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Interpret the relevant provisions of Article 45 of the Financial Holding Company Act such as the appendix and this instrument of interpretation shall come into effect from this day onwards.
Chin-Kuan-Yin-(1)-09610000350
March 27, 2007
Content
1. Interpret the relevant provisions of Article 45 of the Financial Holding Company Act such as the appendix and this instrument of interpretation shall come into effect from this day onwards.
2. Chin-Kuan-Yin-(1)-0946000571 dated July 21, 2005 of the Commission shall be repealed from this day onwards.
Appendix: Interpretation of Article 45 of the Financial Holding Company Act
Article 45 of the Financial Holding Company Act is interpreted as follows:
1. In the case that a financial holding company or its subsidiary(ies) which has drafted and adopted internal operations guidelines engages in transactions other than credit extension with the persons listed in Article 45 of the Financial Holding Company Act, the transactions are handled in accordance with the said guidelines by a management division that has been granted general authorization to do so through a resolution approved by at least three-quarters (3/4) of all directors present at a board of directors meeting attended by at least two-thirds (2/3) of the directors, and the terms of the transactions are no better than those terms offered to similarly situated customers, the transactions are deemed to comply with Paragraph 1 of Article 45 of the Financial Holding Company Act:
(1) Transactions of Inter-financial Institutions
a. Call loans (including New Taiwan dollars and foreign currencies)
b. Derivative financial products (for example, in the case that the transaction concerns a credit derivative, the financial institution shall require complete collateral from its counterpart, provide credit to the counterpart in the way that interested parties are provided with credit, and list the counterpart in the credit line control. In addition, the terms on collateral shall match up with the duration of the agreement of the transaction and the liquidity of reference asset, and the collateral shall be limited to cash, government bonds, negotiable certificates of deposit of the Central Bank of the Republic of China (Taiwan), saving vouchers of the Central Bank of the Republic of China (Taiwan), treasury bills and fixed deposit receipts of banks.)
(2) The following transactions concern market list prices or open market prices:
a. Remittance, exchanges, deposits or settlement and sale of foreign exchange.
b. Transactions in the primary or secondary market of short-term notes, as well as short selling of securities transactions in the secondary market of government bonds, bank debentures or corporate bonds.
(3) General corporate bonds and debentures are foreign-denominated, listed in New Taiwan dollars, and have no connection with shareholding, and the issuers of the bonds or debentures, or the bonds or debentures themselves have ratings from Taiwan Ratings Corporation of twA or above. In addition, during the underwriting period, the total amount of the subscription of these bonds and/or debentures by the same person shall not exceed NT$ 10 million.
(4) Apportionment of processing fees, service fees or commissions occurred due to the engagement of joint marketing by and among subsidiaries of a financial holding company.
(5) Transactions of insurance products where insurance rates have been submitted to the competent authorities for approval and reference, and prices or rates have been approved and filed for reference by the competent authorities or organizations of financial institutions; or other transactions where collections of fees are standardized and consistent among themselves.
(6) A single purchase in the amount of not more than NT$ 1 million (if an act of contract is about an outright purchase or sale, then the concluded lump sum shall be adopted; with respect to the agreement on payment of commissions or fees are to be paid as agreed upon, then adopt the total amount of the commissions or the fees to be paid pursuant to the agreement).
(7) The total annual interest equivalent, as translated into annual total rents or rent deposits, of a single lease agreement does not exceed NT$ 5 million.
(8) The application to purchase and repurchase of common trust fund beneficiary securities and securities investment trust fund beneficiary certificates (excluding closed-end funds, however) issued by the persons listed in Article 45 of the Financial Holding Company Act. The manager department shall additionally compile the transaction records of the said purchase and repurchase case by case and the profit statement of the purchase and repurchase and submit them to the board of directors for reference in each season. Nevertheless, in the case that other laws and regulations do provide otherwise, then the procedure which the manager department shall follow shall be subject to the provisions of the laws and regulations.
(9) Transactions of financial asset securitization products or real estate securitization products (excluding real estate investment trust beneficiary securities, however) which are publicly offered pursuant to the Financial Asset Securitization Act and the Real Estate Securitization Act respectively in the secondary market. The manager department shall additionally compile the transaction records case by case and the profit statement of the transactions and submit them to the board of directors for reference in each season (however, this subparagraph does not apply to beneficiary securities and asset backed securities which are publicly offered within one year of the issuance of these securities respectively.)
(10) Transactions concluded as a result of operating trust property or trust funds by a bank subsidiary which operates trust businesses concurrently. The subsidiary’s operation of trust property or trust funds is based on the Regulations Governing the Management of Collective Trust Funds and the Rules Governing the Management and Employment of Collective Investment Trust Fund. In addition to the foresaid transactions, transactions which fall in this Subparagraph are those transactions concluded as a result of operating funds by a securities investment trust subsidiary pursuant to the Regulations Governing Securities Investment Trust Funds.
(11) In the case that a stock subsidiary is the broker which recommends emerging stocks, quotes or the obligation to buy or sell made by the broker are the transactions at the electronic negotiation system of emerging stocks.
(12) Transactions in relation to commissioning an impartial third party which/who has been approved by the competent authorities pursuant to the Regulations Governing the Recognition of an Impartial Third Party and its Public Auction Procedure to handle bad debts owed to a financial institution.
2. In the case that transactions other than credit extension, which are handled between a financial holding company or its subsidiary(ies) and the persons listed in Article 45 of the Financial Holding Company Act, fall in the following circumstances, Paragraph 1 of Article 45 of the Financial Holding Company Act in relation to the situation that the transactions are handled in accordance with the said guidelines by a management division that has been granted general authorization to do so through a resolution approved by at least three-quarters (3/4) of all directors present at a board of directors meeting attended by at least two-thirds (2/3) of the directors and Paragraph 4 of the same Act shall not apply:
(1) A government is a responsible person or major shareholder of the financial holding company; and an enterprise falls under the category of the persons listed in Subparagraph 2, Paragraph 1 of Article 45 of the Financial Holding Company Act as a result of the situation that the government is a responsible person or major shareholder of the financial holding company. Nevertheless, in the case that the aforesaid enterprise is a responsible person or major shareholder of the financial holding company at the same time or the enterprise falls in the circumstances set forth in Subparagraph 2, Paragraph 1 of Article 45 of the Act because of its affairs with other civil shareholders or natural persons other than a government, it still shall be subject to the same Article.
(2) A bank subsidiary which operates trust businesses concurrently and is not entitled to the right to utilize the trust property. Nevertheless, in the case that a financial holding company or its subsidiary(ies) appoints an assignee to handle transactions other than credit extension with the persons listed in Article 45 of the Financial Holding Company Act by means of trusts, it shall be subject to the same Article.
3. The types of persons provided in Subparagraph 4 of Article 4 of the same Act define the scope of “subsidiary(ies)” stated in Article 45.
4. The scope of “a responsible person,” “a responsible person … of the Financial Holding Company,” and “acts as the responsible person” provided in Paragraph 1 of Article 45
(1) The scope of “a responsible person” stated in Paragraph 1 of Article 45 includes a director, a supervisor, a general manager, a deputy general manager, an assistant manager or any person whose position is comparable to the foresaid positions.
(2) When a juristic shareholder of a financial holding company, by basing its status as a juristic person or by recommending its representative for the participation in the election of directors or supervisors, is elected to be a director or supervisor, the juristic person is not only a responsible person of the financial holding company, its president, a natural person who is appointed to perform duties pursuant to laws, and the person who/which represents the juristic person to be elected as a director or supervisor are also responsible persons of the company.
(3) A responsible person or major shareholder of the financial holding company, which are stated in Subparagraph 2, Paragraph 1 of Article 45 and acts as the responsible person means a responsible person or major shareholder of the financial holding company which acts as the responsible person pursuant to Article 8 of the Company Act.
5. Investment in or purchase of securities which are issued by any of the persons stated in the preceding paragraph and which are stated in Subparagraph 1, Paragraph 2 of Article 45 dose not include shares of reinvestments which are held by a financial holding company or its subsidiary(ies) pursuant to Articles 36 and 37 of the Financial Holding Company Act or other laws.
6. The scope of “third parties having a relationship” stated in Subparagraph 6, Paragraph 2 of Article 45 includes spouses of persons stated in Subparagraphs 1 to 4, Paragraph 1 of Article 45, relatives within two levels of blood relations, as well as an enterprise of the person himself/herself or his/her spouse serving as a president, supervisor or manager to the said enterprise.
7. The balance calculation shall be adopted to determine the transaction quota provided in Paragraph 4 of Article 45 and the transaction quota shall be handled pursuant to the following provisions:
(1) In the case that a bank subsidiary(ies) of a financial holding company and its parent company, as well as the businesses invested by the financial holding company pursuant to Subparagraphs 1 to 7, Paragraph 2 of Article 36 of the Financial Holding Company Act handle transactions other than credit extension, only the following transactions shall be included in the transaction quota:
a. Sales or purchases of and leases of real estates, and the creation of superficies right are to be calculated pursuant to the amount of money paid or acquired for the foresaid transactions. However, in the case that transactions, pursuant to Point 1, are deemed to fall under the types of the transactions set forth in Paragraph 1 of Article 45, this Subparagraph shall not apply the said transactions.
2. Securities which are held for the purpose of oneself are to be calculated pursuant to the amount of money paid for the securities. However, this Subparagraph shall not apply to transactions which pursuant to Point 1, are deemed to fall under the types of the transactions set forth in Paragraph 1 of Article 45, and transactions of shares concluded as a result of the adjustment of the organization or shareholding structure formed under Article 31 of the Financial Holding Company Act.
(2) Transactions handled by a bank subsidiary(ies) of a financial holding company, its parent company and other interested parties other than the businesses stated in Subparagraphs 1 to 7, Paragraph 2 of Article 36 of the Financial Holding Company Act, shall be computed in the transaction quota, except those transactions which are stated as follows:
1. Transactions which pursuant to Point 1, are deemed to fall under the types of the transactions set forth in Paragraph 1 of Article 45 of the Financial Holding Company Act.
2. Transactions of shares concluded as a result of the adjustment of the organization or shareholding structure formed under Article 31 of the Financial Holding Company Act.
(3) The quota of transactions of derivative financial products is calculated in terms of future potential exposures of counterparty credit risks and the amount proposed by a banking subsidiary at the time of calculating the transaction quota shall not be lower than the capital which shall be calculated pursuant to the provisions of “The Explanations to the Calculation of a Bank’s Capital and Risk Assets” or “The Explanations to the Calculation of a bill finance company’s Capital and Risk Assets.”
8. All interested parties stated in Paragraph 4 of Article 45 means persons stated in Subparagraphs 1 to 4, Paragraph 1 of Article 45 of the Financial Holding Company Act and interested third parties stated in Subparagraph 6, Paragraph 2, Article 45. |