These Regulations are enacted pursuant to Paragraph 4 of Article 35, Paragraph 3 of Article 36, Paragraph 2 of Article 72, and Paragraph 3 of Article 73 of the Act Governing Relations Between the Peoples of the Taiwan Area and the Mainland Area (referred to as the “Act” hereunder).

The Competent Authority, as referred to in these Regulations, is the Financial Supervisory Commission, Executive Yuan.

The terms used in these Regulations are defined as follows:
1. “A subsidiary bank” means one of the following:
(1) A bank with more than 50 percent of total outstanding voting shares or capital directly or indirectly owned by another financial institution; or
(2) A bank controlled by another financial institution.
2. “Equity investment” means owning less than 50 percent of total outstanding voting shares or capital of an investee and not having controlling power over the investee.
3. “A mainland commercial bank” means a bank organized and registered in accordance with the Commercial Bank Law of Mainland Area, excluding “foreign-funded banks” in Mainland China.
4. “A mainland-funded bank” means a bank organized and registered in accordance with the law in a third area and having any of the following situations:
(1) More than 30 percent of its total outstanding voting shares or capital is directly or indirectly owned by individuals, juristic persons, organizations, or other institutions in Mainland Area; or
(2) Individuals, juristic persons, organizations, or other institutions in Mainland Area have controlling power over it.

The business activities of a financial institution in Taiwan Area with any individuals, juristic persons, organizations, other institutions in Mainland Area or their branches in any country and area outside Mainland Area shall be governed by these Regulations.
The financial institution in Taiwan Area referred to in the preceding paragraph includes banks (including offshore banking units (referred to as “OBUs” hereunder) as well as branches and subsidiary banks set up in a third area), credit cooperatives, bill finance companies, institutions engaging in credit card business, Chunghwa Post Company, Ltd. (referred to as “Chunghwa Post” hereunder) and financial information service businesses engaging in inter-bank funds transfer clearing services.

Banks in Taiwan Area (referred to as “Taiwan banks” hereunder) that intend to establish representative offices, branches, or subsidiary banks or make equity investment in Mainland Area and financial holding companies in Taiwan Area (referred to as “Taiwan financial holding companies” hereunder) that intend to make equity investment in Mainland Area shall obtain approval from the Competent Authority in accordance with these Regulations.
Where the subsidiary bank in a third area (referred to as “third-area subsidiary bank” hereunder) established by a Taiwan bank or financial holding company (referred to as “Taiwan parent company” hereunder) intends to establish a representative office, branch, or subsidiary bank or make equity investment in Mainland Area, the Taiwan parent company shall obtain approval from the Competent Authority in accordance with these Regulations.
The establishment of a branch or a subsidiary bank in Mainland Area or making equity investment in Mainland Area as referred to in the preceding two paragraphs shall in addition apply to the Ministry of Economic Affairs for approval in accordance with the Act.
The branches and subsidiary banks of Taiwan banks and those of third-area subsidiary banks in Mainland Area may engage in financial activities with individuals, juristic persons, organizations, other institutions or their branches in Taiwan Area and Mainland Area.

Deleted.

When a Taiwan bank or its third-area subsidiary bank applies to establish a branch or subsidiary bank, or make equity investment in Mainland Area, or a subsidiary company with over 50 percent of total outstanding voting shares or capital owned directly or indirectly by the bank intends to make investment in Mainland Area, the cumulative allocated operating capital and total amount of investment therefor combined shall not exceed 15 percent of the bank’s net worth at the time of application.
When a Taiwan financial holding company applies to make equity investment in Mainland Area, or an affiliated company directly or indirectly controlled by the financial holding company (excluding a Taiwan bank, a subsidiary company with over 50 percent of total outstanding voting shares or capital owned by the bank, and a third-area subsidiary bank) intends to make investment in Mainland Area, the total amount of investment therefor shall not exceed 10 percent of the financial holding company’s net worth at the time of application.

A Mainland commercial bank or Mainland-funded bank intending to establish a representative office or branch, or make equity investment in a financial institution in Taiwan Area shall obtain approval from the Competent Authority in accordance with these Regulations, and in addition, apply to the Ministry of Economic Affairs for approval in accordance with the Act.
The branches of Mainland commercial banks and Mainland-funded banks in Taiwan may engage in business with individuals, juristic persons, organizations, other institutions or their branches in Mainland Area and Taiwan Area.

Mainland commercial banks or Mainland-funded banks that intend to establish a branch or make equity investment in Taiwan Area shall comply with the following provisions:
1. Only either the Mainland commercial bank or its Mainland-funded bank may enter Taiwan Area to either establish a branch or make equity investment; and
2. A Mainland commercial bank or its Mainland-funded bank may establish only one branch in Taiwan Area, and its equity investment in Taiwan is limited to investing in only one financial institution in Taiwan Area.

For applications to engage in financial activities, establish representative office, branch, or subsidiary bank, or make equity investment under these Regulations, the Competent Authority shall consult the Central Bank of the Republic of China (Taiwan) (referred to as the “Central Bank” hereunder) before granting an approval.
If there are indications that the activities applied for in the preceding paragraph are likely to adversely affect the sound business management of the bank or fail to meet the requirements for financial supervision, the Competent Authority may disapprove the application, or annul the approval if an application has been approved.
Where an application mentioned in Paragraph 1 hereof, or the application item or the documentation submitted thereof is found to contain false representation after an approval is granted, the Competent Authority may revoke the approval.