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Title: Administrative Law of State-Owned Enterprise Ch
Date: 1949.01.20
Legislative: 1. Enacted and promulgated by the President on January 20, 1949.
2. Article 23 and 38 of this law were amended on January 7, 1998.
3. Article 35 of this law was amended on July 19, 2000.
4. Article 35 of this law was amended on June 19, 2002.
5. Article 3 of this law was amended on January 9, 2008.
6. Article 15, 31, 33 and 37 of this law were amended on December 28, 2011.
Content: Chapter Ⅰ General Provisions

Article 1
The administration of state-owned enterprise shall comply with the provisions of the
Administrative Law of State- Owned Enterprise (hereinafter the “Law”).

Article 2
The purpose of establishing state-owned enterprise is to develop national capital,
promote economic development, and improve the livelihood of the people.

Article 3
State-owned enterprise as referred to in this Law are of the following types:
1. Enterprises which are solely owned by the State;
2. Enterprises, which, in accordance with special regulations, are jointly owned by
the State and private individuals;
3. Enterprises, which, in accordance with the Company Law, are jointly owned by the
State and private individuals, and in which the State holds more than 50% of the
Those enterprises, which, in accordance with separate contracts, are jointly owned
by the State and foreigners shall be governed by such contracts.
The chairperson or general manager and president of the enterprises, which the state
holds less than 50% of the shares,are appointed by the government.Those chairpersons
and presidents on behalf of the state shares may be requested to report to and to be
interrogated by the Legislative Yuan, concerning budget and operation examined by the
shareholders congress.

Article 4
State-owned enterprise shall be operated in a manner befitting a business so that
they may be able to support themselves, achieve continued development, and increase
the national income without incurring losses. However, enterprises established for
demonstration purposes or for other reasons specified by government are not subject
to the provisions of this law.

Article 5
The National Treasury is responsible for appropriating the funding necessary for
government’s investment in national enterprises. If stocks are to be issued in
accordance with applicable regulations, the stocks issued shall be placed under
the custody of the National Treasury.

Article 6
Unless otherwise specified in applicable regulations, the rights and
responsibilities of state-owned enterprise shall be the same as those of private
enterprises of similar categories.

Article 7
The competent authorities overseeing state-owned enterprise are prescribed in the
various laws governing organization of the ministries, committees, or agencies of
the Executive Yuan.

Article 8
The competent authorities shall have the following functions:
1. To establish, consolidate, reorganize, and dissolve the subordinate state-owned
2. To approve the operating plans and guidelines of the subordinate state-owned
3. To appoint and remove important persons of the subordinate state-owned
4. To set up the administrative framework of the subordinate state-owned enterprise
5. To inspect and evaluate the operations of the subordinate state-owned enterprise
6. To make the financial plans for the subordinate state-owned enterprise.
Where special regulations exist, the aforementioned appointment and removal of
important persons referred to in paragraph 3 shall be governed by such regulations.

Article 9
Chief managerial agencies may be set up as appropriate for the purpose of
administering the following state-owned enterprise:
1. State-owned enterprise of the same nature
2. State-owned enterprise sharing a close operating relationship

Article 10
The competent authorities shall submit the regulations regarding the organizations
of state-owned enterprise to the Executive Yuan, which, in turn, shall refer to the
Legislative Yuan for review and approval.

Chapter Ⅱ Finance

Article 11
State-owned enterprise shall prepare budgets based on the business/expansion plans
approved by the competent authorities and shall determine the amount of capital
required. The budgets, once approved, shall be appropriated either in one lump sum
or in installments by the National Treasury.

Article 12
State-owned enterprise shall begin preparing the budget proposals before the start
of each fiscal year. The budget proposals shall be submitted to the competent
authorities for approval.

Article 13
State-owned enterprise shall turn over its profits to the National Treasury after
the year-end audit. Enterprises, which, in accordance with Article 4, are
established for demonstration purposes or other reasons as specified by the
government may request subsidies from the competent authorities in the event
losses are incurred.

Article 14
State-owned enterprise shall control their expenditures, and the Executive Yuan
shall set standards for determining the pay scale and non-salary benefits of
state-run enterprise employees. Any expenditures surpassing these limits shall
not be allowed.

Article 15
State-owned enterprise with the approval of the government way issue specific
usage corporate bonds without being subjected to the restrictions of Article 247,
Paragraph 2 of Article 249, and Paragraph 2 of Article 250 of the Company Act.
The specific usage and annual total issued amount of the bonds shall be submitted
to Legislative Yuan for approval through the budget process.
If the proceeds realized from the issue of corporate bonds are applied for usage
other than that stipulated, the responsible person of the state-owned enterprise
shall be sentenced to an imprisonment under two years.

Article 16
The Directorate-General of Budget, Accounting and Statistics shall, in a manner
befitting a business enterprise, establish accounting systems for state-owned
enterprise in coordination with the competent authorities.

Article 17
The revenue and the expenditure of state-owned enterprise shall be post-audited
by the auditing agencies. In the case of large-scale enterprises, the auditing
agencies may assign auditors to conduct on-site audits.

Chapter Ⅲ Operations

Article 18
State-owned enterprise or chief managerial agencies shall submit their annual
operating plans to the competent authorities for approval before the state of
each fiscal year.

Article 19
State-owned enterprise are responsible for the sale of their own products.
Where a joint sale is considered appropriate, the competent authorities shall
prescribe the procedures thereof.

Article 20
The rates charged by public utilities shall be calculated in accordance with
the formulas prepared either by state-owned enterprise or by chief managerial
agencies. Such formulas, together with any changes thereof, shall be referred
to the Legislative Yuan for approval.

Article 21
Unless otherwise authorized by the competent authorities, state-owned enterprise
shall not purchase equipment or facilities deemed irrelevant to their operations.

Article 22
State-owned enterprise shall obtain authorization from the competent authorities
before signing contracts involving large transactions or long-term trading.
The criteria for determining the size of a transaction or the length of trading
shall be prescribed by the competent authorities.

Article 23
( deleted )

Article 24
The competent authorities or chief managerial agencies shall take in charge when
collectively procuring the raw materials and/or equipment required by
state-owned enterprise are more adequate.

Article 25
During the trading or constructing processes, state-owned enterprise shall
follow all bidding and contracting procedures in accordance with the
regulations prescribed by the competent authorities.
Related auditing procedures are prescribed in Article 17.

Article 26
State-owned enterprise shall adopt the most efficient measures and systems to
manage their security facilities, employee training and technical administration.

Article 27
The employees of state-owned enterprise may elect representatives to represent
them in meetings to discuss matters relating to production plans.

Article 28
Technical collaboration between state-owned enterprise and foreign countries
shall be authorized by the competent authorities.

Article 29
The competent authorities shall according to the nature of each individual
corporation, establish a set of criteria for evaluating the performance of
state-owned enterprise.

Article 30
State-owned enterprise which are considered as the compulsory responsibility
of the State and which make no profit during the initial stage of operation
shall not be evaluated by the criteria of profit/loss in a certain period.

Chapter Ⅳ Personnel

Article 31
Except for special technical or important managerial employee, state-owned
enterprise shall recruit their employees through open examinations.
The examination shall be held as a written examination in principle.
The examination method, qualifications, subjects, grading , admission
criteria and other matters shall be determined by the competent authority
of the state-owned enterprise.
The projects, positions and qualifications required of the special technical
or important managerial employee shall be established by the state-owned
enterprises, reported to the competent authority, and published on the website.

Article 32
The personnel of state-owned enterprise who have been employed before the
promulgation of this Law shall be evaluated in accordance with their work
experience, seniority, and job performance in order for them to be considered
for job promotions and transfers.

Article 33
The appointment, performance rating, retirement, indemnity, severance and
other personnel management matters related to state-owned enterprise
employees shall be proposed by the competent authorities .and reported to
the Executive Yuan for approval unless otherwise prescribed by law.

Article 34
The competent authorities may appoint trustees and supervisors for
state-owned enterprise which do not have corporate status if this is
deemed appropriate by the Executive Yuan.

Article 35
The director, auditor, trustee, and supervisor of one state-run enterprise
shall not concurrently hold the same position in another state-run
enterprise, except for the purpose of merger or establishment of holding
companies. Under such exceptional circumstances, the director and trustee
of one state-run enterprise may concurrently hold the same position in
other state-run enterprise, as well as hold the positions of auditor and
supervisor. The director, auditor, trustee, and supervisor who hold the
same in another state-run enterprise may be elected as the chairperson,
vice chairperson of the board, or other equal positions.
At least one fifth of the directors, trustees of one state-run
enterprise who represent state capital shall be recommended by the
relevant labor union.
The labor union may replace the recommended directors and trustees who
are considered incompetent.

Article 36
Apart from the requirements of Article 13 of the Civil Servant Service
Law, the employees of state-owned enterprise shall not be engaged by
or invest in enterprises of a similar nature.

Article 37
In order to prevent favoritism, Article 26 of the Civil Servant
Appointment Law shall apply mutatis mutandis to all personnel
appointments of state-owned enterprise.

Chapter Ⅴ Addendum

Article 38
The Law shall go into force upon the date of its promulgation.
The effective date of the amended Articles of the Law shall be set
by Executive Yuan.