A Study on the Re-investment Legal Scheme of Financial Holding Company in Taiwan

• Main Authors: Hui-Wen Lo, 羅惠雯
• Other Authors: Yi-Hong Xie
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/25566058146803151149

碩士 === 東吳大學 === 法律學系 === 94 === In view of the tides of cooperation and liberalization, Taiwan Financial Holding Company Act, was first enacted and promulgated in July of 2001, afterwards revised in February of 2004 and May of 2005 respectively. In addition, the competent authority of financial services revised two regulations simultaneously in June of 2005, which comprised of "The Regulations Governing Review of the Application to Make the Investment by Financial Holding Companies in accordance with Financial Holding Company Act of 2005" and "The Regulations Governing Review For Financial Holding Companies Acquiring Capital by the Way of Disinvestment in the Subsidiaries of 2005", in order to relax restrictions on FHC reinvestment and ease the ways of obtaining funds. However, Financial Holding Company Act is widely considered as legally vague and disregarded the fit and proper of reinvestment; inter alia, the reinvestments on the Venture Capital Funds and other non-financial entities. The vagueness does encourage circumvention of the principles on the “Separation in Banking and Commerce”, in which may prevent FHC from improper investment in financial markets. This research analyzed and compared Taiwan's legal system and realities of financial services and is comprised of six parts as follows: Part one: To illustrate motives, purposes, realms, methodologies, and structure of the research. Part two: To elaborate the essence of FHC reinvestment in Taiwan. The first subpart is to indicate existing issues on the FHC reinvestment. Secondly, it demonstrates how conflicts of interest led by the FHC reinvestments. Part three: To depict the legislative background of the regulations on FHC reinvestment. The first subpart explains four objects of FHC’s reinvestment in the eyes of the law, including long-term investments related to financial activities, investments of non-financial activities, use of short-term capital, and investments in real estate for private use. Moreover, this research demonstrates approaches of reinvestment in both Taiwan FHC and its subsidiaries, including stock acquisition, asset acquisition, release of on-going business, or a merger, in order to conducting reinvestments. Part Four: To introduce the comparative legal scheme of U.S. and Germany in financial services. Part Five: To explain the risk control and management of reinvestment. By first establishing criteria of FHC reinvestment, it promotes effectiveness of capital fire wall within financial groups in Taiwan. Part Sixth: Conclusion and Suggestions. With not only holding a supportive amendment of FHC’s reinvestment in non- financial entities but adopting the legislation of strictly with merciful going forward and to advance self-discipline in practicing the market system.