Before making endorsements or guarantees for others, the company shall implement 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
Whether collateral must be obtained and appraisal of the value thereof.
If the Company provides or its subsidiaries provide endorsements or guarantees for another subsidiary of which the net value is lower than one-half of its paid-in capital, the Company shall demand the borrower to submit a specific improvement plan and to report its operational results for the Board of Director’s review on quarterly basis. 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 this subparagraph, the sum of the share capital plus paid-in capital in excess of par shall be substituted.
The Financial Department shall establish the memorandum book for its endorsement/ guarantee activities and record each piece of the following information for the record: the entity for which the endorsement/guarantee is made, the amount, the date of passage by the Board of Directors or by authorization of the Chairman of the Board, the date of the endorsement/ guarantee, and matters to be carefully evaluated under provision.
The Financial Department shall regularly track the guarantee notes, which is due and has not retrieved, and report the reason. Furthermore, the Financial Department shall assess or list the possibility of loss of endorsements/ guarantees, and disclose the information which refers to endorsements/ guarantees appropriately in the financial statements. The notes requiring extension shall be collected and wrote-off, and reissued.
The Company shall guarantee the handling fee for the endorsement guarantee object not less than the guaranteed commission rate of the financial institution to the Company.