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Article 12
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A public company shall specify the following matters in its Operational Procedures for Endorsements/Guarantees, and shall comply with those Operational Procedures when making endorsements/guarantees:
- Entities for which the company may make endorsements/guarantees.
- Where an endorsement/guarantee is made due to needs arising from business dealings, evaluation standards shall be specified for determining whether the amount of an endorsement/guarantee is commensurate the total amount of trading between the two companies.
- The ceilings on the amounts a public company is permitted to make in endorsements/guarantees, including on the public company’s aggregate endorsement/guarantee amount and the amount of its endorsements/guarantees for any single entity, as well as on the aggregate endorsement/guarantee amount, and the amount of endorsements/guarantees for any single entity, that the public company and its subsidiaries as a whole are permitted to make. If the aggregate amount of endorsements/guarantees that is set as the ceiling for the public company and its subsidiaries as a whole reaches 50% or more of the net worth of the public company, an explanation of the necessity and reasonableness thereof shall be given at the shareholders meeting.
- Procedures for making endorsements/guarantees.
- Detailed review procedures, including:
- The necessity of and reasonableness of endorsements/guarantees.
- Credit status and risk assessment of the entity for which the endorsement/guarantee is made.
- The impact on the company's business operations, financial condition, and shareholders' equity.
- Whether collateral must be obtained and appraisal of the value thereof.
- Procedures for controlling and managing endorsements/guarantees by subsidiaries.
- Procedures for use and custody of corporate chops.
- Hierarchy of decision-making authority and delegation thereof.
- Announcing and reporting procedures.
- Penalty for violation of these Regulations or the company's Operational Procedures for Endorsements/Guarantees by managers and personnel in charge.
- For circumstances in which an entity for which the company makes any endorsement/guarantee is a subsidiary whose net worth is lower than half of its paid-in capital, relevant follow-up monitoring and control measures shall be expressly prescribed.
- Other particulars required by the FSC.
In the case of a subsidiary with shares having no par value or a par value other than NT$10, for the paid-in capital in the calculation under subparagraph 11 of the preceding paragraph, the sum of the share capital plus paid-in capital in excess of par shall be substituted.
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