ownership of such land shall be done after the current value of such land has been determined in accordance with the Land Tax Act. The land value increment tax payable on such transfer may be accrued and deferred until the next transfer of such land by the transferee company.
If the transferee company becomes bankrupt or is dissolved, the accrued and value increment tax shall have priority [over general creditors];
3.The stamp tax, deed tax, income tax and securities transfer tax arising from the transfer of business shall not be levied; and
4.The income tax and securities transaction tax arising from the share exchange shall not be levied. |
| Article 29 |
（100% stock conversion）
When a financial institution converts into a financial holding company, all shares shall be transferred.
If a financial institution that converts into a financial holding company, as referred to in the preceding paragraph, is a company whose shares are listed on the Taiwan Stock Exchange or Taipei Exchange, its shares shall be de-listed on the date fixed for transfer of shares and the shares of the financial holding company shall be listed thereon instead.
After a financial institution converts into a financial holding company, in addition to the requirement that directors and supervisors must comply with Article 26, Paragraph 6, of this Act, the financial holding company shall also comply with the relevant provisions of the Securities and Exchange Act and the Company Act.
After completing the transfer in accordance with this Act, the bank subsidiary, insurance subsidiary or securities subsidiary of the financial holding company which is originally a public company shall, unless otherwise provided in this Act, comply with the provisions related to public issuing under the Securities and Exchange Act mutatis mutandis. |
| Article 30 |
（Regulations applying mutatis mutandis to the issuance of new shares）
Where a financial holding company issues new shares for the business of its subsidiary, the employees of such subsidiary may subscribe the shares of the financial holding company, in which case Paragraphs 1, 2, 4, 5 and 6 of Article 267 of the Company Act shall apply mutatis mutandis.
Where a financial holding company holds all outstanding shares or capital stock of a subsidiary, such subsidiary is not subject to the restrictions set out in Paragraph 1, Article 267 of the Company Act when it issues new shares. |
| Article 31 |
（Regulations applying mutatis mutandis to conversion of financial institutions to financing holding companies）
Articles 24 through 28 of this Act shall apply, mutatis mutandis, to the adjustment of the organization or shareholding structure of an investee enterprise when a financial institution converts into a financial holding company and such investee enterprise becomes an investee enterprise of the financial holding company.
Persons holding the shares of a financial holding company as a result of a conversion done in accordance with the preceding paragraph (i) may transfer their shares within three (3) years to the employees of the financial holding company or the financial holding company's subsidiary(ies), (ii) may transfer the shares in accordance with the rights granted by Article 28-2, Paragraph 1, Subparagraph 2 of the Securities and Exchange Act, or (iii) may sell such shares on a stock exchange or over-the-counter market in exemption from the restrictions under Article 38 of the Act. Shares that are not timely transferred or sold within three (3) years shall be treated as unissued shares of the financial holding company and shall apply for an alteration of registration in respect of such shares accordingly.
During the share transfer process of a financial institution, if the financial holding company to be established is an existing company, then the two preceding paragraphs shall apply mutatis mutandis to the investee enterprises of the existing company.
With the exceptions of surplus earning distribution, legal reserve, or capital reserves being set aside as equity capital, the shares of a financial holding company held by financial institutions by means of the preceding three paragraphs shall not be entitled to other shareholders’ rights. |
| Article 32 |
（Short-form merger procedures）
Where the subsidiary of a financial holding company acquires or merges with a company in which such subsidiary holds more than ninety percent (90%) of the outstanding shares and such subsidiary is the surviving entity, a merger agreement shall be drafted and then approved by a majority vote at a meeting of the board of directors attended by two-thirds or more of the directors of each company, respectively and Article 316 of the Company Act requiring resolutions of a shareholders meeting shall not apply.
Following adoption [by the boards of directors] of the resolution described in the preceding paragraph, each board of directors shall, within ten (10) days of such resolution, make a public announcement of the contents of the resolution and the items to be specified in the merger agreement, and designate a period of at least thirty (30) days during which shareholders may raise their objections.
Dissenting shareholders may, upon request made in writing within twenty (20) days from the expiry of the above objection period, stating therein the type and number of shares, request the respective companies to buy back their shares at the prevailing fair [market] value.
Article 187, Paragraph 2 and 3 and Article 188 of the Company Act shall apply, mutatis mutandis, to the determination of the share price by such dissenting shareholders and the relevant company and to the expiration of the appraisal righ. |
| Article 33 |
（Spin-off procedures ）
Upon the resolution of a shareholders' meeting, a subsidiary of a financial holding company may sell part of its business and assets to an existing company or a newly established company with the price being paid in newly issued shares of such existing company or newly established company, as applicable, to which the subsidiary or its shareholders subscribe (a "divided company"), and the following shall apply to such a transaction:
1.Where the divided company subscribes with the price being paid in the newly issued shares by using the specific part of its businesses or assets, Article 272 of the Company Act shall not apply; and
2.Following the adoption of the resolution of such division, the divided company shall, within ten (10) days of such resolution, make a public announcement of the contents of the resolution, and designate a period of at least thirty (30) days in which dissenting creditors may raise their objection thereto. If the divided company fails to make such announcement or fails to provide security to dissenting creditors within the designated period of time, the divided company may not use the division as a defense against such creditors.
If the other company is a newly established company, the shareholders' meeting of the divided company shall be deemed the promoters' meeting of such newly established Company.
Articles 185 through 188 of the Company Act shall apply, mutates mutandis, to the transfer of the essential part of the business or properties under the division described in Paragraph 1 [of this Article]. |
| Article 34 |
（Spin-off agreement and resolutions）
When the divided company and another subsidiary undergo company division in accordance with the provisions of the preceding article, if such other subsidiary is an existing company, the boards of directors of the divided company and its subsidiary shall enter into a division agreement; if such other subsidiary is a newly established company, the board of directors of the divided company shall adopt a resolution for division. Such agreement and resolution, as applicable, shall be presented at the shareholders' meetings.
The division agreement and resolution approving such division referred to in the preceding paragraph shall include the following items and be sent to all shareholders together with notice of the relevant shareholders' meeting:
1.The required amendments to the articles of incorporation of the existing company that is taking over the business, or the articles of incorporation of the newly established company that is taking over the business;
2.The total number of shares, types of shares and number of shares to be newly issued by the existing company that is taking over the business or issued by the newly established company that is taking over the business;
3.The total number, type and quantity of the shares acquired by the divided company or its shareholders;
4.The relevant rules for cash payment to the divided company or its shareholders who will be allocated less than one share;
5.Matters with regard to the assumption of rights and liabilities of the divided company;
6.Matters with regard to the protection of creditors and customers of the divided company and the handling of the rights and interests of the employees of the divided company;
7.Matters with regard to the reduction in capital if the divided company's capital will be reduced;
8.Matters with regard to the cancellation or consolidation of shares if there is a cancellation or consolidation of the shares of the divided company;
9.The date fixed for the division;
10.The limit on the amount of dividend distributions prior to the date fixed for the division by the divided company;
11.The names of the directors and supervisors of the newly established company that is taking over the business; and
12.If more than two subsidiaries jointly engage in a division to establish a new company, a resolution for such division describing matters with regard to such a joint division. |
| Article 35 |
（Procedures for processing debts of spin-off companies）
Except that the obligations arising from the activities of the divided business can be separate from the obligations of the company before the division, the company that is taking over the business after the division shall be jointly and severally liable for the obligations of the company before the division up to the value of the property of the business it takes over; provided, that, any claim of joint and several liability [under this section] shall lapse if it is not exercised within two (2) years after the date fixed of division. |