MOEA Completes Draft Finance Company Act

　　To further diversify financing channels for corporations and individuals, the Ministry of Economic Affairs has formulated a Draft Finance Company Act that, the ministry explained recently, would allow existing leasing companies, with proper permission, to reorganize into finance companies. The act will help to legitimize underground and emerging finance enterprises, and to make the financing market mechanism more complete.

　　According to the provisions of the draft act, finance companies that are established with government permission will be allowed to operate mainly the loan, bills discounting, and guarantee (except for bills and securities) businesses. They will also be allowed to engage in other businesses for which permission is not required. The interest-rate ceiling stipulated in the civil code will not apply to their lending operations, but will be raised to 30%. Like banks, they will enjoy a 2% preferential income tax rate.

　　The draft stipulates a minimum capitalization of NT$500 million for finance companies. Those that also operate a guarantee business must have paid-in capital of at least NT$1 billion.

　　To prevent finance companies from using violent methods to collect debts, the draft law states that they may not exercise violence, threats, violation of privacy, or other behaviors that interfere with the everyday lives of their customers or debtors. It also asks the finance industry to organize a trade association to help the government carry out related policies, and contains self-disciplinary provisions to restrain debt-collection behaviors and the outsourcing of debt collection.

　　The Council for Economic Planning and Development and the Ministry of Economic Affairs (MOEA) jointly submitted the draft law to the Executive Yuan for consideration. The Executive Yuan has returned the draft law back to the MOEA for further review, after which the draft will be resubmitted for the deliberation at the next session of the Legislative Yuan. For further information, please visit this website: http://w2kdmz1.moea.gov.tw/user/news/detail-1.asp?kind=&id=9298.

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