These Guidelines are formulated by the Council for Economic Planning and Development, Executive Yuan (hereinafter referred to as the CEPD) to govern the handling of overdue US Economic Aid loans and payment due from the recipients of US Economic Aid materiel (hereinafter referred to in common as loans).

If the recipient of a US Aid loan or US Aid materiel (hereinafter referred to as the borrower) fails to repay the loan in accordance with the schedule stipulated in the loan or supply contract, the agent bank of the CEPD (hereinafter referred to as the bank) should immediately issue an overdue notice to the borrower and his guarantor requesting prompt settlement of the overdue loan, due interest, and any applicable penalties.

If the monies due as referred to in the preceding Article are not paid in full within one full month after the issuance of the overdue notice, the bank should issue a second overdue notice requesting settlement thereof.

If the monies due as referred to in the preceding Article are not paid in full within one full month after the issuance of the second overdue notice, the bank should promptly report this to the CEPD and prepare to pursue recovery according to law; and after receiving approval from the CEPD, the bank should institute legal proceedings for the recovery of the said monies due.

While the bank is preparing to pursue recovery according to law as referred to in the preceding Article, if the borrower increases its capital and reorganizes for the purpose of continuing production, and if it is evident that its ability to pay the monies due has been improved thereby, the CEPD may notify the bank to temporarily defer the institution of legal proceedings, and if the borrower is able to propose a reliable and definite method for paying all the monies due, to the satisfaction of the CEPD, the CEPD may notify the bank to desist from the institution of legal proceedings.

During the conduct of legal proceedings as referred to in Article 4 above, if the borrower resumes the timely payment of monies due or proposes a reliable means of making such payment which meets with the satisfaction of the CEPD, and provided that the borrower is willing to bear the costs of the plaintiff in the legal proceedings, the CEPD may notify the bank to settle the claim out of court.

If the borrower has not paid the monies due under a loan, in cases of pressing urgency the bank may forego taking the steps set out in Articles 2 to 4 above, but instead directly institute legal proceedings for the recovery thereof. The bank may adopt such procedures to secure its claim as the circumstances require.

(Rescinded.)

If after taking receipt of distributed US Aid materiel the borrower breaches the terms of the supply contract or fails to make payment of all monies due after action has been taken to press for the same in accordance with the provisions of these guidelines, the bank should, after reporting to the CEPD and obtaining approval therefrom, immediately dispatch personnel to take possession of the said materiel, or directly institute legal proceedings for the return of the materiel, and at the same time claim damages for any losses incurred.

US Aid materiel that has been recovered should be offered for sale by open tender conducted by the CEPD or an agent appointed to act on its behalf. A minimum price should be set, and the materiel sold to the highest bidder above that price. If the highest bidder offers a price that is below the minimum price, the initial tender should be cancelled and the materiel offered for sale again by open tender at a lower minimum price. If the second tender again fails to receive any bid that is at or above the minimum price, it should be cancelled again and the materiel offered for sale again by open tender at a further reduced minimum price.
The minimum price for the initial sale by open tender should be set in accordance with the assessed value of the materiel at the time of its recovery. The minimum price for each subsequent sale by open tender should be set at not less than eighty percent of the previous minimum price. If recovered US Aid materiel cannot be sold after being offered for sale by open tender five times in accordance with the method described hereinbefore, the CEPD may set a minimum price based on an estimate of how much it could fetch and, with the agreement of the Ministry of Audit, offer it for sale by open tender again. If the materiel still cannot be sold by this method, the CEPD should donate it to a government agency or state-owned enterprise that is able to find a means of putting it to use.
The minimum price set by estimate for the final tender as described above may be lower than eighty percent of the minimum price in the previous tender.

If, after the success of litigation pursued in accordance with the provisions of Articles 4, 7 and 9 above and its compulsory execution against the property of the borrower and its guarantors, the debt due from the borrower cannot be fully cleared, or if the proceeds of sale of recovered materiel by open tender in accordance with the provisions of Article 10 are lower than the assessed value of the materiel upon recovery, the shortfall should be reported to the Management Committee of the Sino-American Fund and, after being considered and passed by the Committee, reported with supporting documentation to the Ministry of Audit for approval and cancellation.

These guidelines come into effect on the date of their proclamation.