Chapter 1 General Principles |
| Article 1 |
（Purpose of legislation）This Act is enacted in order to increase the synergy of Financial Institutions (as defined below), consolidate the supervision of cross-financial industry, promote the sound development of financial markets and protect the public interest. |
| Article 2 |
（Application of laws）The establishment, administration and supervision of Financial Holding Companies [as defined below] shall be governed by this Act; those matters not provided for in this Act shall be governed by the [relevant] provisions of other laws.
Where a Bank [as defined below] that is not organized as a company seeks to carry out a [share] conversion or division under this Act, the relevant provisions of a company limited by shares of the Company Act shall apply mutatis mutandis. |
| Article 3 |
（Competent authority）The term "Competent Authority" as used in this Act shall mean the Financial Supervisory Commission. |
| Article 4 |
（Definitions）The terms as used in this Act shall have the following meanings:
1. "Controlling interest" shall mean holding twenty-five percent (25%) or more of the outstanding voting shares or capital stock of a bank, insurance company or securities firm, or otherwise having the direct or indirect power to elect or designate the majority of the directors of a bank, insurance company or securities firm.
2. "Financial holding company" shall mean a company established in accordance with this Act and having a controlling interest in a bank, insurance company and/or securities firm.
3. "Financial institution" shall mean any of the following banks, insurance companies or securities firms:
(1) "Bank" shall mean banks as defined in the Banking Act of the Republic of China, bills finance companies and other entities designated by the Competent Authority;
(2) "Insurance company" shall mean insurance enterprises established in accordance with the Insurance Law and organized as companies limited by shares; and
(3) "Securities firm" shall mean securities firms engaging in businesses of securities underwriting, securities dealing and securities brokerage, or securities finance companies engaging in the securities finance business.
4. "Subsidiaries" shall mean any of the following entities:
(1) "Bank subsidiary" shall mean a bank in which the financial holding company has a controlling interest;
(2) "Insurance subsidiary" shall mean an insurance company in which the financial holding company has a controlling interest;
(3) "Securities subsidiary" shall mean a securities firm in which the financial holding company has a controlling interest; and
(4) Any other entity in which the financial holding company holds more than fifty percent (50%) of its outstanding voting shares or capital stock, or otherwise has the direct or indirect power to elect or designate the majority of its directors.
5. "Converted" shall mean the transfer of business operation or share exchange.
6. "Foreign financial holding company" shall mean a company established under foreign law that has a controlling interest in a bank, insurance company, and/or securities firm.
7. "Same person" shall mean the same natural or juridical person.
8. "Same related party" shall mean related party of the same natural person or the same judicial person.
9. "Affiliate" shall mean an enterprise to which Articles 369-1 through 369-3, Article 369-9 and Article 369-11 of the Company Act apply.
10. "Major shareholder" shall mean a natural or juridical person holding five percent (5%) or more of the outstanding voting shares or capital stock of a financial holding company or any of its subsidiaries; if the major shareholder is a natural person, the number of shares held by his/her spouse and minor children shall be aggregated into the principal's shareholding.
Related parties of the same natural person referred to in Subparagraph 8 of the preceding paragraph include:
(1) The principal, his/her spouse and relatives by blood within the second degree of kinship.
(2) An enterprise in which the persons referred to in the preceding subparagraph hold more than one third (1/3) of its outstanding voting shares or more than one third of its capital stock.
(3) An enterprise or a foundation in which the persons referred to in Subparagraph (1) hereof act as its chairman, president or directors representing the majority of directors.
Related parties of the same juridical person referred to in Subparagraph 8 of the preceding paragraph include:
(1) The same juridical person and its chairman and president as well as the spouse and relatives by blood within the second degree of kinship of the chairman and president.
(2) Enterprises in which the same juridical person and natural persons referred to in the preceding subparagraph hold more than one third (1/3) of their outstanding voting shares or capital stock, or enterprises or foundations in which the same juridical person and natural persons referred to in the preceding subparagraph act as their chairman, president or directors representing the majority of directors.
(3) The affiliates of the same juridical person. |
| Article 5 |
（Calculation of the number of shares and the amount of capital held）In determining the number of shares or the amount of capital of a financial holding company, bank, insurance company or securities firm held by the same person or same related party, the following shares or capital shall be excluded
1. Shares acquired by a securities firm during the underwriting period of the securities and disposed of during the period prescribed by the competent authority.
2. Shares acquired by a financial institution under a collateral pledge or security agreement and four years have not elapsed since the date of acquisition.
3. Shares acquired by inheritance or bequest and two years have not elapsed since the date of inheritance or bequest. |
| Article 6 |
（Requirements for the establishment）The same person or the same related party who has a controlling interest in a bank, insurance company and/or securities firm shall apply to the competent authority for approval to establish a financial holding company. Such requirement shall not apply to shares owned by governments and for purposes of managing a troubled financial institution with the approval of the competent authority.
If the same person or same concerned party referred to in the preceding paragraph does not concurrently hold shares or capital from any two of the banking, insurance and securities industry, or, the aggregate amount of assets of the bank, insurance company or securities firm in which such same person or same related party has a controlling interest does not exceed a certain amount, such same person or same related party need not establish a financial holding company.
The term "Certain Amount" as used in the preceding paragraph shall be as prescribed by the competent authority. |
| Article 7 |
（Subject of the application for establishment）Where the same related party applies to the competent authority for approval to establish a financial holding company as referred to in the preceding Article, the person who makes the largest total investment in each financial institution shall be the representative applicant for the other [related parties] to jointly establish a financial holding company.
If each of the parties, who are not the same related party, holds more than twenty-five percent (25%) outstanding voting-right-shares or capital of a bank, insurance company or securities firm, the who makes the largest total investment shall be the applicant to apply to establish a financial holding company.
If, two (2) or more persons make a total investment referred to in the preceding paragraph of the same amount, such persons shall report to the competent authority and the competent authority shall designate one (1) of these persons as the applicant to establish a financial holding company. |
| Article 8 |
（Application form）To establish a financial holding company, [the person or company] shall submit an application which includes the following items to the competent authority for approval:
1.name of the financial holding company;
2.articles of incorporation;
3.capital amount;
4.address where the financial holding company and its subsidiaries will be located;
5.business type, name and percentage of the share-holding of each subsidiary;
6.operation, finance and investment plans;
7.proof of the qualifications of the designated president; senior executive vice president and executive vice president.
8.documents and business proposals for handling the relevant transfer of business operation or share exchange. The proposals should include important matters with regard to the protection of customer and creditor rights and the handling of the rights and interests of the employees;
9.proof of the qualifications of the promoters if the financial holding company is newly established; and
10.other documents as prescribed by the competent authority.
Subparagraph 9 of the preceding paragraph shall not apply when a financial institution converts into a financial holding company or a subsidiary of a financial holding company. |
| Article 9 |
（Conditions reviewed by the competent authority）The competent authority shall consider the following conditions when [deciding whether or not to] approve an application for establishing a financial holding company pursuant to the preceding Article:
1.The soundness of the financial and operational status and management capacity;
2.Capital adequacy; and
3.The impact on the competition in the financial market and the promotion of public interests.
If the establishment of a financial holding company constitutes a merger under Article 10 of the Fair Trade Act, the competent authority’s approval shall be subject to the approval of the Fair Trade Commission ("FTC"). The examination criteria shall be prescribed by the FTC in conjunction with the competent authority. |
| Article 10 |
（Organization type and stock issuance）A financial holding company shall only be established in the form of a company limited by shares. Unless otherwise approved by the competent authority, the shares of a financial holding company shall be publicly offered. |
| Article 11 |
（Exclusive name rights）The words "financial holding company" must be included in the name of a financial holding company.
The term "financial holding company" shall not be used [in the company name] of any entity other than by a financial holding company, nor other names [/words] shall be used that could mislead others into believing that such entity is a financial holding company. |
| Article 12 |
（Minimum capital）The FSC shall prescribe the minimum paid-in capital of a Financial holding company. |
| Article 13 |
（Business license）A Financial holding company that has received establishment approval from the FSC shall, after completing its company registration, apply to the FSC to issue a business license. For a Financial Institution that is converting into a Financial holding company, the calculation of the license fee for the issuance of a business license shall be based on the net increase in capital after such conversion. |
| Article 14 |
（Registration of change ）If, after establishment, a Financial holding company seeks to amend any of the items listed in Article 8, Paragraph 1, Subparagraphs (1) through (4) of this Act, such Financial holding company shall report same to the FSC for approval, amend its company registration and apply for the issuance of a new business license. |
| Article 15 |
（Minimum number of shareholders）A financial holding company may hold all the outstanding shares or paid-in capital of its subsidiary(ies), and the provisions of Article 2, Paragraph 1, Subparagraph (4), and Article 128, Paragraph 1, of the Company Act with respect to the number of shareholders and promoters of a company limited by shares shall not apply. The rights and functions of the shareholders' meeting(s) of such Subsidiary(ies) shall be exercised by the board of directors [of the subsidiary], and the provisions of the Company Act with respect to shareholder meetings shall not apply.
The directors and supervisors of the subsidiary referred to in the preceding paragraph shall be appointed by the financial holding company. Directors and supervisors of the financial holding company may concurrently hold a [director/supervisor] position in the subsidiary(ies) as referred to in Paragraph 1. |
| Article 16 |
（Shareholders eligibility review）When a financial institution is converted into a financial holding company, a same person or same related party who singly, jointly or collectively holds more than ten percent (10%) of the financial holding company's outstanding voting shares shall report such fact to the competent authority.
After a financial holding company has been established, a same person or same related party who singly, jointly or collectively holds more than five percent (5%) of the financial holding company's outstanding voting shares shall report such fact to the competent authority within ten (10) days from the day of holding; the preceding provision applies to each cumulative increase or decrease in the shares of the same person or same related party by more than one percent (1%) thereafter.
After a financial holding company has been established, a same person or same related party who intends to singly, jointly or collectively acquire more than ten percent (10%), twenty-five percent (25%) or fifty percent (50%) of the financial holding company's outstanding voting shares shall apply for prior approval of the competent authority.
A third party who holds shares of a financial holding company on behalf of the same person or same related party in trust, by mandate or through other types of contract, agreement or authorization shall fall within the purview of the same related party.
The regulations governing the qualifications and requirements for the same person or same related party who applies for approval pursuant to Paragraph 3 hereof, required documentation, number of shares to be acquired, purpose of acquisition, sources of funding, state of pledging of shares held, existing shareholding, and the reporting and announcement of changes in other important events, and other matters to be complied with shall be prescribed by the competent authority.
The same person or same related party who holds more than ten percent (10%) of the outstanding voting shares of a financial holding company shall not pledge his or her shares to a subsidiary of the financial holding company. The preceding provision does not apply to shares of a financial holding company already pledged to a financial institution before the financial institution was converted into the financial holding company’s subsidiary, provided the original pledge continues to be in effect.
If a same person or same related party referred to in Paragraph 1 hereof does not meet the qualifications or requirements stipulated in the regulations as referred to in Paragraph 5 hereof, the same person or related party may continue to hold shares of such company, but may not increase his or her shareholding.
The application referred to in Paragraph 3 hereof shall be deemed approved if the competent authority does not object thereto within fifteen (15) business days from the next day following the receipt of such application.
The same person or same related party who singly, jointly or collectively holds more than five percent (5%) but no more than ten percent (10%) of a financial holding company's outstanding voting shares prior to the enforcement of the amendment to the Act on December 30, 2008 shall report such fact to the competent authority within six (6) months from the enforcement date of the said amendment.
Where the same person or same related party who holds outstanding voting shares issued by a financial holding company fails to report to the competent authority in accordance with the provisions of paragraph 2 and the preceding paragraph or fails to obtain approval in accordance with paragraph 3, the same person or same related party shall have no voting rights for the unreported or unapproved excess shares and the competent authority shall order the person to dispose the excess shares within a prescribed period. |
| Article 17 |
（Qualifications of the promoters and responsible persons）The guidelines with respect to the qualifications of the promoters and responsible persons of a financial holding company, the restrictions on concurrent posts held by the responsible persons and other matters to be complied with shall be prescribed by the Competent Authority.
A person not meeting the qualifications set forth in the guidelines referred to in the preceding paragraph shall not act as the responsible person of a financial holding company; any such person who currently acts as the responsible person of a financial holding company shall be ipso facto discharged.
The responsible person of a financial holding company who concurrently holds a position in a subsidiary of the financial holding company owing to an investment relationship, or the responsible person of a subsidiary of a financial holding company who meets the qualifications set forth by the Competent Authority to concurrently hold a position in another subsidiary of the financial holding company is not subject to the restrictions set out in the front section of Paragraph 3, Article 11 of Act Governing Bill Finance Business.
The responsible person or any employee of a financial holding company shall not accept, under any pretense, commissions, rebates and other unwarranted benefits from a transaction counterparty or a customer of the financial holding company or its subsidiaries. |
| Article 18 |
（Procedures for merger, general transfer or assumption）With competent authority approval, a financial holding company may merge with the following companies, transfer its entire assets and liabilities to the following companies, or assume the entire assets and liabilities of the following companies (and Article 6, Article 8, Article 9 and Articles 12 to 14 of the Financial Institutions Merger Act shall apply mutatis mutandis):
1.Financial holding companies;
2.Existing companies that have a controlling interest as defined in Article 4, Paragraph 1, Subparagraph 1 of this Act, and meet the requirements of Article 9, Paragraph 1, of this Act.
If the business scope of the existing company, as referred to in Subparagraph 2 of the preceding paragraph, exceeds the scope of Articles 36 and 37 of this Act, the competent authority shall, at the time of approval, require such company to make an adjustment within a prescribed period of time. |
| Article 19 |
（Emergency response to management crisis of the company）IF a financial holding company has one of the following circumstances, and the financial holding company or its banking subsidiaries, insurance subsidiaries or securities subsidiaries experience a significant deterioration in financial or business conditions and are unable to pay their debts or has a negative net worth after adjustments, and where the competent authority determines that immediate measures are necessary and that such measures will not have material adverse effect on competition in the financial market, the circumstances are exempted from applying for approval from the FTC under Article 11, Paragraph 1 of the Fair Trade Act:
1.Merge with any company referred to in Paragraph 1, Subparagraph 1 or Subparagraph 2 of the proceeding Article, or transfer all of its rights and obligations to any said company or assume all the rights and obligations of any said company;
2.A same person or same related party to hold shares representing one-third (1/3) or more of its outstanding voting shares; and
3. Be established as a result of a conversion from a financial institution. |
| Article 20 |
（Dissolution and liquidation procedures）A financial holding company, upon the resolution to dissolve by its shareholders' meeting, shall file an application to the competent authority for approval, stating therein the reasons and enclosing therein the minutes of said shareholders' meeting, a plan for debt repayment, the plan and the deadline by which its subsidiaries or invested enterprise(s) will be disposed of and conduct liquidation in accordance with the Company Act upon the competent authority’s approval.
If a financial holding company conducts special liquidation, to supervise the company’s special liquidation, the court shall consult the competent authority’s opinion. When necessary, the court may request the competent authority to recommend a liquidator or to designate a person to assist the liquidator in carrying out their duties.
After a financial holding company has commenced liquidation, no capital or dividends may be distributed under any circumstance until all of the financial holding company's debts have been paid off. |
| Article 21 |
（Approval revocation procedures）If, after it has received the FSC establishment approval, a Financial holding company ceases having a Controlling Interest, as defined in Article 4, Paragraph 1, of this Act, in a Bank Subsidiary, Insurance Subsidiary, or Securities Subsidiary, the FSC shall request such Financial holding company to take corrective measures within a prescribed period of time. If the Financial holding company fails to remedy the matter, its establishment approval shall be revoked. |
| Article 22 |
（Cancellation of business license）If the FSC approves the dissolution of a Financial holding company, or revokes the establishment approval of a Financial holding company, such Financial holding company shall surrender its business license within a prescribed period of time for cancellation.Such Financial holding company shall not use "Financial holding company" in its name anymore, and shall amend its company registration accordingly.
If a Financial holding company referred to in the preceding paragraph fails to surrender its business license within the prescribed period of time, the FSC shall cancel the business license by public announcement. |
| Article 23 |
（Establishment of a foreign financial holding company）If a foreign financial holding company meets the following requirements and obtains the competent authority’s approval, it may be exempted from establishing a new financial holding company in the Republic of China ("R.O.C."):
1.[If the foreign financial holding company] has fulfilled the requirements under Article 9, Paragraph 1, for the establishment of a financial holding company;
2.[If the foreign financial holding company] has sufficient experience in operating and managing a financial holding company and has excellent credit;
3.The competent financial regulatory authority in such foreign financial holding company's home country has approved such foreign financial holding company investment in the R.O.C. by possessing Subsidiaries and agreed to cooperate with the R.O.C. government in sharing the responsibility to supervise such Foreign financial holding companies' activities on a consolidated basis;
4.The competent financial regulatory authority in such foreign financial holding company's home country and such foreign financial holding company's head office have the capacity to supervise the relevant subsidiaries in the R.O.C. on a consolidated basis; and
5.The head office of such foreign financial holding company has appointed an agent for litigious and non-litigious matters in the R.O.C.
The preceding paragraph also applies to foreign financial institutions which are "universal banks" in their home countries. |