Article 1
This Act is enacted to regulate the merger of financial institutions,
expand economic scale, and economic horizon, enhance the
operational efficiency of financial institutions, and protect proper
competition environments.

Article 2
Merger of financial institutions shall be governed by this Act.
Merger of non-corporation Financial Institutions shall be effected
in accordance with this Act. In addition, the provisions regarding
merger of companies limited by shares under the Company Act
shall apply mutatis mutandis.
Where a banking enterprise, in accordance with the Banking Act
and the Deposit Insurance Act, is merged by its ministrant,
supervisor, receiver or liquidator, the Banking Act, Deposit
Insurance Act, and the relevant rules shall apply to the merging
procedures on a priority basis.
Matters not provided in this Act shall be governed by other
relevant acts and regulations; in the absence of such other acts and
regulations, the competent authority shall prescribe separately.

Article 3
The Competent Authority under this Act shall be the Ministry of
Finance

Article 4
The terms used herein shall have the following meanings:
1."Financial Institution" means the following banking enterprises,
securities and futures enterprises, institutions covered by the
insurance enterprise, and other institutions approved by the
Competent Authority:
(1) Banking Enterprises: including banks, credit cooperatives,
credit departments of farmers associations, credit
departments of fishers associations, bill finance companies,
credit card institutions, and Directorate General of Postal
Remittances & Savings Bank.
(2) Securities and Futures Enterprises: including securities
firms, securities investment trust enterprises, securities
investment consulting enterprises, securities finance
enterprises, futures commission merchants, leverage dealers,
futures trust enterprises, futures management enterprises,
and futures consulting enterprises.
(3) Insurance Enterprises: including insurance companies and
insurance cooperatives.
(4) Trust Enterprises.
2. "Merger" means the merger of two or more Financial
Institutions into one Financial Institution.
3. "Extinguished Institution" means the Financial Institution which
becomes extinguished due to merger.
4. "Surviving Institution" means the Financial Institution which
survives the merger.
5. "Newly Incorporated Institution" means the Financial
Institution separately established due to merger.

Article 5
For the merger of Financial Institutions other than the credit
departments of farmers or fishers associations, the institutions to be
merged shall jointly apply to the Competent Authority for approval;
provided that no merger shall be allowed if the businesses cannot
be concurrently operated according to act or regulation.
Where a bank in the Banking Enterprises is merged with other
Financial Institutions in the Banking Enterprise, the Surviving
Institution or Newly Incorporated Institution shall be the bank.
Where a securities firm in the Securities and Futures Enterprises is
merged with other Financial Institutions in the Securities and
Futures Enterprises, the Surviving Institution or Newly
Incorporated Institution shall be the securities firm.
Where a property insurance company is merged with an insurance
cooperative, the Surviving Institution or Newly Incorporated
Institution shall be the property insurance company.

Article 6
When approving a merger, the Competent Authority shall take into
account the following factors:
1. influence on the expansion of the economic scale of the
Financial Institutions, enhancement of its operation efficiency,
and upgrade of international competitiveness;
2. influence on the competition factors on the financial market;
3. financial status, management ability, and operational soundness
of the Surviving Institution or Newly Incorporated Institution;
and
4. influence on the improvement of public interests, including
promotion of financial stability, enhancement of financial
service quality, provision of convenience, and handling of
problematic Financial Institutions.

Article 7
After the merger of a Financial Institution is approved by the
Competent Authority, if such institution exceeds the scope
provided by the acts and regulations due to the merger, the
Competent Authority shall order it to make adjustment within a
time limit.
The maximum adjustment period related to the merger of Financial
Institutions in the same category of business referred to in the
preceding paragraph shall be two years; provided that if the
provision regarding credit to related parties, or credit to one and the
same person, one and the same related party or one and the same
affiliated company under the Banking Act is exceeded, the
maximum adjustment period shall be five years. When necessary,
an application for extension may be applied once, and the period
shall be limited to two years.

Article 8
For the merger of Financial Institutions other than the credit
departments of farmers or fishers associations, the board of
directors shall prepare a merger agreement pertaining to the
consolidation or merger, attached with balance sheets, income
statements, and property inventory audited and certified by a CPA
and checked by the supervisor, and submit the same to the
shareholders meeting or general members (representatives)
meeting for approval.
The merger agreement referred to in the preceding paragraph
shall state the following particulars:
1.Names of Financial Institutions to be merged, name of Surviving
Institution or Newly Incorporated Institution, address of its head
office, its business areas, and total number, kinds and amount of
shares (shares of cooperative) to be issued by it;
2.The total number, kinds and amount of new shares to be
distributed by the Surviving Institution or Newly Incorporated
Institution to the shareholders (members) of the Extinguished
Institution, method of distribution, and other related matters;
3.Method of protection provided by the Surviving Institution or
Newly Incorporated Institution to the creditors, fund
beneficiaries, securities investors, or futures traders;
4.Amendment of Articles of Incorporation of the Surviving
Institution or Articles of Incorporation of the Newly Incorporated
Institution.

Article 9
When Financial Institutions other than the credit departments of
farmers or fishers associations are merged, except for a public
company which should make public announcement and report
within two (2) days from the occurrence of merger in accordance
with Paragraph 2 of Article 36 of the Securities and Exchange Act,
such institutions shall reach a resolution for merger pursuant to
the preceding Article and make a public announcement of the
content of the resolution and particulars to be stated in the merger
agreement within ten (10) day, without being subject to the
provision regarding separate notice under Paragraph 2 of Article
73 of the Company Act and other acts and regulations. The said
public announcement shall specify a period of not less than 30
days within which the creditors, fund beneficiaries, securities
investors or futures traders may raise any objection in writing that
the merger would damage their rights and interests.
The public announcement referred to in the preceding paragraph
shall be consecutively placed at all the business premises for at
least seven (7) days and consecutively published in the local daily
newspapers for at least five (5) days.
If the Financial Institution does not make the public
announcement referred to in Paragraph 1, or if the public
announcement does not meet the requirements referred to in the
preceding paragraph, or if such institution fails to satisfy, settle,
or provide an appropriate security interest for, the claims of its
creditors, fund beneficiaries, securities investors, or futures
traders who raise objection within the specified time limit, the
merger shall not be valid against such creditors, fund
beneficiaries, securities investors, or futures traders.

Article 10
For merger of a credit cooperative or insurance cooperative, a
resolution shall be adopted by two-thirds or more of the members
or representatives of members present at a members or
representatives of members meeting attended by all members or
three-fourths or more of representatives of members.
If the resolution referred to in the preceding paragraph is adopted
in a general representatives of members meeting, the credit
cooperative and insurance cooperative shall give a written notice
containing the resolution and particulars to be recorded in the
merger agreement to the non-representative members or make a
public announcement in the manner provided in Paragraph 2 of
the preceding Article, and specify an objection period of not less
than 30 days. Dissenting members shall make objection in writing
within the specified period. When one-third or more members
raise objection, the original resolution shall become void. If no
objection is raised within the said period, the resolution shall be
deemed agreed.

Article 11
The sale or assignment of the credit department of a farmers or
fishers association to a Banking Enterprise shall be concurred by
two-thirds of the members or representatives of members present
at a members or representatives of members meeting attended by
all members or two-thirds or more of representatives of members,
and the Banking Enterprise shall file an application to the
Competent Authority for approval. Before granting the approval,
the Competent Authority shall seek the opinion of the central
competent authority in charge of the farmers and fishers
association.
If the resolution referred to in the preceding paragraph is adopted
in a general representatives of members meeting, the farmers or
fishers association shall give a written notice containing the
resolution and particulars to be recorded in the sale/assignment
agreement to the non-representative members or make a public
announcement in the manner provided in Paragraph 2 of Article 9
and specify an objection period of not less than 30 days.
Dissenting members shall make objection in writing within the
specified period. When one-third or more members raise
objection, the original resolution shall become void. If no
objection is raised within the said period, the resolution shall be
deemed agreed.
When a Banking Enterprise and farmers or fishers association
reaches a resolution for acquiring or assigning/selling the credit
department of the farmers or fishers association, its board of
directors shall prepare an agreement pertaining to the relevant
matters, attached with the balance sheets, income statements, and
property inventory audited and certified by a CPA and checked by
the supervisor, and submit the same to the shareholders meeting
or general members (representatives) meeting.
The agreement referred to in the preceding paragraph shall
contain the following particulars:
1. Name of the Financial Institution, name, address of head
office, and business area of the acquiring Banking Enterprise;
2. Methods and procedures to evaluate and split the assets and
liabilities of the credit department of the farmers or fishers
association;
3. Methods to protect the rights and interests of the creditors of
the credit department of the farmers or fishers association; and
4. Amendments to the Articles of Incorporation of the acquiring
Banking Enterprise.
After the resolution referred to in Paragraph 1 is adopted, the
farmers or fishers association shall make a public announcement
of the content of the resolution and particulars to be stated in the
agreement within 10 days. The said public announcement shall
specify a period of not less than 30 days within which the
creditors may raise any objection in writing that the
assignment/sale of the credit department of the farmers or fishers
association to a Banking Institution would damage their rights
and interests.
The public announcement referred to in the preceding paragraph
shall be consecutively placed at all the business premises for at
least 7 days and consecutively published in the local daily
newspapers for at least five 5 days.
If the farmers or fishers association does make the public
announcement referred to in Paragraph 1, or if the public
announcement does not meet the requirements referred to in the
preceding paragraph, or if the association fails to satisfy, or
provide an appropriate security interest for, the claims of its
creditors, the assignment of the credit department to the Banking
Enterprise shall not be valid against such creditors.

Article 12
Where a farmers or fishers association invests in a bank or
contributes its credit department as capital to invest in a bank, the
bank shall apply to the Competent Authority for approval. Before
granting the approval, the Competent Authority shall seek the
opinion of the central competent authority in charge of the
farmers or fishers associations.
For the investment by farmers or fishers association referred to in
the preceding paragraph, the provisions in Paragraph 1 through
Paragraph 3 and Paragraph 5 through Paragraph 7 of the
preceding Article shall apply mutatis matandis to the matters
related to resolution procedures, agreement, and public
announcement procedures, etc.
The provision in Paragraph 3 of the preceding Article shall apply
to the bank referred to in Paragraph 1.
The agreement referred to in Paragraph 2 and the preceding
paragraph shall contain the following particulars:
1. Name of the Financial Institution, name of the invested or
newly established bank, address of its head office, its business
area, and total number, kinds, and amount of its issued and
outstanding shares.
2. Methods and procedures to evaluate and split the assets and
liabilities of the credit department of the farmers or fishers
association;
3. Methods to protect the rights and interests of the creditors of
the credit department of the farmers or fishers association; and
4. Amendments to the Articles of Incorporation of the invested
bank or Articles of Incorporation of the newly established
bank.
Where a farmers or fishers association invests in a newly
established bank or contributes its credit department as capital to
invest in the newly established bank, the farmers or fishers
association may become a promoter without being subject to the
restrictions in the proviso of Paragraph 3 of Article 128 of the
Company Act. The criteria for the investment in a newly
established bank by a farmers or fishers association or the
contribution of the association's credit department as capital to
invest in the newly established bank shall be separately
prescribed by the Competent Authority after consultation with the
central competent authority in charge of the farmers or fishers
associations.

Article 13
In the event that the business or financial status of its credit
department obviously deteriorates, a farmers or fishers
association cannot meet its liabilities or its net value after
adjustment becomes negative, the Competent Authority may
suspend all the powers and authority of the representatives of
members, directors, supervisors, or Secretary General of the
farmers or fishers association, or their powers and authority
related to the credit department, and the provisions of Articles
45 and 46 of the Farmers Association Act and Articles 48 and
49 of the Fishers Association Act shall not apply. The
Competent Authority may designate appropriate personnel to
exercise the suspended powers and authority.
When executing the sanctions referred to in the preceding
paragraph, the Competent Authority may, if deemed necessary,
after consultation with the central competent authority in charge
of farmers or fishers associations, order the farmers or fishers
association to assign its credit department and the property
required for its operation to a bank, and the provisions of
Atciel 37 of the Farmers Association Act and Article 39 of
Fishers Association Act shall not apply.
For the acquisition of the credit department of a farmers or
fishers association by a bank in the form of company limited by
shares, the following provisions shall apply:
1. A resolution shall be adopted at a shareholders meeting
attended by shareholders holding and representing a majority
of the total number of issued and outstanding shares and at
which meeting a majority of the votes held by the shareholders
present shall be cast in favor of such resolution. Dissenting
shareholders shall not request the bank to redeem their shares,
and the bank may be exempt from following the provisions of
Article 185 through Article 188 of the Company Act.
2. Where the Competent Authority deems it necessary to take
emergency measure, and where such measure does not have
any material adverse effect on the competition on the financial
market, the bank is exempt from applying to the Fair Trade
Commission of the Executive Yuan for an approval in
accordance with Paragraph 1 of Article 11 of the Fair Trade
Act.
Where a bank not in the form of a company limited by shares
acquires the credit department of a farmers or fishers
association in accordance with Paragraph 2, the provisions
referred to in the preceding paragraph shall apply mutatis
mutandis

Article 14
Where a farmers or fishers association assigns its credit
department or contribute its credit department as capital to
invest in the Banking Enterprise in accordance with Article 11
to Article 13 herein, the head office or branch of the original
credit department may, upon the approval of the Competent
Authority, become a branch of the said Banking Enterprise.
If the Banking Enterprise referred to in the preceding paragraph
applies to revoke the branch reorganized from the credit
department of the farmers or fishers association so that there is
no Banking Enterprise to provide financial services in the area
where the farmers or fisher's association is organized other than
the Directorate General of Postal Remittances and Savings
Bank, the farmers or fishers association in such area may set up
a credit department in accordance with the Farmers or Fishers
Association Act to handle financial business for its members.
If a farmers or fishers association assigns its credit department
or contribute its credit department as capital to invest in the
Banking Enterprise in accordance Article 11 to Article 13 so
that its promotional fund becomes insufficient, the central
competent authority in charge of the farmers or fishers
associations shall budget the fund according to actual needs.

Article 15
When an asset management company that aims for acquisition
of non-performing loans of Financial Institutions handles
non-performing loans, the following provisions may apply:
1. When the non-performing loans are assigned from Financial
Institutions, Paragraph 3 of Article 18 hereof shall apply.
2. When a Financial Institution transfers its non-performing
loans, the enforcement orders that have already been obtained
by such Financial Institution against the borrower or guarantor
shall extend to the asset management company.
3. When an asset management company forecloses a
first-priority mortgage on a collateral that is real estate owned
by the borrower or a third party, the asset management
company may mandate an impartial third party approved by
the Competent Authority to conduct public auction without
being subject to Article 28 of the Law Governing the
Application of the Obligations of the Civil Code. The
remaining amount of proceeds from the said public auction, if
any, after paying off the amount receivable shall be returned to
the borrower, but if there are other subordinate mortgagor(s),
the said amount shall be lodged in the court.
4. If an asset management company has already obtained
enforcement order for non-performing loans as a subordinate
creditor, the Competent Authority may request the court to use
the third-party auction institution referred to in the preceding
item to handle the auction procedure under the Compulsory
Execution Act.
5. The court shall consult with the asset management company
when considering the petition for bankruptcy or reorganization
against the borrower of the non-performing loans of a
Financial Institution. In case where the Financial Institution is
the largest creditor of the said borrower, the court shall
appoint the asset management company to be the bankruptcy
trustee or reorganization manager.
6. For the claims under non-performing loans of a Financial
Institution that have been assigned or the compulsory
enforcement thereof has been initiated before the borrower is
declared bankrupt or under reorganization, exercise of such
claims or compulsory enforcement may continue after the
borrower is declared bankrupt or under reorganization without
being subject to the restrictions under the Company Act and
the Bankruptcy Act.
Regulations governing the approval of third-party auction
institution and the procedure for an auction conducted by such
third party as referred to in Item 3 of the preceding Paragraph
shall be separately prescribed by the Competent Authority.
An asset management company or the third party auction
institution approved by the competent authority under Item 3 of
the preceding Paragraph may accept mandate and supervision
from the compulsory enforcement authority and handle
compulsory enforcement matters from Banking Enterprises
pursuant to the Compulsory Execution Act.
The business tax rate for the Banking Enterprises shall apply
mutatis mutandis to asset management companies in respect of
disposal of the non-performing loans of Financial Institutions as
referred to in Paragraph 1.
The losses from sale of non-performing loans by a Financial
Institution to an asset management company may be carried
forward over five years.

Article 16
When a Financial Institution contemplating merger applies to
the Competent Authority for approval, it shall submit an
application for merger, together with the following documents:
1. Merger plan, stating the content of merger plan (including
method of merger, evaluation of economic efficiency, general
condition of business area after merger, business items,
business development plan, and financial projection for the
coming 3 years), expected progress, feasibility, necessity,
reasonableness, legality, and the evaluation of the factors to be
considered under Article 6, and other analysis;
2. Merger or assignment or investment contract, including
important matters such as disposal of the rights and interest of
employees, in addition to particulars to be recorded;
3. Minutes of general shareholders meeting, general members
(representatives) meeting of the Surviving Institution and
Extinguished Institution;
4. Supporting documents of public announcement (notice) of
resolution on the merger of the Financial Institution and
particulars to be stated in the relevant contracts;
5. Information of shareholders requesting for redemption of
shares or members withdrawing capital contribution and a list
of the capital contribution amount;
6. CPA's written opinion on the reasonableness of evaluation of
the ratio for exchange of shares as a result of the merger, or
the assignment/sale of the credit department, or the investment
by contributing the credit department as capital;
7. Detailed proforma report of self-provided capital sufficiency
for the merger one month prior to the merger;
8. Balance sheets, income statement, property inventory,
statement of change of shareholders equity, and cash flow
statement audited and certified by a CPA on the record date for
exchange of shares due to merger, assignment/sale, or
investment;
9. Legal opinions issued by a lawyer; and
10. Other documents as required by the Competent Authority.
Where a Newly Incorporated Institution will be formed due to
merger, in addition to following the provisions in the preceding
paragraph, the promoters of such institution shall submit the
following documents to the Competent Authority to apply for
incorporation approval:
1. Promoters' register;
2. Minutes of promoters' meeting;
3. Qualification certificates of general manager, vice general
manager, and assistant manager;
4. Articles of Incorporation of the Newly Incorporated
Institution; and
5. Other documents as required by the Competent Authority.
The format of the documents referred to in the preceding two
paragraphs shall be prescribed by the Competent Authority.

Article 17
Where the merger of Financial Institutions is approved by the
Competent Authority, the Surviving Institution or the Newly
Incorporated Institution may, when applying for amendment
registration of the real estate owned by the Extinguished
Institution, its movable properties that require registration, and
all encumbrances, directly process the registration against the
certificate issued by the Competent Authority, without paying
registration fees, in the following manner:
1. The stamp tax and deed tax incurred by the merger shall be
exempted;
2. If the land directly used by the Extinguished Institution is
transferred, after the present value of the land is decided upon
examination in accordance with the Land Tax Act, the
registration for transfer of the title to the land shall be effected,
and the payable land value increment tax may be deferred and
paid by the Surviving Institution or Newly Incorporated
Institution until the land is transferred again. Upon bankruptcy
or dissolution, the deferred land value increment tax shall be
paid on a priority basis;
3. Where the land assumed by the Extinguished Institution in
accordance with Article 76 of the Banking Act is transferred to
the Surviving Institution or Newly Incorporated Institution
due to merger, the land value increment tax shall be exempted;
4. The goodwill generated due to merger may be amortized
within 5 years;
5. Expenses incurred due to merger may be amortized within 10
years;
6. The losses from sale of non-performing loans by a Financial
Institution due to merger may be carried forward over 15
years.
The Financial Institutions subject to merger referred to in the
preceding paragraph may, in the year of loss and the year of
reporting deduction, when the accounting books and vouchers are
complete, use the blue return referred to in Article 77 of the
Income Tax Act or, if such books and vouchers have been audited
and certified by the CPA and a tax return has been processed and
the income tax paid, the Surviving Institution or Newly
Incorporated Institution after merger may, upon filing business
income tax return, deduct the loss approved by the relevant tax
collection agency in each period within five years before the
merger of such Financial Institutions, which amount shall be
calculated based on the proportion of shares in the Surviving
Institution or Newly Incorporated Institution held by the
shareholders (members) of such Financial Institutions due to
merger, and such amount shall be deducted from the net profit of
the current year within five years from the year on which the loss
is incurred.

Article 18
The provisions of this Act shall apply to the Financial Institution
which categorically assumes or assigns all assets as well as
liabilities. This same rule applies to foreign Financial Institutions
which merge with domestic Financial Institutions, or
categorically assumes or assigns both assets and liabilities;
provided that losses incurred by the foreign Financial Institutions
outside of the ROC territory before merger, categorical
assumption or assignment shall not be deducted in accordance
with Paragraph 2 of the preceding Article.
Where a Financial Institution, in accordance with the Banking
Act, Deposit Insurance Act, and Insurance Act, categorically
assumes or assigns assets and liabilities, assigns in installments or
assigns the principal portion of the business and assets/liabilities
by its ministrant, supervisor, receiver, liquidator, or trustee, the
Banking Act, Deposit Insurance Act, Insurance Act, and the
relevant provisions shall apply on a priority basis. In addition, the
provisions of this Act shall apply mutitas mutandis.
Where a Financial Institution categorically assumes or assigns
both assets and liabilities, assigns in installments, or assigns the
principal portion of the business and assets/liabilities, or follows
the provisions of Article 11 through Article 13, the notice of
assignment of the claim may be made by public announcement.
When liabilities are assumed, the acknowledgement of creditors
may be exempted, and the provisions of Article 297 and Article
301 of the Civil Code shall not apply.
The regulations for the merger between a foreign Financial
Institution and a domestic Financial Institution, categorical
assumption or assignment by such foreign Financial Institution
shall be separately prescribed by the Competent Authority

Article 19
When a Financial Institution undergoes merger, reorganization, or
assignment, the rights and interests enjoyed by its employees
shall be handled in accordance with the Labor Standards Law.

Article 20
This Act shall come into effect on the date of promulgation.