RegAlert2026-08-06
Added · Updated
Amendment to Article 4 of the Measures for Capital Reduction of Subsidiaries of Financial Holding Companies
This amendment modifies Article 4 of the Measures for Capital Reduction of Subsidiaries of Financial Holding Companies to align with the new solvency regime for insurance companies effective in 2026. It changes the required capital adequacy ratio for insurance subsidiaries from a fixed 300% to 1.5 times the statutory standard defined in Article 143-4, Paragraph 2, Item 1 of the Insurance Act. Additionally, it introduces a proviso allowing insurance subsidiaries to exceed this requirement if specific evidence demonstrates financial health and regulatory approval is obtained, thereby maintaining operational flexibility during the transition period.
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General Explanation for the Amendment of Article 4 of the Measures for Capital Reduction of Subsidiaries of Financial Holding Companies
Since the promulgation of the Measures for Capital Reduction of Subsidiaries of Financial Holding Companies (hereinafter referred to as "these Measures") on November 17, Year 99, there have been two amendments, the most recent being on May 24, Year 111.
This amendment is made in response to the application of the new solvency regime by Taiwan's insurance industry starting in Year 115. Therefore, Article 4 of these Measures is amended. The current provisions consist of eight articles; this amendment focuses on Article 4. The key points of the amendment are that due to differences in the calculation basis for the ratio of own capital to risk capital for insurance companies, the statutory standard is adjusted from 200% to 100%. To facilitate institutional alignment and maintain the flexibility of operators' fund utilization, and in coordination with relevant provisions of the Insurance Act, the value of the capital adequacy ratio specified, previously "300%," is amended to be expressed as "1.5 times the statutory standard for capital adequacy prescribed in Item 1, Paragraph 2, Article 143-4 of the Insurance Act." For example, "300%" is amended to "1.5 times the statutory standard," and a proviso clause is added.
Comparison Table of Amended Provisions and Current Provisions for Article 4 of the Measures for Capital Reduction of Subsidiaries of Financial Holding Companies
| Amended Provisions | Current Provisions | Explanation |
|---|---|---|
| Article 4 After a financial holding company subsidiary reduces its capital, it shall comply with the following regulations:<br><br>1. Bank subsidiaries: The estimated capital adequacy ratio after capital reduction must reach 12.5% or above, the Tier 1 capital ratio must reach 10.5% or above, and the common equity tier 1 ratio must reach 9% or above, and such capital adequacy ratio shall be reviewed by a certified public accountant. Furthermore, the liquidity reserve ratio of bank subsidiaries after capital reduction shall not be lower than the statutory ratio.<br><br>2. Insurance subsidiaries:<br>(1) The estimated capital adequacy ratio after capital reduction must reach 1.5 times or above the statutory standard for capital adequacy prescribed in Item 1, Paragraph 2, Article 143-4 of the Insurance Act, and such capital adequacy ratio shall be reviewed by a certified public accountant. However, this does not apply if there is concrete evidence proving capital soundness and consent is obtained from the competent authority.<br>(2) The credit rating of insurance subsidiaries after capital reduction must maintain a twAA level or above.<br><br>3. Securities subsidiaries: The estimated capital adequacy ratio after capital reduction must reach 200% or above, and other financial ratios must also comply with securities management-related regulations, without affecting the normal operation of original securities business.<br><br>4. Futures subsidiaries: The adjusted net capital amount after capital reduction must not be less than 20% of the total customer margin required for open positions of futures traders, and other financial ratios must also comply with futures management-related regulations, without affecting the normal operation of original futures business.<br><br>5. Securities investment trust subsidiaries: After returning share capital through capital reduction, the capital amount shall not be lower than the minimum paid-in capital amount prescribed in Article 7 of the Standards for Establishment of Securities Investment Trust Enterprises, and the net value after capital reduction, unless otherwise prescribed by the competent authority, shall not be lower than NT$900 million. | Article 4 After a financial holding company subsidiary reduces its capital, it shall comply with the following regulations:<br><br>1. Bank subsidiaries: The estimated capital adequacy ratio after capital reduction must reach 12.5% or above, the Tier 1 capital ratio must reach 10.5% or above, and the common equity tier 1 ratio must reach 9% or above, and such capital adequacy ratio shall be reviewed by a certified public accountant. Furthermore, the liquidity reserve ratio of bank subsidiaries after capital reduction shall not be lower than the statutory ratio.<br><br>2. Insurance subsidiaries: The estimated capital adequacy ratio after capital reduction must reach 300% or above, and such capital adequacy ratio shall be reviewed by a certified public accountant. | |
| Furthermore, the credit rating of insurance subsidiaries after capital reduction must maintain a twAA level or above.<br><br>3. Securities subsidiaries: The estimated capital adequacy ratio after capital reduction must reach 200% or above, and other financial ratios must also comply with securities management-related regulations, without affecting the normal operation of original securities business.<br><br>4. Futures subsidiaries: The adjusted net capital amount after capital reduction must not be less than 20% of the total customer margin required for open positions of futures traders, and other financial ratios must also comply with futures management-related regulations, without affecting the normal operation of original futures business.<br><br>5. Securities investment trust subsidiaries: After returning share capital through capital reduction, the capital amount shall not be lower than the minimum paid-in capital amount prescribed in Article 7 of the Standards for Establishment of Securities Investment Trust Enterprises, and the net value after capital reduction, unless otherwise prescribed by the competent authority, shall not be lower than NT$900 million. | 1. Considering that the insurance industry will apply the new solvency regime in Year 115, the calculation basis for the ratio of own capital to risk capital differs, so the statutory standard is adjusted from 200% to 100%. To facilitate institutional alignment and coordinate with relevant provisions of the Insurance Act, the "300%" specified in Item 2 is amended to "1.5 times the statutory standard for capital adequacy prescribed in Item 1, Paragraph 2, Article 143-4 of the Insurance Act" in Item 2, Sub-item 1.<br><br>2. Considering that the new solvency regime and the current Risk-Based Capital (RBC) system differ in asset/liability coverage, risk coverage, and calculation methods, the calculated proportions cannot be directly converted into proportions under the RBC system. To assist operators during the transition period of institutional conversion, ensuring that fund utilization conditions remain consistent with those before the conversion and maintaining operators' fund utilization flexibility, a proviso clause is added to the capital adequacy ratio condition in Item 2, Sub-item 1. |
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Source: Financial Supervisory Commission Taiwan — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works