Important Measures
Amendments to the Regulations Governing Loaning of Funds and Making of Endorsements / Guarantees by Public Companies
2019-04-15
In order to provide corporate groups with more flexibility in capital movement and utilization and help SMEs access more financial resources, the FSC introduced the amendments to the aforementioned Regulations on March 7, 2019 based on its review of external suggestions and practical needs of the industry. The key points of the amendments were as follows:
1.Short-term financing provided by a leasing enterprise that meets specific criteria by the FSC may exceed 40% of its net worth, but is still subject to the ceiling of 100% of its net worth.
2.The FSC relaxed the regulations for financing between different companies in a corporate group. A public company may receive loans granted by overseas companies in which the public company holds, directly or indirectly, 100% of the voting shares, and the loan is not subject to the restriction of “financing amount shall not exceed 40% of the lender''s net worth” and “the durations of loans shall not exceed one year”.
3.For public companies that have set up audit committees, the formulation and amendment of operational procedure for lending and provision of guarantee and endorsement have to be approved by the audit committee.
4.Public companies that have independent director(s) are required to inform the supervisor(s) and the independent director(s) of any material violation with regard to lending, guarantee and endorsement activities with written notification. The rectification plans shall also be presented to the independent director(s).
1.Short-term financing provided by a leasing enterprise that meets specific criteria by the FSC may exceed 40% of its net worth, but is still subject to the ceiling of 100% of its net worth.
2.The FSC relaxed the regulations for financing between different companies in a corporate group. A public company may receive loans granted by overseas companies in which the public company holds, directly or indirectly, 100% of the voting shares, and the loan is not subject to the restriction of “financing amount shall not exceed 40% of the lender''s net worth” and “the durations of loans shall not exceed one year”.
3.For public companies that have set up audit committees, the formulation and amendment of operational procedure for lending and provision of guarantee and endorsement have to be approved by the audit committee.
4.Public companies that have independent director(s) are required to inform the supervisor(s) and the independent director(s) of any material violation with regard to lending, guarantee and endorsement activities with written notification. The rectification plans shall also be presented to the independent director(s).
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- Update: 2019-05-09