CHAPTER Ⅲ BUSINESS |
| Article 21 |
（Business scope）The Competent Authority shall determine the business permitted to be offered by a Bills Finance Company within the scope set out below. The Competent Authority may establish separate permitted business for a Bills Finance Company's head office and for its branch offices. The permitted business shall be specified on the business license.
1. Certifying and underwriting Short-Term Bills;
2. Certifying and underwriting financial bonds;
3. Brokering and trading Short-Term Bills;
4. Brokering and trading financial bonds;
5. Brokering and trading government bonds;
6. Guaranteeing and endorsing Short-Term bills;
7. Providing financial consulting services to enterprises; and
8. Other business as authorized by the Competent Authority.
If the provision of any of the above business involves foreign exchange, then CBC’s approval shall also be required. If the provision of the above business involves government or corporate bonds, approval from the Competent Securities Authority shall also be required.
A Bills Finance Company may not conduct any business not permitted by the Competent Authority. |
| Article 22 |
（Records of related information）If a Bills Finance Company certifies, underwrites, brokers or trades in Short-Term Bills or bonds, as referred to in the first paragraph of the preceding article, it shall record the time, type, amount and customer name for each transaction.
A financial institution concurrently engaging in Bills Finance business shall be subject to the preceding paragraph. |
| Article 23 |
（Establishment of the minimum transaction face value of short-term bills and the face value of promissory notes sold by distributors）The minimum trading par value of Short-Term Bills shall be as prescribed by the Competent Authority after consulting with the CBC.
The par value of a Commercial paper underwritten by a Bills House, shall be prescribed by the Competent Authority after consulting with the CBC. |
| Article 24 |
（Obligations of bills finance businesses）A Bills Finance Company trading in Short-Term Bills or bonds, as referred to in Article 21, Paragraph 1, shall publicly disclose the bid and offer prices pursuant to rules [to be] issued by the Competent Authority.
A Bills Finance Company which has committed to a price and/or quantity shall execute the trade at said price and in said quantity.
The preceding two paragraphs shall also apply to financial institutions concurrently operating a Bill House business and trading in Short-Term Bills. |
| Article 25 |
（Principle of confidentiality）A Bills House that certifies, underwrites, brokers, trades, guarantees or endorses Short-Term Bills or bonds, and conducts other businesses, etc. shall, unless otherwise required by law or by the Competent Authority, keep confidential all information regarding a customer's finances, business, and trading activities. |
| Article 26 |
（Issuance of short-term bills）Short-Term Bills may be issued in physical or dematerialized forms. Except for treasury bills, short-term bills issued in physical forms shall be delivered to the central depository custody institution for custody; those issued in dematerialized forms shall be registered by the central depository custody institution for issuance.
Settlement for transaction in Short-Term Bills under the custody of or registered with the central depository custody institution as referred to in the preceding paragraph, shall be effected through book-entry transfer. The guidelines governing the book-entry transfer operation and the issuance, registration, and relevant matters for short-term bills issued in dematerialized forms shall be prescribed by the Competent Authority after consulting with the CBC.
Short-Term Bills held or registered in the central custody institution may be pledged and the creation of the pledge may be effected through book-entry transfer and Article 908 of the Civil Code shall not be applicable.
Transfer, inheritance and pledge of the Short-term Bills registered by the central custody institution for issuance shall not be valid against any third party unless such transfer, inheritance and pledge of the Short-Terms Bills have been registered under the guidelines established by the central competence authority referred to in the Paragraph 2.
In the event that the payment for the dematerialized short-term bills registered by the central custody institution is dishonored upon their maturity, the central custody institution shall issue the certifying documents of debt and non-payment to the holder.
The certifying documents of non-payment received by the aforesaid holder through notification shall be as the protest in the Law of Negotiable Instruments.
In the case that the dematerialized short-term bills issued in the forms of the promissory notes of a company or a state-run business is dishonored by non-payment upon their maturity, and the holder thereof and upon receiving the aforesaid certifying documents of debt and non-payment, the holder may, in accordance with Article 123 of the Negotiable Instruments Act, petition a competent court for a ruling granting compulsory execution. |
| Article 27 |
（Certification）A Bills House shall conduct its certification business with the care of a good administrator.
The types of Short-Term Bills which [must] be certified by a Bills House shall be as prescribed by the Competent Authority. |
| Article 28 |
（Transaction terms of short-term bills, counterparties of similar transactions, total amount held, and specific levels）Transaction terms for Short-Term Bills or bonds traded or held by a Bills House which are issued by a [related] enterprise listed below (Related Party), shall be not more favorable than the terms for similar transactions with similar [non-related] parties and shall be (I) guaranteed or accepted by a financial institution which has been rated at or above a certain rating [level prescribed by the Competent Authority] or (ii) issued by a Related Party issuer which is rated at or above a certain rating [level to be prescribed by a Competent Authority] by a credit rating agency. Except for negotiable time deposit certificates and financial bonds issued by a bank, the total amount [of the above Related Party issued Bills/bonds] a Bills House may hold shall be restricted. [The following are Related Parties]:
1. An Enterprise that is, itself or through a representative, a director or supervisor of a Bills House; or
2. A shareholder holding more than three percent (3%) of the paid-in capital of a Bills House, or an entity in which the responsible person of a Bills House serves as a director, supervisor, or manager.
The definition of transaction terms, similar [non-related] parties, total holding amount and required minimum ratings shall be prescribed by the competent authority after consulting with the CBC. |
| Article 29 |
（Credit investigation）When a Bills House underwrites, guarantees or, endorses Commercial papers, it shall make a detailed and accurate credit assessment for the issuing company, confirm such company’s issuing plans and sources of repayment, and obtain audited financial statements, to determine the amount of underwriting, guarantee, or endorsement. This requirement shall not apply to Commercial papers guaranteed by other financial institutions. |
| Article 30 |
（Scope for the single enterprise, single related person or the same related enterprises）The Competent Authority may prescribe restrictions on a Bills Finance Company that guarantees or endorses [multiple] Short-Term Bills of a single enterprise, single related person or the same related enterprises.
Related enterprises as used in the preceding paragraph shall have the meaning ascribed thereto in Articles 369-1 through 369-3, Article 369-9 and Article 369-11, of the Company Act; "same related person" shall mean an enterprise which has received a guarantee from a Bills Finance Company and another enterprise which has one of the following relationships with such enterprise:
1. The chairman or the manager [of the two enterprises] is the same or such persons are husband and wife or lineal relatives by blood;
2. The guarantor or third party security provider [for the two enterprises] is the same person or entity or two (2) or more of such guarantors or third party security providers are the same persons or entities; or
3. Such enterprise is the guarantor or the pledgor for the other enterprise.
The "same person" as used in the preceding paragraph, Item 2, shall mean the same natural person or legal entity; "guarantor" as used in Items 2 and 3 [of the preceding paragraph], shall not include the competent public treasury authority at all levels of government or a credit guarantee institution approved by the government. |
| Article 31 |
（Establishment and restrictions on the guarantees for short-term bills and total balance of endorsements）The total outstanding amount of guaranteed or endorsed Short-Term Bills by a Bills Finance Company shall be determined by the Competent Authority after consulting with the CBC.
In order to improve the operations of a Bills Finance Company, the Competent Authority may, after consulting with the CBC, when necessary, restrict the total outstanding amount of guarantees and endorsements for Short-Term Bills by a Bills Finance Company. |