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The Financial Supervisory Commission announced on October 13, 2009 to amend Article 4 of the Regulations Governing Insurance Enterprises' Multiple Loans to and Other Transactions with the Same Party, Same Related Party, or Same Affiliated Enterprise. According to the amendment, besides Paragraph 1 of said Article 4, all real estate transactions conducted by an insurance enterprise with a non-related party are also subject to the following rules:
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Where the insurance enterprise's risk based capital ratio a non-related party is 200% or above
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The value of each transaction cannot exceed 1.5% of the fund of the insurance enterprise, and the total amount of all the transactions with the same party cannot exceed 3% of the fund of the insurance enterprise.
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Where the insurance enterprise's risk based ratio is less than 200% but it has a positive equity value
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The insurance enterprise may submit a capital injection plan and the actual capital injection information to the competent authority for approval. The value of each transaction can be up to 1% of the fund of the insurance enterprise; provided, however, that the balance of the total amount of all the transactions with the same party cannot exceed 2% of the fund of the enterprise after the authority's approval is obtained and the following criteria are met:
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The real estate is (a) completed; (b) immediately available for commercial use; and (c) acquired from a public tender or auction.
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Procedures of handling real estate transactions are set up according to the rules on real estate transactions under the Regulations Governing the Acquisition and Disposal of Assets by Public Companies and the transaction was conducted in accordance with Article 146-2 of the Insurance Act and Article 9 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies. Relevant transaction information has been disclosed on the website of the insurance enterprise according to Article 10 of the Regulations Governing the Public Disclosure of Information by Life Insurance Enterprises and Article 10 of the Regulations Governing Public Disclosure of Information by Non-life Insurance Enterprises.
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3.
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The transaction has been approved by a three-quarters vote of the board of the insurance enterprise at a board meeting attended by at least two-thirds of the directors; a detailed evaluation report has been provided to the board as reference and all the directors and supervisors present at the meeting have issued written opinions.
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Where the insurance enterprise's risk based capital ratio does not reach 200% and it has a negative equity value
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The insurance enterprise may submit a capital injection plan and the actual capital injection information to the competent authority for approval. After the authority's approval is obtained and the criteria mentioned in (2) above are met, the value of a single transaction can be up to 1% of the fund of the insurance enterprise or NT$500 million, whichever is lower; however, the balance of total amount of all the transactions with the same party cannot exceed 2% of the fund of the insurance enterprise or NT$1 billion, whichever is lower.
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The authority may revoke its approval or take other necessary measures if the insurance enterprise fails to implement its capital injection plan afterwards. Also, the insurance enterprise should include a termination or exemption-of-liability clause in the relevant real estate contract to reflect the applicable situation described above.
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