萬國法律事務所

In order to keep pace with international banking standards and adjust to the rapidly changing international economic situation and financial developments; a proposed Banking Law amendment has been passed by Taiwan’s Legislative Yuan on 9 December 2008 and became effective on 30 December 2008. The amendment includes following main points:

(1) Strengthen Management of Shareholders: 

According to amended Article 25 of the Banking Law, if any person or any related person, jointly or severally, obtains more than five percent of the total issued voting shares of a bank, such person must notify the Financial Supervisory Commission (FSC) within ten days after his or her acquisition of the shares. Further, such person is now required to notify the FSC in the event that the shares that he or she possesses increase or decrease in rate by over one percent. In addition, a person or a related person must apply to the FSC for approval before he or she, jointly or severally, obtains more than ten percent, twenty-five percent, or fifty percent of the total issued voting shares of a bank.

(2) Establishes a Mechanism for Market Exit of Banks:

The amendment stipulates that any banks that suffer a severe capital inadequacy will be placed under government control. The amended Article 44 of the Banking Law, in adopting the international BIS standard, categorizes banks into four categories based on their capital adequacy: adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.  In the event that the ratio of a bank’s own capital to its venture property falls below two percent, the bank will be deemed to be critically undercapitalized and the FSC will send representatives to take control of the bank within ninety days after the bank becomes critically undercapitalized.

In addition, according to the amended Article 62 of the Banking Law, when a bank’s business or financial condition apparently deteriorates, and such condition renders it unable to pay its debts or to be likely to be detrimental to its depositors’ interests, the FSC may:

I. Send representatives to take control of the operation of such bank;


II. Order to bank to discontinue its business and settle its liabilities;

III. Prohibit the bank’s responsible person from transferring, delivering or creating encumbrances on his property; and

IV. Prohibit the bank’s responsible person from leaving Taiwan.

(3) Partial Easement of Banks Confidentiality Obligations:

For the sake of social justice, the rules on the confidentiality of customer data have been amended to permit banks to publicly announce the data of their clients when the accumulated bad-debt for the same client reaches NT$ 50 million, or when it reaches NT$ 30 million within six months after a loan is made.