Data Source:Laws and Regulations Retrieving System of the Banking Bureau


Title: The Act Governing Bills Finance Business (2018.12.05 Modified)

  CHAPTER Ⅳ FINANCE

Article   32    (Establishment of internal control system and procedures of bills finance businesses)A Bills Finance Company shall establish internal control systems and procedures for evaluating the quality of its assets, creation of loss reserves, clearing of the past due credit extensions and the disposition or transfer of bad debts. Applicable regulations with respect to the above system and procedures shall be established by the Competent Authority.
Article   33    (Maximum and minimum requirements for financial ratios of bills houses)In order to improve the financial condition of Bills Houses, the Competent Authority may, after consulting with the CBC, when necessary, impose restrictions on the business offered by, and the financial ratios of, a Bills House.
If a Bills House fails to comply with the restrictions referred to in the preceding paragraph, the Competent Authority may impose a restriction on the distribution of dividends or take other necessary disciplinary actions.
Article   34    (Statutory earnings reserve, special earnings reserve)A Bills Company shall, at the time it distributes its profits for each fiscal year, set aside thirty percent (30%) of its after-tax profits as a legal reserve.
Unless and until the accumulated legal reserve equals a Bills Company's paid-in capital, the maximum cash dividends which may be distributed [each year] shall not exceed fifteen percent (15%) of a Bills Finance Company's paid-in capital. Once the accumulated legal reserve equals or exceeds a Bills Company's paid-in capital, the foregoing paragraph shall not apply.
In addition to the required legal reserve, a Bills Finance Company may set aside a special reserve in accordance with its Articles of Incorporation or a resolution of its shareholders.
Article   35    (Annual report formulation, publication, and certification)At the end of each fiscal year, each Bills Finance Company shall prepare and submit its annual report, business report, balance sheet, property inventory, income statement, statement of shareholder's equity, cash flow statement, the determination of profit distribution or make up of losses and other items designated by the Competent Authority to the Competent Authority for recordation, within fifteen (15) days after such reports are approved by an annual shareholders meeting. The matters to be included in such annual report shall be as prescribed by the Competent Authority.
A Bills Finance Company shall publish its balance sheet, income statement, statement of shareholders' equity, cash flow statement and other items specified by the Competent Authority in a daily newspaper in the place where such Bills Finance Company is located or in such other manner as may be designated by the Competent Authority; provided, that, if a Bills Finance Company complies with Article 36 of the Securities Exchange Act, the above publication shall not be required.
The reports and statements required to be published under the preceding paragraph shall be audited and certified by a certified public accountant.
Article   36    (Scope and management of the security deposit)A Bills House shall post with the CBC or in a depository bank designated by the CBC a bond in cash, government bonds, financial bonds, corporate bonds or other bonds or notes acceptable by the CBC. The amount, purpose and administration related to such bond shall be as prescribed by the Competent Authority after consulting with the CBC.
Article   37    (Interbank loan or financing time limit and total remaining balance)The tenor and total outstandings amount of "inter market" borrowing by a Bills Finance Company from financial institutions shall be prescribed by the Competent Authority after consulting with the CBC.
Article   38    (Conditional transactions)A Bills House engaging in repo and reverse repo transactions shall do so in accordance with a written agreements and on the dates agreed to in such written agreement.
The aggregate transaction amount for the transactions described in the preceding paragraph shall be as determined by the Competent Authority after consulting with the CBC.
Article   39    (Establishment of total amount of corporate bonds)The total amount of corporate bonds that can be issued by a Bills Finance Company shall be set by the Competent Authority after consulting with the CBC. Article 247 of the Company Act and Article 28-4 of the Securities and Exchange Act shall not apply to such issues.
Article   40    (Investment management)A Bills Finance Company shall not invest in other enterprises. However, in connection with a government economic development plan, or financial policy and with the Competent Authorities approval, a Bills Company may invest in financial related enterprises, enterprises related to its business, or enterprises permitted to be invested in by the Competent Authority prior to the promulgation of this Act. The counterparties, amount, management and other matters related to such investments shall be subject to the regulations promulgated by the Competent Authority.
A Bills Finance Company investment in bonds and derivatives shall be subject to restrictions prescribed by the Competent Authority after consulting with the CBC.
A Bills Finance Company may invest not more than thirty percent (30%) of its net worth at the time such investment is made in real estate for its own use.
A Bills Company shall not invest in real estate other than for its own use, unless:
1. A substantial portion of the real estate is for its own use;
2. The real estate will be for its own use in the near future; or
3. A substantial portion of the originally owned and later redeveloped real estate is for its own use.
A Bills Finance Company may not invest more than ten percent (10%) of its net worth in real estate not for its own use in accordance with the exceptions in the preceding paragraph. The total amount that a Bills Finance Company may invest in real estate not for its own use plus the total amount a Bills Finance Company invest in real estate for its own use shall not exceed thirty percent (30%) of a Bills Finance Company's net worth at the time of the investment in said real estate.
Should a Bills Finance Company enter into a real estate transaction with an entity in which the Bills Finance Company holds more than three percent (3%) of the paid-in capital, or with the responsible person(s) or staff members or major shareholders of the Bills Finance Company, or with an interested party of the Bills Finance Company's responsible person, the Bills Finance Company shall do so at arms length and obtain the consent of more than three-quarters (3/4) of the Bills Finance Company’s directors present at a board meeting where at least two-thirds (2/3) of the directors are present.
Article   41    (Regulatory capital and risk assets)The ratio between equity capital and risk weighted assets of a Bills Finance Company shall not be less than eight percent (8%). If a Bills Finance Company is required by the Competent Authority to produce consolidated financial statements, such Bills Finance Company shall also meet the above ratio requirement on a consolidated basis.
The formula for calculating the aforesaid equity capital and risk assets shall be as prescribed by the Competent Authority. In order to improve the conduct of a Bills Finance Company's management, when necessary, the Competent Authority may set restrictions on a Bills Finance Company's risk assets.
If the actual ratio of a Bills Finance Company is lower than the required ratio referred to in Paragraph 1, above, the Competent Authority may prohibit such Bills Finance Company from distributing dividends and/or taking other necessary actions. Applicable regulations with respect to the above matters shall be as prescribed by the Competent Authority.
Article   42    (Establishment and registration of the accounting system)The BHA shall establish a [model] accounting system to be used by Bills House pursuant to relevant laws and regulations and submit said system to the Competent Authority.