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Summary: Promulgated the Directions Governing Commercial Banks Applying for Investment in Venture Capital Businesses and Management Consulting Businesses
Issuer: Financial Supervisory Commission
Issue date: November 14, 2022
Issuance No.: Jin-Guan-Yin-Fa Order No. 11102734501
Full Content:
1. Processed in accordance with Paragraph 4, Article 74 of the Banking Act.
2. The FSC hereby states that the following businesses which commercial banks may apply to invest shall be deemed as "other financial related businesses designated by the competent authority" as specified in Paragraph 4, Article 74 of the Banking Act:
(1) Venture capital businesses.
(2) Management consulting businesses for fundraising or establishing venture capital businesses.
3. The total investment amount by a commercial bank in its venture capital businesses shall not exceed three percent (3%) of its net worth at the time of the investment. In addition, the investment amount shall be included in the overall investment limit as specified in Subparagraph 1, Paragraph 3, Article 74 of the Banking Act.
4. The combined total shareholding held by a commercial bank and its subsidiaries in an investee business, which is invested by the commercial bank's venture capital businesses, shall not exceed fifteen percent (15%) of the total outstanding shares with voting rights issued by the investee business. However, this restriction shall not apply if the combined total amount of investment does not exceed the following limits and only the venture capital subsidiaries of the commercial bank participate in the investment:
(1) The investee business belongs to the industries defined in Subparagraphs 1 through 5 and Subparagraphs 8 through 15, Paragraph 1, Article 3 of the Development of the Cultural and Creative Industries Act, with a total investment amount not exceeding NT$150 million.
(2) The investee business belongs to key innovative industries, including green energy, Asia Silicon Valley, biomedicine, national defense, smart machinery, innovative agriculture, and circular economy, with a total investment amount not exceeding NT$150 million.
(3) The investee business belongs to six core strategic industries, including information and digital industries, cybersecurity industry, precision health industry, national defense and strategic, green and renewable energy industry, national defense and strategic industries, and strategic stockpile industries, with a total investment amount not exceeding NT$150 million.
(4) The investee business belongs to the industries other than those mentioned in the preceding subparagraph (1) to (3) with a total investment amount not exceeding NT$50 million.
5. When a venture capital subsidiary of a commercial bank invests in other venture capital businesses, the bank shall determine and control the relevant investment ratio in accordance with its internal rules. The bank shall report related information in accordance with the format specified by the competent authority within fifteen (15) days after the end of each quarter.
6. The double leverage ratio of a venture capital subsidiary invested by a commercial bank may not exceed one hundred twenty-five percent (125%). The double leverage ratio refers to the proportion of the investment made by the venture capital subsidiary to its net worth.
7. When a commercial bank invests in venture capital businesses and management consulting businesses specified in Point 2 of the Directions, it shall be processed in accordance with the regulations for calculating the capital of capital instruments issued by financial institutions in the Forms for Calculating Bank’s Regulatory Capital and Risk-weighted Assets.
8. The responsible person or staff members of a commercial bank may not serve as the manager of the business invested by the bank's venture capital subsidiary.
9. When a commercial bank engages in loans and other transactions with its venture capital businesses, management consulting businesses, or investee businesses of its venture capital businesses, it shall process such transactions in accordance with the regulations for transactions with interested parties in the Banking Act and the Financial Holding Company Act.
10. A commercial bank shall require its venture capital subsidiaries to set up a separate account for their invested businesses and document in detail the status of investment. The commercial bank shall also regularly review the business and financial conditions of its venture capital subsidiaries to effectively monitor and manage their overall investment risks.
11. These Directions shall be implemented immediately. The Jin-Guan-Yin-Fa No. 10610006570 Order issued by the FSC on December 25, 2017 shall be abolished immediately. |