The Credit Union Act is specified to promote sound operation and development of credit unions, to protect rights and interests of credit union members, to improve flow of mutual funds among the general public and to develop the function of a social security system.
Credit unions are a legal person.
Credit unions mentioned in this Act means a non-profit corporation, which established before the proclaimed of this Act or newly established according by this Act and organized by the natural persons and other non-profit organizations in common bond.
The common bond means people who work in the same company, factory or a career group, who participate in the same club, religious group or aboriginal group or who live in the same country or town.
People that join credit unions without the common bond are not qualified; however, it is not limited to those people that joined before the Act was amended.
The membership is still valid within two years when members lose the common bond with the credit unions.
Credit unions are based on the system of limited liabilities and members are liable to their own shares.
The Credit Union League of the Republic of China (hereinafter called “League”) in this Act refers to an association organized by all credit unions. Any established credit union ought to join and become a member of the League.
Management and supervision of credit unions are specified and implemented by the League in accordance with the Act.
The Competent authority of credit unions is the Ministry of the Interior in the central government, the City Government in a special municipality or the County (City) Government in a county (city).
“Credit Union” should be specified on the name of the corporations and forbidden to other purposes except those specified in the Act.
The League is in charge of establishment, management, supervision, guidance and assistance of credit unions.
Rules of establishment, management, supervision, guidance and assistance will be stipulated by the League and sent to the central competent authority for approval.
The League may undertake the business of credit guarantee for the credit unions for the purpose of helping members that are underprivileged and lacking in collateral surety, by providing access to necessary funds to improve quality of life and livelihood production, while the government shall provide assistance and incentives as necessary.
The funds concerning the abovementioned guarantee business shall be raised by the League, who is responsible for determining the scope, counterpart, size, amount, and other issues due for legal compliance, and submit to the central authorituies consultating with other relative authorities for review and approval.
The government shall determine the schemes governing the depositing of the following funds at financial institutes:
1. Stabilization funds deposited at the League by each member union;
2. Surplus funds deposited at the League by each member union;
3. Surplus funds owned by each member union.
The League may re-deposit a certain ratio of any fund previously mentioned in Subparagraphs 2 and 3 to be held in trust for the purpose of enhancing fund liquidity. The regulations governing a credit union’s deposit of surplus funds at a financial institute shall be stipulated by the central competent authority in consultation with the Central Bank and Financial Supervisory Commission.
Credit union organizations established in accordance with the Act will be exempted from income taxes and business taxes.
The missions of a credit union are as follows:
1. Accepting members’ share subscriptions;
2. Providing charge accounts for its members;
3. Providing loans for its members;
4. Participating in various cooperative fund businesses under the initiatives of the League;
5. Providing payment services of utility, natural gas, tuition, telephone, tax, fine, and other payables and receivables for its members;
6. Participating in the League’s financing activities;
7. Participating in community projects that help to develop community industries;
8. Participating in society enterprise businesses in the form of cooperatives under the initiatives of the League;
9. Subscribing national bonds or financial products;
10. Undertaking tasks commissioned by the government or public welfare organizations;
11. Other businesses approved by the central competent authority.
No agreement in capital guarantee, interest guarantee, or fixed revenue concerning the subscriptions paid by union members to a credit union is allowed.
The schemes for credit unions’ subscriptions of financial products mentioned in Subparagraph 9, Paragraph 1 shall be determined by the League and submitted to the central competent authority for acknowledgment.
The sales and goods or services not provided by members concerning the missions mentioned in Subparagraphs 7, 8, and 10 in Paragraph 1 executed by a credit union shall be subject to income tax and business tax stipulated in the Income Tax Act and Value-added and Non-value-added Business Tax Act, and Article 8 shall not apply. However, business tax does not apply to an undertaking commissioned by the government.
The amount of loans made by a credit union to a single member shall not exceed ten percent (10%) of the total shares and reserves of the credit union.
The amount of loans made by a credit union shall not exceed the amount of its ownership capital.
The ownership capital of the credit union as mentioned in the previous shall be included shares, dormant account, capital reserves, reserves, special reserves, undistributed net income and net income for the year.
Credit unions are not allowed to provide services to non-members for accepting shares and providing loans.
Shares of a credit union shall be a value of one hundred dollars (NT$100) each; the total value of shares held by any member shall not exceed ten percent (10%) of the total share balance of the credit union.
Money paid in on shares is as the saving and also the obligation as a member.
The total share of each member is not exceed one million dollars (NT$1,000,000), his dividend shall be free of his own individual income tax.
A member may withdraw from the credit union by giving a writing application to the credit union and be consented by the board of directors. The board of directors may determine to postpone the payment of the withdrawn shares in necessary, but not exceed sixty (60) days since the withdrawal is approved.
If members withdraw their shares during a year, they shall not be entitled to the dividends of the same year.
When a member applies his withdrawal during a critical operation crisis of a credit union, the board of directors shall suspend the withdrawal applications and convene the temporary General Meeting of members within one month.
Annual surpluses of credit unions are allotted or distributed in the following order:
1. Compensate accumulated losses.
2. Interest Refund.
3. Set aside as the Reserve more than twenty percent (20%).
4. Set aside as the Public Welfare Fund and Education Fund not less than five percent (5%).
There shall be reduced the percentage of the aforementioned refund carried when the reserve is equal to twenty percent (20%) of the share balance.
The supreme authority in the credit union is vested in the General Meeting of members.
There shall be one fifth of all members or a certain number of adult members to present, the General Meeting of members shall be convened.
Every member is entitled to cast one vote and authorization of exercising such right is not allowed.
There are General meeting of members and temporary General meeting of members. The General Meeting of members shall be convened in annually within 2 months after the end of the fiscal year and a written notice shall be given to members in 7 days before the meeting convened. The temporary General meeting of members shall be convened in accordance with related regulations.
There shall be the board of directors in a credit union to execute the resolutions reached at the General Meeting of members and to take the joint responsibility for the credit union.
The Board of Directors shall be consisted of seven (7) to twenty-one (21) members as the Board members who shall be elected at the General Meeting of members with a term of three years; and they may be re-elected.
The Board members shall elect a President from them who should be re-elected once.
A credit union is required to establish a board of supervisors, and the board shall be jointly responsible for the credit union.
The board shall consist of 3 to 7 supervisors who are voted for in the Annual General Meeting. Each tenure shall be for 3 years and a consecutive tenure is allowed.
The Board members and the Supervisory members are volunteers, shall not receive any salary or wages.
The directors and supervisors shall perform duties in accordance with the laws, articles of association, and resolutions made in the Annual General Meeting.
The directors or supervisors shall be held liable to the credit union for the damage inflicted to the credit union and caused by the resolutions made by the board of directors or supervisors, unless otherwise a director or supervisor has objected to the said resolution and the said objection is evidenced by respective meeting minutes.
A director or supervisor shall be held liable for the damage inflicted to the credit union and caused by the said director’s or supervisor’s negligence or violation of the rules.
A credit union shall be dissolved in one of the following situations and the League should report such event to the competent authority for approval.
1. Resolution of Dissolution in the General Meeting of members.
2. Less than fifty (50) members.
3. Declaration of bankruptcy.
4. Dissolved by the command from the League.
Resolution of one point of the above subparagraph shall be passed by more than two thirds of members presented who shall be more than three fourths of all members.
When a credit union is liquidated upon dissolution, the League shall conduct supervision. A liquidator shall be elected in the General Meeting of members, but, if there is no election in the General Meeting, one of the Board members shall be as a liquidator.
When a credit union suffers a loss at annual final accounts or after liquidation, the credit union shall use various reserve funds and shares in order for the loss; When there is a surplus after liquidation, it shall be distributed according of the shares of members.
Upon completion of liquidation, the liquidator shall make a report within 20 days and send it to the League, which will refer it to the competent authority. In addition, a copy ought to be delivered to each member.
The League’s missions are as follows:
1. Counseling on the credit unions’ establishment of articles of association;
2. Conducting mutual assistance education and training programs;
3. Evaluating the establishment of credit unions and protecting their rights;
4. Supervising, auditing, and guiding credit unions;
5. Undertaking insurance programs of credit unions;
6. Managing the statutory reserve funds deposited by credit unions;
7. Undertaking financing for credit unions and operating the surplus funds deposited by credit unions;
8. Assisting credit unions with their subscriptions of national bonds;
9. Undertaking cooperative businesses like children’s nurseries and elderly care for the credit union members;
10. Participating in society enterprises in the form of cooperative businesses and undertaking public welfare businesses;
11. Other approved tasks.
Subparagraph 7 in the preceding paragraph may be applicable to the League’s fund raising and use concerning the execution of its missions, and the financing and operating of the surplus funds stipulated in the same Subparagraph and other compliance requirements shall be determined by the League and submitted to the central competent authority for acknowledgment.
The League’s undertaking of mission 10 in Paragraph 1 shall be submitted to the central competent authority for acknowledgment.
The missions executed by the League shall be subject to the supervision and guidance of the central competent authority, but the central competent authority may coordinate with other business-specific competent authorities concerning the said missions to provide assistance.
The League shall present related information of credit unions operating to the competent authority within three months at the end of every year.
When a credit union violates legal regulations and bylaws; or, can’t operate well to harm the rights and interests of the members, the competent authority shall take the following disciplinary actions. The League shall report to the competent authority for approval before taking disciplinary measures.
1. Cancel resolutions reached at meetings.
2. Suspend or discharge the office of the Board members and the Supervisory members.
3. Mandate credit unions to punish personnel who neglect their duties.
4. Suspend part of business activities.
5. Compulsory dissolution.
6. Other necessary dispositions.
For any of the above situations, the Board members and the Supervisory members may be fined a minimum of sixty thousand dollars (NT$60,000) to a maximum of three hundred thousand dollars (NT$ 300,000).
Credit unions established prior to announcement and execution of this Act shall register to the competent authority within one year after announcement and execution of this Act.
The land and improved buildings purchased and registered by a natural person or in the name of the credit union with their own reserves prior to the amendment and implementation of this Act, the ownership of such land and buildings shall be changed to the credit union.
Credit unions shall apply the certificates and papers required for the title change, which referred to the above-mentioned to their respective competent authorities of municipalities, counties and cities. The central competent authority shall make the regulation of procedures related to title change.
When a credit union or similar organization violates the regulation specified in Article 6 or is not established according to legal ordinances, the credit union or organization shall be fined with a maximum of three hundred thousand dollars (NT$ 300,000) or be imprisoned for up to two years.
When a legal person commits the aforementioned, the person in charge shall take the responsibility.
The Board members, the Supervisory members and employees of credit unions shall be fined with a maximum of six hundred thousand dollars (NT$600,000) or be imprisoned for up to one year or both for any of the following situations:
1. Object to transfer.
2. Conceal or destroy properties or account books of credit unions.
3. Forge debts or admit untrue liabilities.
The League shall report to the competent authority and claim a fine of a minimum of sixty thousand dollars (NT$60,000) to a maximum of three hundred thousand dollars (NT$ 300,000) to the credit unions depending upon how seriously they meet any of the following situations:
1. Violate the Article 9 to run the unapproved business.
2. Violate the Article 11 to grant the loans beyond limitations.
3. Violate the Article 12 to provide the services to non-members.
4. Violate the Article 13 to receive the shares over the maximum of the individual member.
5. Violate the Article 14 to withdraw inconsistent with specified regulations.
6. Violate the Article 15 to have the inappropriate distribution of surplus.
7. Violate the Article 20 to pay the salary or wages.
The aforesaid fines are aimed at credit unions to be punished. Upon completion of punishment, credit unions are entitled to the right of claims to the person in charge.
The competent authority shall claim a fine of a minimum of sixty thousand dollars (NT$60,000) to a maximum of three hundred thousand dollars (NT$ 300,000) to the League depending upon how seriously the League meets any of the following situations:
1. Violate the Article 27 to run unapproved business.
2. Violate the Article 28 not to present the information or present the false one.
This Act will be executed upon the date of announcement.