1. Amendment to Banking Act
On 17 April 2019, the President announced an amendment to the Banking Act. We list the major points below:
(1) To require the responsible person(s) to abide by non-compete obligations: To authorize the competent authority to prescribe regulations prohibiting involvement in conflict of interests by the responsible person(s) of banks.
(2) To reinforce international cooperation in anti-money laundering: To stipulate that the government may enter into treaties or agreements with foreign governments, agencies, or international organizations, and provide necessary information to such foreign governments, agencies, or international organizations based on the principle of reciprocity and confidentiality.
(3) To update administrative control measures to effectively correct bank irregularities: To add the types of administrative impositions which may be taken by the competent authorities, such as limiting investments and ordering to wind down branches within a given period.
(4) Overall review of administrative fines in the penalty chapter: In order to enhance the effectiveness of financial supervision and to threaten illegal behaviors, to review the maximum amount of administrative fines in the penalty chapter. For material breach of banks, the maximum fine will be raised by a multiple of five (5), from NT$10 million to NT$50 million, while the maximum fine for the remaining provisions will be raised by a multiple of four (4). It is also added that the competent authority may adopt appropriate corrective measures rather than imposing fines for minor violations.
(5) To strengthen the management of credit card business: To increase penalties for violations of credit card business related management measures, and institutions operating credit card business are punishable.
(6) The consecutive penalties by "day" is amended to by "time".
Reported by: Stacy Lo/ Cindy Chien
2. Amendment to Securities and Exchange Act
On 17 April 2019, the President announced an amendment to the Securities and Exchange Act. We list the major points below:
(1) The audit committee is not required to approve the audited semi-annual financial reports.
(2) The time limit for the transfer of treasury stock provided under Article 28-2 is extended from 3 years to 5 years.
(3) Any person who acquires, either individually or jointly with other persons, more than ten percent of the total issued shares of a public company shall make a public announcement in addition to filing a report.
(4) The primary listed foreign companies on Taiwan Stock Exchange and Taipei Exchange and foreign companies traded on the emerging stock market shall establish a remuneration committee.
(5) The minimum amount of the administrative fines imposed on an underwriter for acquiring for its own account the securities underwritten by itself and the maximum amount of other administrative fines are increased.
Reported by: Stacy Lo/ Cindy Chien
3. Draft amendment to Securities Investor and Futures Trader Protection Act
On 3 April 2019, the Financial Supervisory Commission (FSC) announced draft amendments to the "Securities Investor and Futures Trader Protection Act" in order to facilitate corporate governance and protection of investors. The major amendments include:
(1) To amend regulations in connection with litigations to representative(s) of a company and litigations for discharge of directors and supervisors of a company to be filed by the investor protection institution;
(2) To specify that provisions associated with the above-mentioned representative litigations and discharge litigations apply to mutatis mutandis the foreign companies under Article 165-1 of the Securities and Exchange Act;
(3) To amend the utilization scope of protection fund hereunder; and
(4) To specify that the service of the mediation documents shall apply mutatis mutandis the provisions under the Code of Civil Procedure.
Reported by: Jeffrey Liu/Cindy Chien
4. Amendment to Civil Code
On 9 April 2019, the Legislation Yuan passed the amendment to Article 976 of the Civil Code, to remove "where the party gets a venereal or other loathsome disease" and "where, the party becomes permanently disabled after engagement" from the justified reasons to cancel the marriage engagement. Furthermore, the term "adultery" is revised to "consensual sexual intercourse."
Reported by: David Tsai/ Naiju Kuan
Business Case Adjudication Act
5. Draft of Business Case Adjudication Act
On 29 March 2019, the Judicial Yuan announced the draft of Business Case Adjudication Act to provide the trial procedure of business case. We summarize the key points below:
(1) Establishment of business court: The level of business court is the same as the high court adopting two-level courts and trials system, which is constituted by well-trained judges.
(2) Mandatory legal representation: Parties and related parties shall engage attorneys to represent them to conduct the acts of litigation procedure.
(3) Online submission of legal documents: The legal documents shall be submitted through online system.
(4) Preliminary mediation proceeding: Mediation shall be proceeded before trial and the court shall appoint people with relevant expertise as the mediators.
(5) Inquiry system between parties: To prepare the claim or evidence, parties may list necessary matters and inquire the other party to explain.
(6) Expert witness: Parties may engage expert witnesses to provide professional opinion, and may also respond to the professional opinion provided by the other party. The court may request the witness expert to state his/ her opinion during the hearing.
(7) Order of keeping confidential: Where the documents, objects to be inspected, or data required for expert testimony submitted during the procedure involve business secret, the holder may apply for an order of keeping confidential with the court.
Reported by: David Tsai/Paul Hsu
Statute for Industrial Innovation
6. Draft amendments to Article 10-1 of “Statute for Industrial Innovation”
On 20 December 2018, the Executive Yuan passed the draft amendments to Article 10-1 of the Statute for Industrial Innovation so as to promote the industrial upgrading and transformation into AI industry as well as to encourage the enterprises to invest in AI or fifth-generation mobile communication system related equipment and technology through tax incentives. The amendment is pending the review by the Legislative Yuan. The following tax incentives will be given where certain requirements are met:
(1) Up to 5% of the investment expenses may be credited against the payable profit-seeking enterprise income tax in the then current year.
(2) Up to 3% of the investment expenses may be credited against the payable profit-seeking enterprise income tax in each of the three years following the then current year.
Reported by: Mike Lu/ Bella Chiu
7. Amendment to Regulations Governing Issuance of Beneficial Securities by Trustee Institution and Issuance of Asset-Backed Securities by Special Purpose Company and Regulations Governing Public Offering or Private Placement of Beneficiary Securities of Real Estate Investment Trust or Asset Trust by Trustee Institution
On 8 April 2019, Banking Bureau announced the amendments to the Regulations Governing Issuance of Beneficial Securities by Trustee Institution and Issuance of Asset-Backed Securities by Special Purpose Company and the Regulations Governing Public Offering or Private Placement of Beneficiary Securities of Real Estate Investment Trust or Asset Trust by Trustee Institution for public consultation. We summarize the key points below:
(1) Regulations Governing Issuance of Beneficial Securities by Trustee Institution and Issuance of Asset-Backed Securities by Special Purpose Company:
(a) The scheduled issuance period shall not exceed 5 years if the trustee institution and the special purpose company adopt shelf method to issue beneficial securities and asset-backed securities.
(b) In the interests of time for the securitization, the applicable scope for financial asset securitization cases where application shall be made is limited.
(c) Trustee institutions or special purpose companies carrying out the public offering or private placement of beneficiary securities or asset-backed securities with shelf method which shall report to the competent authority after completion of each public offering or private placement.
(d) The reason for termination of the issuance with shelf method for filing or reporting is provided.
(e) Where the beneficiary securities or asset-backed securities privately placed meet certain requirements, an application with the competent authority for change to public offering may be made.
(2) Regulations Governing Public Offering or Private Placement of Beneficiary Securities of Real Estate Investment Trust or Asset Trust by Trustee Institution:
Where the privately placed beneficiary securities meet certain requirements, an application with the competent authority for change to public offering may be made.
Reported by: Stacy Lo/Eliza Lee
Taiwan and Mainland
8. Amendment to Act Governing Relations between the People of the Taiwan Area and the Mainland Area
On 9 April 2019, the Legislative Yuan passed the third reading of the amendment to Article 93-1 of the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, which is pending the announcement by the President. The penalties of the following activities will be raised, provided however that the penalties are not required where a violation is trivial and improved:
(1) A China investor investing in Taiwan area without a competent authority's approval.
(2) An invested enterprise failing to file the information required, filing with untruthful or incomplete documents; or avoiding, impeding, refusing to inspection.
(3) An invested enterprise violating the re-investment procedures.
(4) A China investor or invested enterprise failing to apply for verification, or filing with untruthful or incomplete documents.
(5) An investor's agent filing with untruthful documents with intention or gross negligence.
Reported by: Mike Lu/ Will Chen
9. Draft Act on the Use and Taxation on the Inward Remittance of Overseas Funds
On 11 April 2019, the Executive Yuan passed the draft Act on the Use and Taxation on the Inward Remittance of Overseas Funds (Act) prepared by the Ministry of Finance, which will be submitted to the Legislative Yuan for readings. The main points are as follows:
(1) Individuals and profit-seeking enterprises which choose to calculate, declare and pay taxable income in accordance with the Act may be exempt from the taxation imposed based on the Basic Income Tax Act, the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, and the Income Tax Act, and no change will be permitted once it has been selected; the remitted fund shall not be used for the acquisition of real estate, and shall comply with the provisions of the Money Laundering Prevention Act, the Counter-Terrorism Financing Act and other applicable laws and regulations.
(2) In the event that the individual remits the overseas funds within one year from the date of the implementation of the Act, or that the profit-seeking business is allocated and remits back investment income from its offshore invested companies with controlling power or significant influence within one year from the date of implementation of the Regulation, the tax rate of 8% will be applicable when the funds are remitted back to the special account. For those who make the remittance within one year from the second day after one year anniversary for implementation of the Regulation, the tax rate of 10% will be applicable.
(3) Where the funds remitted by individuals and profit-seeking enterprises are used in direct substantive investments, an investment plan shall first be submitted to the Ministry of Economic Affairs for approval of the invested industry before the funds may be withdrawn from the special account. After the investment is completed and the completion certificate is obtained, an application for a refund of 50% of the tax amount may be submitted to the tax authorities.
(4) Individuals and profit-seeking enterprises engaging in substantive investments through domestic venture capital investment or private equity funds, an investment application shall first be submitted to and be approved by the Ministry of Economic Affairs to invest in important policy-focused industries before the funds may be withdrawn from the special account. After the investment period is expired and the completion certificate is obtained, an application for a refund of 50% of the tax amount may be submitted to the tax authorities.
Reported by: Stacy Lo/Jack Tai