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Amendment to Articles 2, 3 and 6 of the Regulations Governing the Consolidated Capital Adequacy of Financial Holding Companies promulgated
The Financial Supervisory Commission of the Executive Yuan (the “FSC”) passed the amendment to Articles 2, 3, and 6 of the Regulations Governing the Consolidated Capital Adequacy of Financial Holding Companies on December 22, 2005. This amendment was made in concurrence with the promulgation of the Statement of Financial Accounting Standards No. 34 and the actual practice of financial holding companies. The gist of the amendment is as follows:
1. In concurrence with the provisions of the Statement of Financial Accounting Standards No. 34 that requires the book value of short-term investment be deducted from regulatory capital requirements, it is stipulated that book value of short-term funds used pursuant to paragraph 1, Article 39 of the Financial Holding Company Act be deducted. (Amendment to Article 2)
2. To avoid adding unnecessary capital burden to financial holding companies, it is stipulated that a financial holding company and its trust, futures and venture capital subsidiaries may deduct tax receivable and pre-paid tax from total assets in the calculation of regulatory capital requirements. (Amendment to Articles 2 and 3)
3. To give supervisory practice greater flexibility and meet supervisory needs, the action of restricting the allocation of remuneration, bonuses, and travel allowances for directors and supervisors by a financial holding company failing to meet the capital adequacy requirement is changed to restrictions on pay, bonus, travel allowance and other payments to directors and supervisors. (Amendment to Article 6)
4. In considering that in practice no financial holding company has even applied for the establishment of a branch, the restriction to apply for a branch by a financial holding company is changed to restriction to apply for a branch by its subsidiary. (Amendment to Article 6) |