Lexgroup Newsletter (Issue No. 316)

Date: Apr 2019

Criminal Code

1. Draft amendments to Articles 149 and 150 of Criminal Code

On 14 March 2019, the Executive Yuan passed the draft amendment to Articles 149 and 150 of the Criminal Code related to the Offenses of Interference with Public Order. We summarized the key points below:

(1) The provision of “public gathering” of these 2 Articles is amended to “gather more than three people in public or the place where unspecific people may enter”.

(2) The provisions of “carrying lethal weapon” and “cause the danger to public or traffic” are added as the elements for increasing the punishment under Article 150 of the Criminal Code.

Reported by: David Tsai / Paul Hsu

Code of Criminal Procedure

2. Draft amendment to Code of Criminal Procedure

On 5 March 2019, the Judicial Yuan and the Executive Yuan passed the draft amendment to the Code of Criminal Procedure.  We summarized the key points below:

(1) During the investigation and the trial, a victim may participate in the procedure, state his/her opinion, appoint attorneys and review court file.

(2) A victim may apply for mediation or transfer of the case to a proper organization for restoration.

Reported by: David Tsai / Paul Hsu

Compulsory Enforcement

3. Amendment to Precautionary Matters on Handling Compulsory Enforcement

On 5 March 2019, the Judicial Yuan announced the amendment to the Precautionary Matters on Handling Compulsory Enforcement, which provides that the auction announcement shall be posted on the electronic bulletin board and the website of the court.

Reported by: David Tsai / Paul Hsu

Insurance

4. Examination Principles of Financial Supervisory Commission for Issuance of Approval Letter- Applied by Insurance Company for Listing on Taiwan Stock Exchange or Taipei Exchange or Trading on the Emerging Market

On 14 March 2019, the Financial Supervisory Commission (FSC) announced the Examination Principles of Financial Supervisory Commission for Issuance of Approval Letter Applied by Insurance Company for Listing on Taiwan Stock Exchange or Taipei Exchange or Trading on the Emerging Market.  We summarize the key points below:

(1) Insurance companies to be listed on the Taiwan Stock Exchange or the Taipei Exchange:  

(a) Profitability Indicator: The applicant shall reach the relevant indicators which shall be reviewed, evaluated and confirmed in writing by the accountant and the actuary.  

(b) Solvency Indicator: After the deduction of impacted factors, the capital adequacy ratio at the end per year 

during the past 2 years shall not be less than 250%, which shall be reviewed, evaluated and confirmed in writing by the accountant and the actuary.

(c) Legal Compliance Indicator: The applicant has not been sanctioned by the competent authority for the past 3 years because of violation of Insurance Act or Financial Consumer Protection Act, or the correction action for the violation has been taken and recognized by the competent authority; and the applicant has not been imposed an administrative fine of 1 million NTD or more by the competent authority for the past 3 years, or the correction action for the violation has been taken and recognized by the competent authority.  

(d) Others: The applicant shall not have events such as poor corporate governance performance, investment in real estate being more than 10% of the utilizable finds, ratio of net value against asset being less than 5.5% or less than that of other insurance companies with the same insurance business (excluding the investment insurance) or material labor disputes, which may be exempted, provided that the concrete improvement has been explained by the applicant and recognized by the competent authority. 

(2) Insurance companies to be registered on the emerging market:  

(a) Profitability Indicator: Unless otherwise justifiable, where the applicant has sold relevant unmatured debt instrument for the past 10 years, amortization and provision shall be made based on the remaining years of such debt instrument.  The adjusted pre-tax earnings for the past 5 years shall be positive, which shall be reviewed, evaluated and confirmed in writing by the accountant and the actuary.

(b) Solvency Indicator: After the deduction of impacted factors, the capital adequacy ratio at the end of per year for the latest 2 years shall not be less than 200%, which shall be reviewed, evaluated and confirmed in writing by the accountant and the actuary.

(c) Legal Compliance Indicator: The applicant has not been sanctioned by the competent authority for the past 3 years because of violation of Insurance Act or Financial Consumer Protection Act, or the correction action for the violation has been taken and recognized by the competent authority; and the applicant has not been imposed on administrative fine of 1 million NTD or more by the competent authority for the past 3 years, or the correction action for the violation has been taken and recognized by the competent authority.  

(d) Other: The applicant shall not have events such as poor corporate governance performance, investment in real estate being more than 10% of the utilizable finds, ratio of net value against asset being less than 5.5% or less than that of other insurance companies with the same insurance business (excluding the investment insurance) or material labor disputes, which may be exempted, provided that the concrete improvement has been explained by the applicant and recognized by the competent authority.  

Reported by: David Tsai / Will Chen

Banking

5. Amendment to Article 36-1 of the Obligations and Code of Conduct for Trust Entities

On 12 March 2019, the Trust Association of R.O.C. (the Trust Association) announced the amendment to Article 36-1 of the Obligations and Code of Conduct for Trust Entities to cope with the newly permitted business of "pledged loans on self-held trust beneficiary rights".  The key points are summarized as below: 

(1) When a trust entity sets a pledge on self-held trust beneficiary rights, the relevant agreement shall specify that the trust entity shall not early terminate the trust deed except as otherwise instructed by the client in the event that the acceleration clauses are specified in the trust deed. 

(2) When the client uses the beneficiary right under the self-benefit specific money trust investing in securities as the security to borrow loans, and has given written consents and instructions according to Article 6 of the Self-Regulatory Rules for the Business of Pledge on the Beneficial Rights of Specific Money Trust Where the Bank Itself Acts as the Trustee, and the trust entity shall handle the relevant matters in accordance with prior instructions given by the client if the acceleration clause set forth in the loan agreement is triggered.  

Reported by: Stacy Lo / Jack Tai

Securities

6. Amendment to Taipei Exchange Procedures for Verification and Disclosure of Material Information of Companies

On 12 March 2019, the Taipei Exchange (TPEx) amended its Procedures for Verification and Disclosure of Material Information of Companies traded on TPEx.  We summarized the key points below: 

(1) Amendment in respect of "Material Information"

(a) Any alteration of trading method, suspension of trading, or cease trading or restoration announced according to the TPEx Rules Governing Securities Trading on the TPEx, or the circumstance where companies of TPEx have been subject to search under the law, are deemed as "material information" that will cause material impact on decisions of investors. 

(b) Acquisitions and disposal of open-ended funds publicly offered or the financial product issued by commercial banks which is principal guaranteed with interest due in three (3) months, are excluded from application of "material information." 

(2) Amendment to requirement for holding a press conference for material information

(a) The press conference for material information shall be held for any transaction in respect of right-to-use of real property between a TPEx listed company and its related parties.

(b) The press conference for material information need not be held for an acquisition of real property by a TPEx listed company engaging in construction business, or any transaction in respect of right-to-use of real property or right-to-use operational facility between a TPEx listed company and its parent/subsidiary. 

Reported by: Mike Lu / Cindy Chien

Labor

7. Ruling of Ministry of Labor

On 12 March 2019, the Ministry of Labor (MOL) issued a ruling that from 1 September 2019, the Labor Standards Act shall apply to resident doctors, exclusive of doctors hired by public health institutions pursuant to relevant laws of civil service.

Reported by: David Tsai / Naiju Kuan

8. Amendment to Direction for Entities who Enforce Day (night) Shift

On 11 March 2019, the MOL announced the amendment to the Direction for Entities who Enforce Day (night) Shift.  We summarize the key points below:

(1) A provision of recommended subsidy for day (night) shift is added, which is suggested to not be less than the amount of the monthly basic salary divides by 240 and times the hour(s) of day (night) shift. 

(2) The rule governing female work on night shift is amended and a provision that the employer shall provide necessary safety and health felicities and measures is added, provided that a female employee is still prohibited from working night shift during pregnancy or nursing period.

Reported by: David Tsai / Naiju Kuan

Investment in China

9. Amendment to Principle of Review on Investment and Technical Cooperation in Mainland China

On 12 March 2019, the Ministry of Economic Affair (MOEA) announced the amendment to the Principle of Review on Investment and Technical Cooperation in Mainland China (Principle).  We summarize the key points below:

(1) Where an investor holding more than 10% of shares in a foreign company listed on the Taiwan Stock Exchange or TPEx or traded on the emerging market in Taiwan, or acting as the director, supervisor, or manager of such foreign company, and such the foreign company has made investment in Mainland China as set forth in Paragraph 1 of Article 4 of the Regulation on Investment or Technical Cooperation Permission in Mainland, the investor is not subject to the limit for investment in Mainland China.

(2) Where an investor receives stock dividend from the invested Mainland China enterprise for less than one (1) million USD every year, he/she/it may handle the matter by a report to the competent authority.  

Reported by: Mike Lu / Will Chen

Company Act

10. MOEA's Ruling

On 14 February 2019, the MOEA issued a ruling that where a limited company has two (2) directors and its Articles of Incorporation do not set forth a requirement for having a chairman, each director may represent the company according to Paragraph 2, Article 27 of the Civil Code. 

Reported by: Mike Lu / Ester Liu 

Patent Act

11. Regulations Governing Notification of Drug Patent Linkage Agreements

On 6 March 6 2019, the Ministry of Health and Welfare announced the Regulations Governing Notification of Drug Patent Linkage Agreements (Regulations) for implementation of the Patent Linkage System.

Chapter 4-1 of the Pharmaceutical Affairs Act (Act) establishing the Patent Linkage System was promulgated on 31 January 2018 while the effective date is to be determined by the Executive Yuan.  To ensure the trading order and fair competition, the Act provides in Article 48-19 that for any settlement agreements involving relevant matters of drugs under this chapter, the parties including the applicant for a new drug permit, the holder of a new drug permit, the applicant for a generic drug permit, the holder of a generic drug permit, and the patentee or exclusive licensee of a drug patent shall notify the Central Competent Health Authority, and if the Authority finds any anti-competition issues, it shall notify the Fair Trade Commission.

The Regulations was enacted in accordance with the Act, Article 48-19, Paragraph 2, which provide the method and content of the notification and the starting date of the notifying period, the manner in which the authority handles the notification and the matters the relevant parties shall comply with.  The Regulations shall be implemented as of the date of implementation of the Patent Linkage System of the Act.

Reported by: Jolene Wang / Linda Cheng

Media

12. Amendment to Regulations for Distinguishing Television Program from Advertisement, Product Placement, and Sponsorship Messages

On 8 March 2019, the National Communications Commission announced the amendment to the Regulations for Distinguishing Television Program from Advertisement, Product Placement, and Sponsorship Messages.  We summarize the key points below:

(1) The rules distinguishing television program from the advertisement are loosen.  The restrictions to present the telephone number, website, logo and slogan of a certain sponsor on the program title are removed.

(2) The rules restricting product placement are loosen.  The restrictions on excessive presentation of products, trademarks or services in a television program are removed.

(3) The rules prohibiting television programs specifically for children from accepting title sponsorship are amended.  The restriction on title sponsorship on foreign television programs is prolonged from 7 p.m. to 11 p.m. every day. 

(4) A provision that a television program shall not accept title sponsorship from any political party, staff of a political party's affair, prospective political candidates, political candidates and referendum is added.

Reported by: Kang-Shen Liu / Naiju Kuan

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