A Taiwan bank that meets the following requirements may apply to the Competent Authority for approval to establish a representative office in Mainland Area:
1. The bank is in compliance with the law, is soundly managed and has not been subject to any disciplinary action, or has been subject to disciplinary action but specific remedial actions have been taken therefor and accepted by the Competent Authority within three (3) years prior to application;
2. The bank’s ratio of equity capital to risk-weighted assets was 10% or higher during the latest fiscal half year;
3. The bank has international financial knowledge and experience; and
4. The bank has established a branch and operated business in a member country of The Organization For Economic Cooperation And Development (OECD) for two years or longer.
If a third-area subsidiary bank meets the requirements set out in subparagraphs 1 to 3 of the preceding paragraph, its Taiwan parent company may apply to the Competent Authority for approval for said third-area subsidiary bank to establish a representative office in Mainland Area.

A Taiwan bank intending to establish a representative office in Mainland Area shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Minutes of the board resolution;
4. Financial reports for the last three (3) years;
5. A calculation worksheet for its ratio of equity capital to risk-weighted assets for the latest fiscal half year;
6. Documents verifying that the proposed representative meets the qualification requirements set forth in Paragraph 2 hereof; and
7. Such other information or documents as may be required by the Competent Authority.
The proposed representative mentioned in the preceding paragraph should have good moral character and professional leadership ability, and is free of the situations set forth in Article 3 of the Regulations Governing Qualification Requirements and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of Banks(referred to as the “Regulations Governing Qualification Requirements” hereunder), and complies with the provisions in Paragraph 3 Article 3-1 of the same Regulations.
When a third-area subsidiary bank intends to establish a representative office in Mainland Area, its Taiwan parent company shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Minutes of the board resolution of both the parent company and the third-area subsidiary bank;
4. A calculation worksheet for the ratio of equity capital to risk-weighted assets of the third-area subsidiary bank for the latest fiscal half year; and
5. Such other information or documents as may be required by the Competent Authority.

A Taiwan bank must have obtained the approval of the Competent Authority before applying to [the financial authority in] Mainland Area for the establishment of a representative office. When the Taiwan bank replaces its proposed representative, the bank shall submit documents verifying that the new representative meets the qualification requirements set forth in Paragraph 2 of the preceding article to the Competent Authority for approval; when the Taiwan bank changes the planned address of its representative office, the bank shall submit relevant documents to the Competent Authority for recordation.
The Taiwan bank shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to establish a representative office] and submit the following documents to the Competent Authority for recordation prior to setting up the representative office:
1. An approval letter from the financial authority in Mainland Area;
2. Planned date of establishment and detailed address [of the representative office]; and
3. Name of the representative appointee.
A Taiwan bank shall comply with the following provisions after it has established a representative office in Mainland Area:
1. If the representative office has a material contingent or fraud incident, the bank shall handle and report it according to the provisions set forth by the Competent Authority;
2. The bank shall input all relevant information on the representative office into an information reporting system designated by the Competent Authority and update the information when changes occur;
3. Before replacing its representative, the bank shall submit documents verifying that the newly appointed representative meets the qualification requirements set forth in Paragraph 2 of the preceding article to the Competent Authority for approval; and
4. Before changing the address of its representative office, the bank shall report to the Competent Authority for recordation.
When a Taiwan bank intends to close its representative office in Mainland Area, the bank shall first obtain approval from the Competent Authority before applying to the financial authority in Mainland Area, and promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to close a representative office]. The Taiwan bank shall also submit the approval letter from the financial authority in Mainland Area and the planned closing date to the Competent Authority for recordation before closing the representative office.

A Taiwan parent company must have obtained the approval of the Competent Authority before its third-area subsidiary bank may apply to [the financial authority in] Mainland Area for the establishment of a representative office. The Taiwan parent company shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to establish a representative office]. The preceding provisions shall apply when the third-area subsidiary bank closes its representative office in Mainland Area.
Before the representative office referred to in the preceding paragraph is established in Mainland Area, the Taiwan parent company shall submit the same documents as those mentioned in Subparagraphs 1 and 2, Paragraph 2 of the preceding article to the Competent Authority for recordation; after the representative office is established, the Taiwan parent company shall comply with the provisions in Subparagraphs 1 and 2, Paragraph 3 of the preceding article.

A representative office in Mainland Area may engage in the following activities and shall comply with the regulations in Mainland Area:
1. Researching finance-related business intelligence;
2. Collecting finance-related information; an
3. Other liaison activities.

A Taiwan bank that meets the following requirements may apply to the Competent Authority for approval to establish a branch in Mainland Area:
1. The bank is in compliance with the law, is soundly managed and has not been subject to any disciplinary action, or has been subject to disciplinary action but specific remedial actions have been taken therefor and accepted by the Competent Authority within three (3) years prior to application;
2. The bank’s ratio of equity capital to risk-weighted assets is 10% or higher during the latest fiscal half year;
3. The bank’s non-performing loan ratio is 2% or lower during the latest fiscal half year;
4. The bank’s loan loss coverage ratio is 60% or higher during the latest fiscal half year;
5. The bank has international financial knowledge and experience; and
6. The bank has established a branch and operated business in a member country of OECD for five years or longer, and said branch is free of major regulatory violation and free of remedial actions to be taken for deficiencies found in a financial examination within one year prior to application.
If a third-area subsidiary bank meets the requirements set forth in subparagraphs 1 to 5 of the preceding paragraph, its Taiwan parent company may apply to the Competent Authority for approval for said third-area subsidiary bank to establish a branch in Mainland Area.

A Taiwan bank intending to establish a branch in Mainland Area shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Business plan;
4. Minutes of the board resolution;
5. Financial reports for the last three (3) years;
6. A calculation worksheet for its ratio of equity capital to risk-weighted assets for the latest fiscal half year;
7. Documents verifying that the proposed branch manager meets the qualification requirements set forth in Paragraph 2 hereof;
8. The internal control and audit systems, operations management, and performance evaluation method for the branch to be established in Mainland Area;
9. The operational and regulatory compliance status of the established third-area branches; and
10. Such other information or documents as may be required by the Competent Authority.
The proposed branch manager mentioned in the preceding paragraph should have good moral character and professional leadership ability, is free of the situations set forth in Article 3 of the Regulations Governing Qualification Requirements, and complies with the provisions in Paragraph 3 Article 3-1 and Paragraph 1, Article 6 of the same Regulations.
When a third-area subsidiary bank intends to establish a branch in Mainland Area, its Taiwan parent company shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Business plan;
4. Minutes of the board resolution of both the parent company and the third-area subsidiary bank;
5. A calculation worksheet for the ratio of equity capital to risk-weighted assets of the third-area subsidiary bank for the latest fiscal half year;
6. The internal control and audit systems, operations management, and performance evaluation method of the third-area subsidiary bank for the branch to be established in Mainland Area; and
7. Such other information or documents as may be required by the Competent Authority.

A Taiwan bank that already has branches in Mainland China and meets the requirements set forth in Subparagraphs 1 to 4, Paragraph 1 of Article 25 herein may submit documents set out in Subparagraphs 1 to 7, Paragraph 1 of the preceding article, and in addition, submit the following documents, to the Competent Authority for approval to establish an additional branch in Mainland Area:
1. The number of existing branches in Mainland Area and analysis of their operating status;
2. The findings and comments given by the head office and the financial authority in Mainland Area in the latest examination of its branch(es) in Mainland Area; and
3. Such other information or documents as may be required by the Competent Authority.
If a third-area subsidiary bank that already has branches in Mainland China and meets the requirements set forth in Subparagraphs 1 to 4, Paragraph 1 of Article 25 herein, its Taiwan parent company may submit documents set out in Subparagraphs 1 to 5, Paragraph 3 of the preceding article, and in addition, submit the following documents to the Competent Authority for approval to establish an additional branch in Mainland Area:
1. The number of existing branches in Mainland Area of the said third-area subsidiary bank and analysis of their operating status;
2. The findings and comments given by the said third-area subsidiary bank and the financial authority in Mainland Area in the latest examination of its branch(es) in Mainland Area; and
3. Such other information or documents as may be required by the Competent Authority.

A Taiwan bank must have obtained the approval of the Competent Authority before applying to [the financial authority in] Mainland Area for the establishment of a branch. When the Taiwan bank replaces its proposed branch manager, the bank shall submit documents verifying that the new branch manager meets the qualification requirements set forth in Paragraph 2 of Article 26 to the Competent Authority for approval; when the Taiwan bank changes the planned operating capital for or the planned address of its branch office, the bank shall submit relevant documents to the Competent Authority for approval.
A Taiwan bank shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to establish a branch] and submit the following documents to the Competent Authority for recordation before the branch commences business:
1. An approval letter from the financial authority in Mainland Area;
2. Business items approved for operation by the financial authority in Mainland Area;
3. Planned date for commencement of business and detailed address [of the branch];
4. Name of branch manager; and
5. Such other information or documents as may be required by the Competent Authority.
When a Taiwan bank intends to close its branch in Mainland Area, the bank shall first obtain approval from the Competent Authority before applying to the financial authority in Mainland Area, and promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to close a branch]. The Taiwan bank shall also submit the approval letter from the financial authority in Mainland Area and the planned closing date to the Competent Authority for recordation before closing the branch.
A Taiwan parent company must have obtained the approval of the Competent Authority before its third-area subsidiary bank may apply to [the financial authority in] Mainland Area for the establishment of a branch. The Taiwan parent company shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to establish a branch], and submit the documents set out in Subparagraphs 1 to 3 of Paragraph 2 hereof to the Competent Authority for recordation before the branch commences business.
The provisions in Paragraph 3 hereof apply mutatis mutandis to a Taiwan parent company when its third-area subsidiary bank intends to close its branch in Mainland Area.

A Taiwan bank may apply to the Competent Authority for approval to establish a sub-branch under its branch in Mainland Area, provided its existing branch in Mainland Area has not been subject to any disciplinary action, or has been subject to disciplinary action but specific remedial actions have been taken therefor and accepted by the Competent Authority.
A Taiwan bank intending to set up a sub-branch under its branch in Mainland Area shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Business plan;
4. Minutes of the board resolution;
5. Analysis of the operating status of the branch the planned sub-branch will be under;
6. The internal control and audit systems, operations management, and performance evaluation method for the sub-branch; and
7. Such other information or documents as may be required by the Competent Authority.
A Taiwan bank must have obtained the approval of the Competent Authority before applying to [the financial authority in] Mainland Area for the establishment of a sub-branch, and promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area. The preceding provisions apply when a Taiwan bank closes its sub-branch in Mainland Area.
A Taiwan bank shall submit the following documents to the Competent Authority for recordation before a sub-branch commences business:
1. An approval letter from the financial authority in Mainland Area;
2. Business items approved for operation by the financial authority in Mainland Area;
3. Planned date for commencement of business and detailed address [of the sub-branch]; and
4. Such other information or documents as may be required by the Competent Authority.

When a third-area subsidiary bank intends to establish a sub-branch under its branch in Mainland Area, its Taiwan parent company shall report to the Competent Authority in advance for recordation before applying to [the financial authority] in Mainland Area. The preceding provision applies to the closure of a sub-branch in Mainland Area. Before a sub-branch commences business, the Taiwan parent company shall submit the documents set out in Paragraph 4 of the preceding article to the Competent Authority for recordation.

A Taiwan bank that intends to increase the operating capital of its branch in Mainland Area must first obtain approval from the Competent Authority.
When a third-area subsidiary bank intends to increase the operating capital of its branch in Mainland Area, its Taiwan parent company must first obtain approval from the Competent Authority.

Taiwan banks with branch or sub-branch in Mainland Area shall comply with the following provisions:
1. The bank shall first obtain approval from the Competent Authority if the businesses of its branch or sub-branch do not comply with the financial regulations in Taiwan Area;
2. If the branch or sub-branch has a material contingent or fraud incident, the bank shall handle and report it according to the provisions set forth by the Competent Authority;
3. If the branch or sub-branch changes its business address or business items, the bank shall report to the Competent Authority in advance for recordation;
4. When the branch or sub-branch reports to the financial authority in Mainland Area according to the local financial regulations, the bank shall promptly report same to the Competent Authority for recordation;
5. The bank shall input the basic and operating information of the branch and sub-branch into an information reporting system designated by the Competent Authority;
6. The branch and sub-branch shall undertake internal audits in accordance with the Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries. The bank shall submit the business audit report, independent auditor’s report, and financial examination report on its branch or sub-branch prepared by the financial authority in Mainland Area to the Competent Authority for recordation;
7. The bank shall prepare consolidated financial statement including the branch and sub-branch in Mainland Area along with other offshore branches of the bank and submit same to the Competent Authority for recordation in accordance with Article 49 of the Banking Act; and
8. Before replacing the branch manager, the bank shall first submit documents verifying that the new branch manager meets the qualification requirements set forth in Paragraph 2 of Article 26 herein to the Competent Authority for approval.
The provisions in the preceding paragraph apply mutatis mutandis to third-area subsidiary banks with branch and sub-branch in Mainland China, and the situation under Subparagraph 1 of the preceding paragraph require ex-ante reporting to the Competent Authority for recordation.

Deleted.

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.

A Taiwan bank that meets the following requirements may apply to the Competent Authority for approval to establish a subsidiary bank in Mainland Area:
1. The bank is in compliance with the law, is soundly managed and has not been subject to any disciplinary action, or has been subject to disciplinary action but specific remedial actions have been taken therefor and accepted by the Competent Authority within three (3) years prior to application;
2. The bank’s ratio of Tier 1 capital to risk-weighted assets after deducting the amount allocated for the proposed investment in the subsidiary bank in Mainland Area is 8% or higher;
3. The bank’s non-performing loan ratio is 1.5% or lower during the latest fiscal half year;
4. The bank’s loan loss coverage ratio is 100% or higher during the latest fiscal half year;
5. The bank’s employees have international financial knowledge and experience; and
6. The bank has established a branch and operated business in a member country of OECD for five years or longer, and said branch is free of major regulatory violation and free of remedial actions to be taken for deficiencies found in a financial examination within one year prior to application.
If a third-area subsidiary bank meets the requirements set forth in subparagraphs 1 to 5 of the preceding paragraph, its Taiwan parent company may apply to the Competent Authority for approval for said third-area subsidiary bank to establish a subsidiary bank in Mainland Area.

A Taiwan bank or a third-area subsidiary bank that meets the requirements set forth in Subparagraphs 1 to 4, Paragraph 1 of the preceding article and its branch in Mainland Area is not subject to any disciplinary action, or has been subject to disciplinary action but correction actions have been taken therefor and accepted by the Competent Authority, the Taiwan bank or Taiwan parent company of the third-area subsidiary bank may apply to the Competent Authority for approval to change its branch in Mainland Area into a subsidiary bank.

A Taiwan bank intending to establish a subsidiary bank or to change its branch into a subsidiary bank in Mainland Area shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Business plan;
4. Minutes of the board resolution;
5. Financial reports for the last three (3) years;
6. A calculation worksheet for the ratio of equity capital to risk-weighted assets of the bank after deducting the amount allocated for the proposed investment in the subsidiary bank in Mainland Area;
7. The internal control and audit systems, operations management, and performance evaluation method for the subsidiary bank to be established in Mainland Area;
8. The operational and regulatory compliance status of branches already established in a third area or in Mainland Area;
9. Documents verifying that the appointed managerial personnel of the subsidiary bank at and above the rank of deputy general manager meet the qualification requirements set forth in Paragraph 2 hereof; and
10. The list of proposed directors and supervisors and their education and work experience; and
11. Such other information or documents as may be required by the Competent Authority.
The proposed managerial personnel of the subsidiary bank at and above the rank of deputy general manager mentioned in the preceding paragraph should have good moral character and professional leadership abilities, are free of the situations set forth in Article 3 of the Regulations Governing Qualification Requirements, and comply with the provisions in Paragraph 3 Article 3-1 and Paragraph 1, Article 6 of the same Regulations.
When a third-area subsidiary bank intends to establish a subsidiary bank or to change its branch into a subsidiary bank in Mainland Area, its Taiwan parent company shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Business plan;
4. Minutes of the board resolution of both the parent company and the third-area subsidiary bank;
5. Financial reports for the last three (3) years;
6. A calculation worksheet for the ratio of equity capital to risk-weighted assets of the third-area subsidiary bank after deducting the amount allocated for the proposed investment in the subsidiary bank in Mainland Area;
7. The internal control and audit systems, operations management, and performance evaluation method for the subsidiary bank to be established in Mainland Area;
8. The operational and regulatory compliance status of branches already established in a third area or in Mainland Area; and
9. Such other information or documents as may be required by the Competent Authority.
When a Taiwan bank makes an application under Paragraph 1 hereof, the bank may concurrently apply for the setup of a branch by the subsidiary bank by submitting a feasibility study report and business plan for the branch. The branch of the subsidiary bank must be established within one year from the date of approval by the Competent Authority. Otherwise, the Competent Authority may annul the approval granted.

A Taiwan bank must have obtained the approval of the Competent Authority before applying to [the financial authority in] Mainland Area for the establishment of a subsidiary bank or for changing its branch into a subsidiary bank in Mainland Area. When the Taiwan bank replaces its managerial personnel appointee for the subsidiary bank above the rank of deputy general manager, the bank shall submit documents verifying that the new appointee meets the qualification requirements set forth in Paragraph 2 of the preceding article to the Competent Authority for approval; when the Taiwan bank changes the planned address, capital or amount of investment for the subsidiary bank, the bank shall submit relevant documents to the Competent Authority for approval.
A Taiwan bank shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to establish a subsidiary bank or change its branch into a subsidiary bank] and submit the following documents to the Competent Authority for recordation before the subsidiary bank commences business:
1. An approval letter from the financial authority in Mainland Area;
2. Business items approved by the financial authority in Mainland Area;
3. Planned date for commencement of business and detailed address [of the subsidiary bank];
4. Names of managerial personnel of the subsidiary bank at and above the rank of deputy general manager;
5. List of directors and supervisors of the subsidiary bank; and
6. Such other information or documents as may be required by the Competent Authority.
A Taiwan bank that sets up a subsidiary bank by investing in a bank in Mainland Area shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area and submit information under Subparagraphs 1, and 4 to 6 of the preceding paragraph as well as the amount of investment and the equity structure of the invested bank to the Competent Authority for recordation.
When a Taiwan bank intends to close its subsidiary bank in Mainland Area, the bank shall first obtain approval from the Competent Authority before applying to the financial authority in Mainland Area. The Taiwan bank shall also submit the approval letter from the financial authority in Mainland Area and the planned closing date to the Competent Authority for recordation before closing the subsidiary bank.
A Taiwan parent company must have obtained the approval of the Competent Authority before its third-area subsidiary bank may apply to [the financial authority in] Mainland Area for the establishment of a subsidiary bank or changing its branch into a subsidiary bank in Mainland Area. The Taiwan parent company shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area, and submit the documents set out in Subparagraphs 1 to 3 of Paragraph 2 hereof to the Competent Authority for recordation before the subsidiary bank in Mainland Area commences business.
A third-area subsidiary bank that sets up a subsidiary bank by investing in a bank in Mainland Area shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area and submit information under Subparagraphs 1, 5 and 6 of Paragraph 2 hereof as well as the amount of investment and the equity structure of the invested bank to the Competent Authority for recordation.
The provisions in Paragraph 4 hereof apply mutatis mutandis to a Taiwan parent company when its third-area subsidiary bank intends to close its subsidiary bank in Mainland Area.

A Taiwan bank may apply to the Competent Authority for approval for its subsidiary bank in Mainland Area to set up a branch, provided its subsidiary bank in Mainland Area is not subject to any disciplinary action, or has been subject to disciplinary action but remedial actions have been taken therefor and accepted by the Competent Authority.
When a Taiwan bank’s subsidiary bank in Mainland Area intends to set up a branch, the Taiwan bank shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Business plan;
4. Minutes of the board resolution of both the bank and its subsidiary bank;
5. The financial report and regulatory compliance status of the subsidiary bank for the latest fiscal year;
6. A calculation worksheet for the ratio of equity capital to risk-weighted assets of the subsidiary bank for the latest fiscal half year;
7. The internal control and audit systems, operations management, and performance evaluation method of the subsidiary bank; and
8. Such other information or documents as may be required by the Competent Authority.

A Taiwan bank must have obtained the approval of the Competent Authority before its subsidiary bank in Mainland Area may apply to [the financial authority in] Mainland Area for the establishment of a branch, and shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area. The preceding provision applies when a subsidiary bank intends to close a branch in Mainland Area.
A Taiwan bank shall submit the following documents to the Competent Authority for recordation before the branch of its subsidiary bank in Mainland Area commences business:
1. An approval letter from the financial authority in Mainland Area;
2. Business items approved by the financial authority in Mainland Area;
3. Planned date for commencement of business and detailed address [of the branch]; and
4. Such other information or documents as may be required by the Competent Authority.

A Taiwan bank must have reported to the Competent Authority for recordation before the branch of its subsidiary bank in Mainland Area may apply to [the financial authority in] Mainland Area for the establishment of a sub-branch. The preceding provision applies when a subsidiary bank intends to close a sub-branch in Mainland Area.
A Taiwan bank shall submit the following documents to the Competent Authority for recordation before a sub-branch in Mainland Area commences business:
1. An approval letter from the financial authority in Mainland Area;
2. Business items approved by the financial authority in Mainland Area;
3. Planned date for commencement of business and detailed address [of the sub-branch]; and
4. Such other information or documents as may be required by the Competent Authority.

A Taiwan bank shall appropriate funds exclusively for the capital of its subsidiary bank in Mainland Area and shall apply to the Competent Authority for approval before the capital of its subsidiary bank is increased or decreased.
Taiwan banks shall submit relevant documents to the Competent Authority for approval before they transfer their shareholding in their subsidiary bank in Mainland Area to others.
When the subsidiary bank in Mainland Area has any of the following situations, a Taiwan bank shall submit the following documents to the Competent Authority for approval in advance:
1. Merging, transferring, or assuming all or an essential part of assets or business of another financial institution.
2. Issuing equity-based securities.
3. Dissolved or suspended business.
4. Changing managerial personnel of the subsidiary bank at and above the rank of deputy general manager.
5. Changing the name of bank.

A Taiwan bank shall promptly report to the Competent Authority if its subsidiary bank in Mainland Area incurs losses. If the losses incurred exceed one third (1/3) of the subsidiary bank’s capital, the Competent Authority may order the Taiwan bank to propose a business improvement plan for the subsidiary bank and report the status of improvement periodically.
Where the financial conditions of the subsidiary bank in Mainland Area deteriorates significantly that the sound operation of the Taiwan bank might be adversely affected, the Competent Authority may order the Taiwan bank to propose an exit plan and carry it out after the approval of the Competent Authority.

A Taiwan parent company shall promptly inform the Competent Authority by submitting a report on the particulars of the event and relevant information if its subsidiary bank, branch or sub-branch in Mainland Area has any of the situations below:
1. Changing of business items or major management policy.
2. Changing of capital that results in change to Taiwan bank’s original ownership interest [in the subsidiary bank, branch or sub-branch].
3. Major investments.
4. Changing business address.
5. Undergoing reorganization, liquidation or bankruptcy proceedings.
6. Having business practices adopted in accordance with the local regulations and business customs but non-complying with the financial regulations in Taiwan Area.
7. Major loss has occurred or is foreseeable.
8. Having committed a material violation or business license being revoked or annulled by the financial authority in Mainland Area.
9. Having a material contingent or fraud incident.
10. Having made a report to the financial authority according to the local financial regulations in Mainland Area.
11. Other material events.
With respect to any of the situations specified in Subparagraph 1 to 6 of the preceding paragraph, a Taiwan bank shall report to the Competent Authority in advance.

A Taiwan bank shall comply with the following provisions after it has established a subsidiary bank in Mainland Area:
1. The bank shall input the basic and operating information of the subsidiary bank and its branch and sub-branch into an information reporting system designated by the Competent Authority;
2. The subsidiary bank shall undertake internal audit in accordance with the Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries. The bank shall submit the business audit report, independent auditor’s report, and financial examination report on its subsidiary bank prepared by the financial authority in Mainland Area to the Competent Authority for recordation;
3. The bank shall prepare consolidated financial statement including the subsidiary bank in Mainland Area along with other offshore branches of the bank and submit same to the Competent Authority for recordation; and
4. Such other information or documents as may be required by the Competent Authority.

When the subsidiary bank of a third-area subsidiary bank in Mainland Area intends to establish a branch or sub-branch, its Taiwan parent company shall report to the Competent Authority in advance for recordation before applying to [the financial authority] in Mainland Area. The preceding provision applies to the closure of a branch or sub-branch in Mainland Area.
Article 42 up to the preceding article shall apply mutatis mutandis to a Taiwan parent company after its third-area subsidiary bank has established a subsidiary bank in Mainland Area. However, change of managerial personnel of the subsidiary bank in Mainland Area at or above the rank of deputy general manager does not require approval from the Competent Authority.

A Taiwan bank that meets the following requirements may apply to the Competent Authority for approval to make equity investment in a bank in Mainland Area:
1. The bank is in compliance with the law, is soundly managed and has not been subject to any disciplinary action, or has been subject to disciplinary action but specific remedial actions have been taken therefor and accepted by the Competent Authority within three (3) years prior to application;
2. The bank’s ratio of equity capital to risk-weighted assets after deducting the amount allocated for the proposed equity investment is 10% or higher;
3. The bank’s non-performing loan ratio is 2% or lower during the latest fiscal half year;
4. The bank’s loan loss coverage ratio is 60% or higher during the latest fiscal half year;
5. The bank have international financial knowledge and experience; and
6. The bank has established a branch and operated business in a member country of OECD for five years or longer, and said branch is free of major regulatory violation and free of remedial actions to be taken for deficiencies found in a financial examination within one year prior to application.A Taiwan bank that meets the requirements set forth in Subparagraphs 1 to 4 of the preceding paragraph may apply to the Competent Authority for approval to make equity investment in a non-bank financial institution in Mainland Area.
Matters not specified in these Regulations with respect to equity investment in financial institutions in Mainland Area by Taiwan banks shall be governed by Article 74 of the Banking Act.

A Taiwan financial holding company that meets the following requirements may apply to the Competent Authority for approval to make equity investment in a financial institution in Mainland Area:
1. The financial holding company is in compliance with the law, is soundly managed and has not been subject to any disciplinary action, or has been subject to disciplinary action but specific remedial actions have been taken therefor and accepted by the Competent Authority within three (3) years prior to application;
2. The group’s capital adequacy ratio after the proposed equity investment is 110% or higher;
3. The group’s double leverage ratio after the proposed equity investment is 115% or lower.
Matters not specified in these Regulations with respect to equity investment in financial institutions in Mainland Area by Taiwan financial holding companies shall be governed by Article 36 of the Financial Holding Company Act.

If a third-area subsidiary bank meets the requirements set forth in subparagraphs 1 to 4, Paragraph 1 of Article 47, its Taiwan parent company may apply to the Competent Authority for approval for said third-area subsidiary bank to make equity investment in a financial institution in Mainland Area.
For a third-area subsidiary bank to make equity investment in a non-financial institution in Mainland Area, its Taiwan parent company shall apply to the Ministry of Economic Affairs for approval in accordance with the Regulations Governing Investment or Technical Cooperation in Mainland Area.

A Taiwan bank or financial holding company intending to make equity investment in Mainland Area shall submit the following documents to the Competent Authority for approval:
1. Application;
2. Investment plan, including the strategic objective of investment, expected benefits, sources of funds, fund utilization plan, and fund recovery plan;
3. Minutes of the board resolution;
4. A calculation worksheet for the ratio of equity capital to risk-weighted assets of the bank or financial holding company after deducting the amount allocated for the proposed equity investment, or a calculation worksheet for the group’s capital adequacy ratio and double leverage ratio after the proposed equity investment;
5. Details of investments made and benefit analysis as of the date of application;
6. CPA-audited or reviewed financial report for the latest fiscal year;
7. An equity investment agreement which should show that the financial and business information of the invested company will be made available and the strategic objective of the investment will be performed; and
8. Such other information or documents as may be required by the Competent Authority.
When a third-area subsidiary bank intends to make equity investment in Mainland Area, its Taiwan parent company shall submit documents set out in the preceding paragraph to the Competent Authority for approval.

A Taiwan bank or financial holding company must have obtained the approval of the Competent Authority before applying to [the financial authority in] Mainland Area for making equity investment in the local financial institutions. When the Taiwan bank or financial holding company changes the planned investment amount or shareholding, it shall submit relevant documents to the Competent Authority for approval.
A Taiwan bank or financial holding company shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to make equity investment in a local financial institution] and submit the following documents to the Competent Authority for recordation:
1. An approval letter from the financial authority in Mainland Area; and
2. Amount of investment, the investee and the investee’s equity structure.

Taiwan banks or financial holding companies shall submit relevant documents to the Competent Authority for approval before they transfer their shareholding in a financial institution in Mainland Area to others.

When a Taiwan bank or financial holding company intends to increase its equity investment in a financial institution in Mainland Area, the bank or financial holding company shall submit documents to the Competent Authority for approval in accordance with Paragraph 1 of Article 50 herein. If the shareholding of the bank or financial holding company in the financial institution in Mainland Area exceeds 50 percent of the financial institution’s total voting shares outstanding or total capital, the bank or financial holding company shall apply to the Competent Authority for approval pursuant to Article 37 herein.

A Taiwan bank or financial holding company shall promptly inform the Competent Authority by submitting a report on the particulars of the event and relevant information if its invested financial institution in Mainland Area has any of the situations below:
1. Changing of business items or major management policy.
2. Changing of capital that results in change to the original ownership interest of the Taiwan bank or financial holding company.
3. Major investments.
4. Dissolved or suspended business.
5. Changing the name of the institution.
6. Merging, transferring, or assuming all or an essential part of assets or business of another financial institution.
7. Undergoing reorganization, liquidation or bankruptcy proceedings.
8. Major loss has occurred or is foreseeable.
9. Having committed a material violation or business license being revoked or annulled by the financial authority in Mainland Area.
10. Other material events.
With respect to any of the situations specified in Subparagraph 1 to 7 of the preceding paragraph, a Taiwan bank or financial holding company shall report to the Competent Authority in advance.

Taiwan banks and financial holding companies shall input the basic and operating information of their invested financial institution in Mainland China into an information reporting system designated by the Competent Authority and update the information when changes occur.

Article 51 to the preceding article shall apply mutatis mutandis to the Taiwan parent company where its third-area subsidiary bank intends to make equity investment in a financial institution in Mainland Area.