Regulations Governing the Banking Activity and the Establishment and the Investment by Financial Institution Between the Taiwan Area and the Mainland Area Article 34

A Taiwan bank shall promptly report to the Competent Authority if its branch in Mainland Area incurs losses. If the losses incurred exceed one third (1/3) of the branch’s operating capital, the Competent Authority may order the Taiwan bank to propose a business improvement plan for the branch and report the status of improvement periodically.Where the financial conditions of the branch in Mainland Area as referred to in the preceding paragraph deteriorates significantly that the sound operation of the Taiwan bank might be adversely affected, the Competent Authority may order the Taiwan bank to close its branch in Mainland Area or take other necessary measures against the Taiwan bank pursuant to the Banking Act.A Taiwan parent company shall promptly report to the Competent Authority if the branch of its third-area subsidiary bank in Mainland Area has a situation as described in Paragraph 1 hereof. Where the financial conditions of the branch in Mainland Area deteriorates significantly that the sound operation of the Taiwan parent company might be adversely affected, the Competent Authority may order the Taiwan parent company to close the branch of its third-area subsidiary bank in Mainland Area.