Regulations Governing Financial Institutions Applying To Engage In Bills Finance Business

These Regulations are enacted in accordance with Article 17 of the ActGoverning Bills Finance Business.

Financial institutions as used in these Regulations shall mean Banksand Securities Firms.The term "Banks" as referred to in the preceding paragraph shall notinclude investment and trust companies; the term "Securities Firms" asreferred to in the preceding paragraph are limited to those whichconcurrently conduct securities underwriting, trading and brokerage.Securities Firms may only apply to engage in short term billsbrokerage and trading.

If a financial institution has invested in and holds shares exceeding20% of the actual paid-in capital of a bills finance company, suchfinancial institution may not apply to engage in a bills finance businessunless otherwise approved by the competent authority.A financial institution that, prior to the promulgation of this Regulation,is an investor in the shares of a bills finance company with aninvestment exceeding the ratio cited above and has obtained approvalfrom the competent authority to engage in the bills finance businessmay continue to do so, provided that such financial institution may notapply to open additional branches [for its bills finance business] or toexpand the scope of its bills finance business.

A financial institution that has not been punished by a fine forviolation of the Act governing Bills Finance Business, or the BankingAct of the Republic of China, or been subject to any penalty prescribedby Article 66 of the Securities and Exchange Law within one (1) yearprior to its application may apply to the competent authority forpermission to engage in a bills finance business. Such applicationshall include:1. Application (form enclosed);2. Board resolution;3. Business plan; and4. Other documents as may be required by the competent authority.A branch of a foreign financial institution may replace the boardresolution required by Item 2 of the preceding paragraph with adocument evidencing the consent of a person in the head officeauthorized [to give consent to apply to engage in a bills financebusiness in Taiwan], and shall also provide an affirmation thatengaging in a bills finance business will not violate the laws andregulations of its home country or the charter of its head office.The business plan required by Paragraph 1, Item 3, shall include thefollowing:1.The departments or branches that will engage in certifying,underwriting, brokering and trading of short term bills;2.An evaluation of the market environment;3.The principles and policies by which the business operations will begoverned;4.Projected volumes, profits, and losses for the next three years and anexplanation of the basis for such forecast;5.The [planned] deployment, management, and training of personnel(including a roster of business personnel and documentsevidencing their qualifications);6.A business manual (which shall include an operations flow chart,accounting procedures and internal control and audit systems).

A financial institution that increases the number of its branchesengaging in bills finance business shall apply for permission to do so inaccordance with the provisions of the preceding articles.

A financial institution that has received permission to engage in billsfinance business shall, within six (6) months after the date on which itreceives such permission and prior to engaging in a bills financebusiness, submit the following documents to the purpose competentauthority for purposes of obtaining a new business license (approvallicense) for the head office (or branch);1.The approval letter from the competent authority;2.A roster of business personnel;3.Documentation evidencing the deposit of the security deposit; and4.Other documents as required by rules established by the competentauthority or the purpose competent authority .When applying for the aforesaid business license, the financialinstitution shall also submit a written report to the relevant competentauthority.The competent authority shall revoke its permission [for a financialinstitution to engage in bills finance business] if such financialinstitution fails to apply for a new business license (approval license)within the time period required by the preceding paragraph. However,the competent authority may grant one (1) extension, not to exceed six(6) months, upon timely application and upon showing of a goodreason for such extension.

The preceding three articles shall not apply to a financial institution thatis party to an approved merger with a bills finance company andsubsequently engages in the bills finance business.

A head office or branch of a financial institution that wishes to cease allor part of its bills finance business shall apply to do so by submitting abusiness plan and application to the competent authority. Suchfinancial institution shall also apply for a new business license(approval license).The business plan required by the preceding paragraph shall include thefollowing:1.A description of the business that the financial institution will ceaseto engage in and the reason for such cessation; and2.A substantive discussion of how the rights of, and obligations to,existing clients will be handled and [a discussion] of othermatters relevant to [another financial institution] taking over theservices offered by the financial institution.

These Regulations shall become effective upon promulgationIf the translations of the texts differ from the original Chinesetexts, the original texts are preferential.