Amendment to Criminal Code
1. Amendment to Criminal Code
On 9 May 2019, the President announced an amendment to the Criminal Code. We summarize the key points below:
(1) For matters that an authorization of the government is required, any person without the authorization entering into an agreement with a foreign government or its agent shall be subject to an imprisonment of not less than five (5) years, detention, and/or a fine of not more than NTD 500,000; those who cause any injury to the citizen of the Republic of China shall be subject to life imprisonment or imprisonment for not less than seven (7) years.
(2) The crime under the chapter of Treason shall also be applied to areas or persons of Mainland China, Hong Kong, Macau, foreign hostile authorities, and their agents.
Reported by: David Tsai/ Naiju Kuan
2. Draft of Whistle-Blower Protection Act
On 2 May 2019, the Executive Yuan passed the draft Whistle-Blower Protection Act which has been submitted for review by the Legislative Yuan. We summarize the key points below:
(1) Scope of applicable scandals: Including, among others, crimes under the chapter of Offenses of Malfeasance in Office of the Criminal Code, and Anti-Corruption Act, harboring other’s crime, violation of Act on Recusal of Public Servants Due to Conflicts of Interest, and other behaviors designated by the competent authority.
(2) Authorities that may receive the report: Including officials, principals, responsible persons or designated personnel of public or private sectors, and prosecutors, judicial polices, competent authorities, Control Yuan and governmental ethics departments. Where the abovementioned authorities do not reply to the whistle-blower within 20 days after receiving the report with a 10-day then period of notice to proceed by the whistle-blower, the whistle-blower may file a report to legislative representatives, media, non-governmental philanthropy organizations and still be protected.
(3) Protection of whistle-blower: The government, juristic persons, organizations and individuals shall not take any retaliatory unfavorable personnel measures against the whistle-blower, including dismissal, demotion, pay cut and other unfavorable changes in working conditions. If the whistle-blower faces any unfavorable personnel treatment, he/she may request for recovery or compensation.
(4) Reduction in penalties: Where the whistle-blower is an accomplice of the matter he/she reported, sanctions on him/her may be reduced or exempted.
(5) Identity confidentiality: Authorities receiving the report and the personnel in charge or investigator shall not leak the identity of the whistle-blower.
Reported by: David Tsai/ Paul Hsu
Taiwan and Mainland
3. New Amendment to Act Governing Relations between the People of the Taiwan Area and the Mainland Area will take effect from 1 June 2019
On 24 April 2019, the President announced an amendment to the Act Governing Relations between People of Taiwan Area and Mainland Area which will take effect from 1 June 2019. The penalties of the following activities are raised, provided however that, other than those due to agent's activities, the penalties will be exempted if the violation is trivial which has been cured:
(1) Where an investment in the Taiwan area is made without a prior approval.
(2) Where an invested company fails to file a required report, makes a filing with untrue or incomplete information, or circumvents, impedes, or refuses to an inspections of the regulator.
(3) An invested company violates the requirements in respect of the re-investment procedures.
(4) Where an investor or an invested company fails to apply for a capital verification, or makes a filing with untrue or incomplete information.
(5) Where the agent of an investor intentionally or by gross negligence makes a filing with untrue information.
Reported by: Mike Lu/ Will Chen
4. Amendment to the Directions Governing Electronic Reporting for Financial Institutions to Implement the Financial Account Information Reporting for Tax Purpose
The Ministry of Finance announced an amendment to the Directions Governing Electronic Reporting for Financial Institutions to Implement Financial Account Information Reporting for Tax Purpose on 26 April 2019. We summarize the key points below:
(1) An online test procedure is provided.
(2) A program for check against the reporting file shall be applied.
(3) After uploading the report file, where the file is incorrect and the system shows any erroneous message, a re-upload is required.
Reported by: Stacy Lo/ Hsiyen Hsu
5. A Ruling related to treasury stocks of dissolved company
On 24 April 2019, the Ministry of Economic Affairs issued a ruling that treasury stocks of a dissolved company in a merger may be canceled during the course of a merger, and where they are not cancelled, such stocks shall become stocks of a surviving company.
Reported by: Mike Lu/ Cindy Chien
6. Amendment to Occupational Safety and Health Act
On 26 April 2019, the Legislative Yuan passed an amendment to Articles 3 and 6 of the Occupational Safety and Health Act. We summarize the key points below:
(1) The central competent authority is changed to the Ministry of Labor.
(2) Employers shall establish the necessary safety and health equipment and measures to respond to damages that may be caused by the wind disaster.
Reported by: David Tsai/ Aaron Lai
7. Ruling Allowing ETF Feeder Fund to Invest in Foreign Component Securities
On 30 April 2019, the Financial Supervisory Commission (FSC) issued a ruling to allow a master fund of an ETF feeder fund eligible under the Encouragement Plan for Securities Investment Trust Enterprises (SITEs), after approved and recognized by the FSC, to be ETF with foreign component securities.
Reported by: Jeffrey Liu/Cindy Chien
8. Announcement of Loan Business with Pledge on the Beneficial Rights of Specific Money Trust Where the Bank Itself Acts as the Trustee
On 22 April 2019, the FSC announced that banks may apply with the FSC for the loan business with pledge on the beneficial rights of specific money trust where the bank itself acts as the trustee. We summarize the key points below
(1) There are restrictions on the bank handling such business, including the clients to be accepted, the underlying of the beneficiary rights to be pledged, and the maximum loan to value ratio.
(2) The establishment of pledge and the set-off right exercise procedure shall comply with the provisions under the Trust Law.
(3) The control mechanism of information system established by the bank shall have the controlling effect.
(4) The bank shall establish regulations and control mechanism to prohibit solicitation and improper marketing.
(5) Other internal management regulations that shall be establish according to 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.
Reported by: Stacy Lo/ Eliza Lee
9. Principle for Financial Service Industries to Treat Clients Fairly
On 2 May 2019, the FSC issued a letter that, in order to facilitate the establishment of business culture where financial institutions treat their clients fairly and fully implement the Principle for Financial Service Industries to Treat Clients Fairly (Principle), the FSC requires that financial institution to establish relevant strategies and include the Principle in its internal control system. In addition, the evaluation mechanism for the Principle shall be implemented from 2019 so as to examine the condition of implementation. Meanwhile, the FSC brings out the notes and examples of each principle for financial institution's reference.
Reported by: Stacy Lo/ Eliza Lee
10. Amendment to Copyright Act
The Legislative Yuan passed the amendment to Articles 87 and 93 of the Copyright Act on 16 April 2019. The President promulgated the amendment for enforcement on 1 May 2019. Please refer to Lexgroup Newsletter (Issue No. 319) issued on 7 May 2019 for key points.
Reported by: Chenchi Wang/ Bella Chiu