These Regulations are enacted pursuant to Article 37 of the Credit Cooperatives Act, to which Article 74-1 of the Banking Act applies mutatis mutandis.

Credit cooperatives may invest in the following types of securities:
1.Domestic and foreign government bonds.
2.Domestic short-term bills.
3.Domestic financial bonds.
4.Domestic corporate bonds.
5.Beneficiary certificates of domestic securities investment trust funds.
6.Negotiable certificates of deposit and savings bonds issued by the Central Bank of theRepublic of China (Taiwan)(referred to as the “Central Bank” hereunder).
7.Domestic beneficial securities and asset-backed securities.
8.Domesticstockslisted on TWSE/TPEx.
9.Foreign securities under non-discretionarymoney trust.
10.Other securities approved by the central competent authority.
The types of stocks referred to in the preceding paragraph include:
1. Common shares of constituent stocks of TWSETaiwan 50 Index, common shares of constituent stocks of TWSETaiwan Mid-Cap 100 Index and TWSETaiwan Technology Index.
2. Common shares of constituent stocks of MSCI Taiwan Index.
3. Common shares of constituent stocks of TPEx 50 Index.
Where the corporate bonds or financial bondsin Paragraph 1 hereofare convertible, exchangeable or come with warrants, they may not be converted or exchanged into stock or their warrant may not be exercised unless the underlying stocks are issued by a domesticTWSE/TPExlisted company as provided in the preceding paragraph.

The aggregate amountof securities that a credit cooperative may investinaccording to Paragraph 1 of the preceding article, excluding domesticgovernment bonds, treasury bills, negotiable certificates of deposit and savings bonds issued by the Central Bank, shall not exceed 15% of the total balance of deposits received byit.
The balanceof reverse repo transactions of short-term billsand bondspurchased bya credit cooperativeis excluded from the limits for securities investment set forth in the preceding paragraph, while the balanceof repo transactions of short-term billsand bonds sold by a credit cooperative shall be included.

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; and
3. 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; and
2. 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.

A credit cooperative that meets the criteria provided in Paragraph 1 of the preceding article,has capital adequacy ratio of 10%or higher,andat the time of investment,has bad debt reserve coverage ratioabove 100% at the end of the previous month may invest in domesticTWSE/TPExlisted stocks, provided the aggregate amount of the original acquisition costs for such investment does not exceed 40% of the cooperative’scalculation basis.
A credit cooperative's total investment in the shares of a domesticTWSE/TPExlisted company shall not exceed 5% of the company's total shares issued and outstanding.
Where non-compliancewith anyone of the criteria specified in Paragraph 1 hereof 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 aggregate amount of the original acquisition costs of a credit cooperative for investmentincorporate bonds, financial bonds, short-term billsand stocks that are issued by a singlefinancial holding company or a singlebankshall not exceed 15% of the cooperative’scalculation basis.
When acredit cooperativemakes investmentsaccording to the preceding paragraph, if the credit cooperative also meets the following criteria and the invested financial holding company or bankmeetsthe standardsestablished by the ROC Credit Cooperative Union, theaggregate amount of investments may not exceed25% of the cooperative’s calculation basis:
1. Complying with the provisionsof Paragraph 1, Article 4herein;
2. TheNPL ratio at the end of previous yeardoes not exceed 1%;
3. The capital adequacy ratiois not less than 12%at the end of previous year; and
4. The bad debt reserve coverage ratiois not less than 100%at the end of previous year.
Where non-compliancewith anyone of the criteria specified in the preceding paragraph occursorthe invested financial holding company or bankdoes not meet the standards after a credit cooperative has made investments under Paragraph 1 hereof that exceed the limit specified in Paragraph 1hereof, the credit cooperative shall promptly stop such investment, and may resume investment only after it becomes compliantwith thecriteria and standards under the preceding paragraph again.
The aggregate amount of the original acquisition costs of a credit cooperative forinvestmentin short-term bills, corporate bonds and stocks issued by a single enterpriseother than financial holding companies and banksshall not exceed 10% of the cooperative’scalculation basis.
The balanceof reverse repo transactions of short-term bills and bonds purchased by a credit cooperative is excluded from the limits for securities investment set forth in Paragraph 1, Paragraph 2 and preceding paragraph hereof, while the balanceof repo transactions of short-term bills and bonds sold by a credit cooperative shall be included.
A credit cooperative’s investment innegotiable certificates of deposit issued by the Cooperative Bank of Taiwan using reduction in reserve requirement as a result of the Central Bank’s action of dropping the deposit reserve ratiois excluded from the limitsset forth in Paragraphs1and 2hereof.

The aggregate amount of the original acquisition costs ofa credit cooperativefor investmentin the following securitiesshall not exceed 15% of thecooperative’scalculation basis:
1. Beneficiary certificates of securities investment trust funds issued by a single securities investment trust enterprise.
2. A single type of beneficialsecuritiesor asset-backed securities.

When a credit cooperative invests in domestic short-term bills, domesticfinancial bonds, domestic corporate bonds, domestic beneficial securities or asset-backed securities provided in Paragraph 1 of Article 2 herein, the security or its issuer, guarantor oracceptor shall have a credit rating that meets one of the following criteria:
1. Along-term credit rating of BBB-or above, or a short-term credit rating of A-3 or abovefrom Standard & Poor's Corporation.
2. Along-term credit rating of Baa3 or above, or a short-termcredit rating of P-3 or above from Moody's Investors Service.
3. Along-term credit rating of BBB-or above, or a short-term credit rating of F3 or above from Fitch Group.
4. Along-term credit rating of twBBB-or above, or a short-term credit rating oftwA-3 or above from Taiwan Ratings Corp.
5. Along-term credit rating of BBB-(twn) or above, or a short-term credit rating of F3(twn) or above from Fitch International's Taiwan subsidiary.
When a credit cooperative invests in short-term bills, non-subordinate financial bondsor corporate bonds issued by a domestic TWSE/TPEx listed companythat meet the criteria set out in Paragraph 2of Article 2 herein, such investment is not subject to the credit rating requirements provided in the preceding paragraph.
Foreign government bonds that may be invested by a credit cooperative shall have a credit rating that meets one of the following criteria:
1. Along-term credit rating of A-or abovefrom Standard & Poor's Corporation.
2. A long-term credit rating of A3 or abovefrom Moody's Investors Service.
3. A long-term credit rating of A-or abovefrom Fitch Group.
When a credit cooperative invests in foreign securities throughnon-discretionarymoney trust, the credit rating of such securities shall be subject to the scope of investment for professional investors as provided in Article 10 of the Regulations Governing the Scope of Business, Restrictions on Transfer of Beneficiary Rights, Risk Disclosure, Marketing, and Conclusion of Contract by Trust Enterprises.

A credit cooperative may not invest in the corporate bonds, short-term bills, beneficiary certificates of securities investment trust funds, and stocks issued by a company in which the cooperative's responsible personacts asitsdirector, supervisor or manager, with exceptions to the following:
1. Financial bonds(including subordinated financial bonds).
2. Corporate bonds guaranteed by a bank.
3. Short-term billsguaranteed or accepted by other financial institutionsand underwritten or traded by other bills finance companies.
4. Negotiable certificates of deposit issued by a bank.
5. Beneficial securities and asset-backed securities with a term of less than one year.
The phrase "the cooperative's responsible personactsas itsdirector, supervisor or manager" depicted in the preceding paragraph does not include the situation where the responsible personof the credit cooperative is assigned to the position due to an investment relationship.
The term "responsible personof the credit cooperative" depicted in Paragraph 1 hereof means its director, supervisor, president (general manager), vice president (deputy general manager), assistant vice president (assistant general manager)manager or a person holding a comparable position.

Where a credit cooperative acts as an originator (trustor) under the Financial Asset Securitization Act or Real Estate Securitization Act, it may not invest in the beneficial securities or asset-backed securities issued on the basis of its financial assets, real estate or real estate-related rights.
A credit cooperative that serves as an originator may hold beneficial securities or asset-backed securities issued on the basis of its financial assets for the purpose of credit enhancement. The holding of such securities by a credit cooperative for purposes other than investment is not subject to the restrictions set forth in the Regulations herein.

A credit cooperative’s investment in the stocks of other enterprises as approvedby the centralcompetent authority pursuant to Article 37 of the Credit Cooperatives Act, to which Article 74 of the Banking Act applies mutatis mutandisis excluded from the limits for securities investment set forth in Articles 3, 5 and 6 herein.

The term "calculation basis" as used in theseRegulationsshall mean the credit cooperative's finalized net worth as of the end of the previous fiscal year less the following items:
1. The original acquisition costs for investment in the shares of banks held by the credit cooperative for more than one year;
2. The original acquisition costs for investment in the shares of each federationof cooperatives; and
3. The original acquisition costs for investment in the shares of other enterprises other than banks with the approval of the central competent authority.

A credit cooperative shall establish internal operating guidelines for securities investment and implement thoseguidelines after approval by its board of directors.

Where the credit ratings and limits of securities invested by a credit cooperative before the amendment to these Regulations on August 4, 2005 do not comply with the provisions herein, the credit cooperative may continue to hold such securities until expiration date.

The Regulations herein shall be in force from the date of promulgation.