Regulations Governing Securities Investment of Credit Cooperatives Article 4

A credit cooperative that meets the following criteria may invest in the beneficiary certificates of securities investment trust funds, provided the aggregate amount of the original acquisition costs for such investment does not exceed 40% of the cooperative’s calculation basis:1. It has allocated sufficient valuation reserve to meet the potential asset losses as stated on the latest financial examination report;2. Non-performing loans and non-accrual loans that are two years or longer past the payoff period less the estimated recoverable amount have been written off as bad debt; and3. The non-performing loan ratio of the credit cooperative is below 3% at the time of investment.Where non-compliancewith any oneof the criteria specified in the preceding paragraph occurs after a credit cooperative has made the aforementioned investment, the credit cooperative shall promptly stop such investment, and may resume investment only after it becomes compliantwith those criteria again.The fund management company for the investment of a credit cooperative as mentioned in Paragraph 1 hereof shall meet the following criteria:1. Having established for more than two yearswith total fund assets under its management exceeding NT$20billionand owning a management and research team well experienced in investment; and2. Free of incidence in the past two years of being banned from engaging in certain business due to violation of financial laws or regulations, or having its responsible person or fund manager dismissed under the order of government authority, or being involved in major fraud.