This Act is enacted in order to increase the synergy of Financial Institutions (as defined below), to consolidate the supervision of cross-financial industry, to promote the sound development of financial markets, and to protect the public interest.

The establishment, administration and supervision of Financial Holding Companies [as defined below] shall be governed by this Act; those matters not provided for in this Act shall be governed by the [relevant] provisions of other laws.
A Bank [as defined below] that is not organized as a company that seeks to carry out a [share] swap or spin off under this Act may do so under the Company Law provisions governing a company limited by shares.

The term "Competent Authority" as used in this Act shall mean the Financial Supervisory Commission.

The terms as used in this Act shall have the following meanings:
1. "Controlling interest" shall mean holding twenty-five percent (25%) or more of the outstanding voting shares or capital stock of a bank, insurance company or securities firm, or otherwise having the direct or indirect power to elect or designate the majority of the directors of a bank, insurance company or securities firm.
2. "Financial holding company" shall mean a company established in accordance with this Act and having a controlling interest in a bank, insurance company and/or securities firm.
3. "Financial institution" shall mean any of the following banks, insurance companies or securities firms:
(1) "Bank" shall mean banks and bills finance companies as defined in the Banking Act and other entities designated by the Competent Authority;
(2) "Insurance company" shall mean insurance enterprises established in accordance with the Insurance Law and organized as companies limited by shares; and
(3) "Securities firm" shall mean securities firms engaging in securities underwriting, proprietary trade and brokering or securities finance companies engaging in the securities finance business.
4. "Subsidiaries" shall mean any of the following entities:
(1) "Bank subsidiary" shall mean a bank in which the financial holding company has a controlling interest;
(2) "Insurance subsidiary" shall mean an insurance company in which the financial holding company has a controlling interest;
(3) "Securities subsidiary" shall mean a securities firm in which the financial holding company has a controlling interest; and
(4) Any other entity in which the financial holding company holds more than fifty percent (50%) of its outstanding voting shares or capital stock, or otherwise has the direct or indirect power to elect or designate the majority of its directors.
5. "Converted" shall mean transfer of business operation or swap of shares.
6. "Foreign financial holding company" shall mean a company established under foreign law which has a controlling interest in a bank, insurance company, and/or securities firm.
7. "Same person" shall mean the same natural or juridical person.
8. "Same concerned person" shall mean persons related to the same natural or juridical person.
9. "Affiliate" shall mean an enterprise to which Articles 369-1 through 369-3, Article 369-9 and Article 369-11 of the Company Law apply.
10. "Major shareholder" shall mean a natural or juridical person holding five percent (5%) or more of the outstanding voting shares or capital stock of a financial holding company or any of its subsidiaries; if the major shareholder is a natural person, the number of shares held by his/her spouse and children under twenty years of age shall be aggregated into the principal's share holding.
Persons related to the same natural person referred to in Subparagraph 8 of the preceding paragraph include:
(1) The principal, his/her spouse and relatives by blood within the second degree of kinship.
(2) An enterprise in which the persons referred to in the preceding subparagraph hold more than one third (1/3) of its outstanding voting shares or more than one third of its capital stock.
(3) An enterprise or a foundation in which the persons referred to in Subparagraph (1) hereof act as its chairman, president or directors representing the majority of directors.
Persons related to the same juridical person referred to in Subparagraph 8 of the preceding paragraph include:
(1) The same juridical person and its chairman and president as well as the spouse and relatives by blood within second degree of kinship of the chairman and president.
(2) Enterprises in which the same juridical person and natural persons referred to in the preceding subparagraph hold more than one third (1/3) of their outstanding voting shares or capital stock, or enterprises or foundations in which the same juridical person and natural persons referred to in the preceding subparagraph act as their chairman, president or directors representing the majority of directors.
(3) The affiliates of the same juridical person.

In determining the number of shares or the amount of capital of a financial holding company, bank, insurance company or securities firm held by the same person or same concerned person, the following shares or capital shall be excluded
1. Shares acquired by a securities firm during the underwriting period of the securities and disposed of during the period prescribed by the Competent Authority.
2. Shares acquired by a financial institution under a collateral pledge or security agreement and four years have not elapsed since the date of acquisition.
3. Shares acquired by inheritance or bequest and two years have not elapsed since the date of inheritance or bequest.

A Same Person or Same Affiliated Person who has a Controlling Interest in a Bank, Insurance Company and/or Securities House shall apply to the FSC for approval for the establishment of a Financial Holding Company. Such requirement shall not apply to shares owned by the governments and to shares owned with the FSC approval for purposes of managing a troubled financial institution. If the Same Person or Same Affiliated Person referred to in the preceding paragraph does not concurrently hold shares or capital of a company from any two of the banking, insurance and securities industry, or, the aggregate amount of assets of the Bank, Insurance Company or Securities House in which such Same Person or Same Affiliated Person has a Controlling Interest does not exceed a Certain Amount, such Same Person or Same Affiliated Person need not establish a Financial Holding Company.
The term "Certain Amount" as used in the preceding paragraph shall be as prescribed by the FSC.

Where a Same Affiliated Person applies to the FSC for approval to establish a Financial Holding Company as referred to in the preceding Article, the Same Affiliated Person who makes the largest total investment in each Financial Institutions shall be the representative applicant for the other [Same Affiliated persons] to jointly establish a Financial Holding Company.
If [unrelated] Same Affiliated persons each respectively hold outstanding voting-right-shares or capital of a Bank, Insurance Company or Securities House more than twenty-five percent (25%), the Same Affiliated Person who makes the largest total investment [in the Financial Holding Company] shall be the applicant to apply to establish a Financial Holding Company.
If, with regard to investors referred to in the preceding paragraph, two (2) or more than two persons make a total investment of the same amount, such persons shall report same to the FSC and the FSC shall designate one (1) of these persons as the applicant to establish a Financial Holding Company.

To establish a Financial Holding Company, [the person or company] shall submit an application which includes the following items to the FSC for approval:
1.Name of the Financial Holding Company;
2.Articles of Incorporation;
3.Capital amount;
4.Address where the Financial Holding Company and its Subsidiaries will be located;
5.Business type, name and percentage of the share-holding of each Subsidiary;
6.Operation, finance and investment plans;
7.Evidence of the qualifications of the designated president; senior executive vice president and executive vice president.
8.Documents and business proposals for handling the relevant business or share transfers. The proposals should include important matters with regard to the protection of customer and creditor rights and the handling of the rights and interests of the employees;
9.Evidence of the qualifications of the promoters if the Financial Holding Company is newly established; and
10.Other documents as prescribed by the FSC.
Subparagraph 9 of the preceding paragraph shall not apply to financial institutions which are to be merged into a financial holding company or are to become a subsidiary of a financial holding company.

The FSC shall consider the following when [deciding whether or not to] approve an application for establishing a financial holding company pursuant to the preceding Article:
1.The soundness of the financial and operational status and management capacity;
2.Capital adequacy; and
3.The impact on the competitive situation in the financial market and on the public interest.
If the establishment of a Financial Holding Company constitutes a combination of enterprises under Article 6 of the Fair Trade Law, the FSC approval shall be subject to the approval of the Fair Trade Commission ("FTC"). The examination criteria for the FTC approval shall be prescribed by the FTC, in consultation with the FSC.

A Financial Holding Company may only be established in the form of a company limited by shares. Unless otherwise approved by the FSC, the shares of a Financial Holding Company shall be publicly offered.

The words "Financial Holding Company" must be included in the name of a Financial Holding Company.
The term "financial holding company" may not be used [in the company name] of any entity other than by a Financial Holding Company, nor may other names [/words] be used that could mislead others into believing that such entity is a Financial Holding Company.

The FSC shall prescribe the minimum paid-in capital of a Financial Holding Company.

A Financial Holding Company that has received establishment approval from the FSC shall, after completing its company registration, apply to the FSC to issue a business license. For a Financial Institution that is converting into a Financial Holding Company, the calculation of the license fee for the issuance of a business license shall be based on the net increase in capital after such conversion.

If, after establishment, a Financial Holding Company seeks to amend any of the items listed in Article 8, Paragraph 1, Subparagraphs (1) through (4) of this Act, such Financial Holding Company shall report same to the FSC for approval, amend its company registration and apply for the issuance of a new business license.

A Financial Holding Company may hold all the outstanding shares or paid-in capital of its Subsidiary(ies), and the provisions of Article 2, Paragraph 1, Subparagraph (4), and Article 128, Paragraph 1,of the Company Law with respect to the number of shareholders and promoters of a company limited by shares shall not apply. The rights and functions of the shareholders' meeting(s) of such Subsidiary(ies) shall be exercised by the board of directors [of the Subsidiary], and the provisions of the Company Law with respect to shareholder meetings shall not apply.
The directors and supervisors of the Subsidiary referred to in the preceding paragraph shall be appointed by the Financial Holding Company. Directors and supervisors of the Financial Holding Company may concurrently hold a [director/supervisor] position in the Subsidiary(ies) as referred to in Paragraph 1.

When a financial institution is converted into a financial holding company, a same person or same concerned person who singly, jointly or collectively holds more than ten percent (10%) of the financial holding company's outstanding voting shares shall report such fact to the Competent Authority.
After a financial holding company has been established, a same person or same concerned person who singly, jointly or collectively holds more than five percent (5%) of the financial holding company's outstanding voting shares shall report such fact to the Competent Authority within ten (10) days from the day of holding; the preceding provision applies to each cumulative increase or decrease in the shares of the same person or same concerned person by more than one percent (1%) thereafter.
After a financial holding company has been established, a same person or same concerned person who intends to singly, jointly or collectively acquire more than ten percent (10%), twenty-five percent (25%) or fifty percent (50%) of the financial holding company's outstanding voting shares shall apply for prior approval of the Competent Authority.
A third party who holds shares of a financial holding company on behalf of the same person or same concerned person in trust, by mandate or through other types of contract, agreement or authorization shall fall within the purview of the same concerned person.
The regulations governing the qualifications and requirements for the same person or same concerned person who applies for approval pursuant to Paragraph 3 hereof, required documentation, shares to be acquired, purpose of acquisition, sources of funding, state of pledging of shares held, existing shareholding, and the reporting and announcement of changes in other important events, and other matters to be complied with shall be prescribed by the Competent Authority.
The same person or same concerned person who holds more than ten percent (10%) of the outstanding voting shares of a financial holding company shall not pledge his or her shares to a subsidiary of the financial holding company. The preceding provision does not apply to shares of a financial holding company already pledged to a financial institution before the financial institution was converted into its subsidiary, provided the original pledge continues to be in effect.
If a same person or same concerned person referred to in Paragraph 1 hereof does not meet the qualifications or requirements stipulated in the regulations as referred to in Paragraph 5 hereof, the same person or concerned person may continue to hold shares of such companies, but may not increase his or her shareholding.
The application referred to in Paragraph 3 hereof shall be deemed approved if the Competent Authority does not object thereto within fifteen (15) business days from the next day following the receipt of such application.
The same person or same concerned person who singly, jointly or collectively holds more than five percent (5%) but less than ten percent (10%) of a financial holding company's outstanding voting shares prior to the implementation of the amendment to the Act on December 30, 2008 shall report such fact to the Competent Authority within six (6) months from the implementation date of the said amendment.
Where the same person or same concerned person who holds voting shares issued by a financial holding company without filing a report with the Competent Authority or obtaining approval from the Competent Authority in accordance with the provisions set forth in Paragraphs 2 or 3, the excess shares held by such same person or same concerned person shall not have voting rights and shall be disposed of within the given period prescribed by the Competent Authority.

The guidelines with respect to the qualifications of the promoters and responsible persons of a financial holding company, the restrictions on concurrent posts held by the responsible persons and other matters to be complied with shall be prescribed by the Competent Authority.
A person not meeting the qualifications set forth in the guidelines referred to in the preceding paragraph shall not act as the responsible person of a financial holding company; any such person who currently acts as the responsible person of a financial holding company shall be ipso facto discharged.
The responsible person of a financial holding company who concurrently holds a position in a subsidiary of the financial holding company owing to an investment relationship, or the responsible person of a subsidiary of a financial holding company who meets the qualifications set forth by the Competent Authority to concurrently hold a position in another subsidiary of the financial holding company is not subject to the restrictions set out in the front section of Paragraph 3, Article 11 of Act Governing Bill Finance Business.
The responsible person or any employee of a financial holding company shall not accept, under any pretense, commissions, rebates and other unwarranted benefits from a transaction counterparty or a customer of the financial holding company or its subsidiaries.

With FSC approval, a Financial Holding Company may merge with the following companies, transfer its entire assets and liabilities to the following companies, or assume the entire assets and liabilities of the following companies (and Article 6, Article 8, Article 9 and Articles 12 to 14 of the Financial Institutions Merger Law shall apply mutatis mutandis):
1.Financial Holding Companies;
2.Existing companies that have a Controlling Interest as defined in Article 4, Paragraph 1, Subparagraph 1 of this Act, and meet the requirements of Article 9, Paragraph 1, of this Act.
If the business scope of the existing company, as referred to in Subparagraph 2 of the proceeding paragraph, exceeds the scope of Articles 36 and 37 of this Act, the FSC shall, at the time of approval, require such company to make an adjustment within a prescribed period of time.

If the Financial Holding company, or the Bank Subsidiary, Insurance Subsidiary, or Securities Subsidiary of a Financial Holding Company, due to adverse changes in its financial or business conditions, fails to pay its obligations when due, or after [appropriate] adjustments has a negative net worth, and the FSC determines that immediate measures are necessary and that such measures will not have any material adverse effect on competition in the financial market, Article 11 of the Fair Trade Law shall not apply and an application to the Fair Trade Commission will not be required in order for a Financial Holding Company to:
1.Merge with any company referred to in Paragraph 1, Subparagraph 1 or Subparagraph 2 of the proceeding Article, or transfer all of its rights and obligations to any said company or assume all the rights and obligations of any said company;
2.Permit a Same Person or Same Concerned Person to hold shares representing more than one-third (1/3) of its voting rights; and
3. Be established as a result of a Transfer from a Financial Institution.

A Financial Holding Company, upon the resolution of a dissolution by a shareholders' meeting, shall file a dissolution application to the FSC for approval, stating therein the reason for such dissolution, and enclosing therein the minutes of said shareholders'meeting, a plan for the settlement of liabilities, the plan and the deadline by which its Subsidiary(ies) or its invested enterprise(s) will be disposed of. Upon the FSC approval, the subject liquidation may proceed in accordance with the [relevant] provisions of the Company Law.
If a Financial Holding Company proceeds special liquidation, for supervision purposes, the court [overseeing such special liquidation] shall consult with the FSC and consider the FSC's comments with regard to such special liquidation. When necessary, the court may request the FSC to recommend a liquidator or to appoint a person to assist the liquidator in carrying out his/her functions.
After a Financial Holding Company has commenced liquidation, no capital or dividends may be distributed under any circumstance until all of the Financial Holding Company's debts have been settled.

If, after it has received the FSC establishment approval, a Financial Holding Company ceases having a Controlling Interest, as defined in Article 4, Paragraph 1, of this Act, in a Bank Subsidiary, Insurance Subsidiary, or Securities Subsidiary, the FSC shall request such Financial Holding Company to take corrective measures within a prescribed period of time. If the Financial Holding Company fails to remedy the matter, its establishment approval shall be revoked.

If the FSC approves the dissolution of a Financial Holding Company, or revokes the establishment approval of a Financial Holding Company, such Financial Holding Company shall surrender its business license within a prescribed period of time for cancellation. Such Financial Holding Company shall not use "Financial Holding Company" in its name anymore, and shall amend its company registration accordingly.
If a Financial Holding Company referred to in the preceding paragraph fails to surrender its business license within the prescribed period of time, the FSC shall cancel the business license by public announcement.

If a Foreign Financial Holding Company meets the following requirements and obtains FSC's approval, it may be exempted from establishing a new Financial Holding Company in the Republic of China ("R.O.C.") [In order to own a Controlling Interest in a Bank, Insurance Company and/or Securities House]:
1.[If the Foreign Financial Holding Company] has fulfilled the requirements under Article 9, Paragraph 1, for the establishment of a Financial Holding Company;
2.[If the Foreign Financial Holding Company] has sufficient experience in operating and managing a Financial Holding Company and has excellent credit;
3.The competent financial regulatory authority in such Foreign Financial Holding Company's home country has approved such Foreign Financial Holding Company investment in the R.O.C. by possessing Subsidiaries and agreed to cooperate with the R.O.C. government in sharing the responsibility to supervise such Foreign Financial Holding Companies' activities on a consolidated basis.
4.The competent financial regulatory authority in such Foreign Financial Holding Company's home country and such Foreign Financial Holding Company's head office have the capacity to supervise the relevant Subsidiaries in the R.O.C. on a consolidated basis; and
5.The head office of such Foreign Financial Holding Company has appointed an agent for litigious and non-litigious matters in the R.O.C.
The preceding paragraph also applies to foreign financial institutions which are "universal banks" in their home countries.