Lexgroup Newsletter (Issue No.321)

Date: Jul 2019

Communicable Disease Control Act

1. Amendment to Communicable Disease Control Act

On 24 May 2019, the Legislative Yuan passed the third reading of the amendment to Communicable Disease Control Act.  We summarized the key points below:

(1) The amount of fine for persons spreading rumors concerning epidemic conditions of communicable diseases or disseminating incorrect information concerning epidemic conditions, which results in damages to the public or others is increased up to between NT$500,000 and 3,000,000.

(2) Persons releasing the false or erroneous information concerning communicable disease outbreaks or disease control measures through mass media during the establishment period of the Central Epidemic Command Center, which may result in undesirable outcomes on or have certain influences over the overall disease control efforts and fails to correct the information immediately upon the notification for correction by the competent authorities, the violator shall be fined from NT$100,000 to 1,000,000.

Reported by: David Tsai / Paul Hsu

Amendment to Civil Code

2. Amendment to Chapter of Relatives of Civil Code

On 24 May 2019, the Legislative Yuan passed the third reading of the amendment to the Chapter of Relatives of the Civil Code.  We summarize the key points below:

(1) The contract of designation of custody is added under which the appointer and the appointee may reach a contract to agree that that when the appointer is subject to an order of guardianship, the appointee shall serve as his/her custodian.

(2) Contract of designation of custody shall be notarized.

(3) Before the court renders the order of guardianship, the appointer and the appointee may withdraw the contract of designation of custody at any time.  After the court renders the order of guardianship, the appointer may apply with the court to terminate the guardianship.

(4) In the event that the appointed custodian is deemed inappropriate to serve as the custodian, the court may order to change the custodian according to the application.

(5) The party may agree upon in the contract of designation of custody on whether to pay remuneration.  If the contract is silent, the custodian may apply with the court to decide with discretion.

(6) The party may agree upon in the contract of designation of custody to authorize the custodian to conduct significant property activity and investment activity with the appointee's property.

Reported by: David Tsai / Naiju Kuan

Act Governing Food Safety and Sanitation 

3. Amendments to Act Governing Food Safety and Sanitation

On May 24, 2019, the Legislative Yuan passed the third reading of  the Act Governing Food Safety and Sanitation to add Article 46-1.  Article 46-1 provides that if anyone spreads rumors or untrue messages about food safety and thus has potential to cause damages to the public or others, he/she shall be subject to imprisonment for no more than 3 years, detention or a criminal fine in an amount no more than 1 million.

Reported by: Kangshen Liu / Chenchi Wang

Labor

4. Amendment to Labor Standard Act

On 24 May 2019, the Legislative Yuan passed the third reading of the amendment to the Labor Standard Act (LSA).  We summarized the key points below:

(1) The demand dispatch entity shall not interview or designate the specific dispatched worker before the employment agreement is executed by the dispatch business entity and the dispatched worker.  If the demand dispatch entity violates the abovementioned provision, the dispatched worker may request the demand dispatch entity to sign the employment agreement with him/her in ninety (90) days after the dispatched worker serves for the demand dispatch entity.  The dispatch business entity shall not impose any 

unfavorable treatment on the dispatched worker because of his/her request.

(2) If the dispatched worker suffers from occupational accidents because of serving for the demand dispatch entity, the demand dispatch entity and the dispatch business entity shall jointly and severally bear the compensation liability provided by the LSA.  If the demand dispatch entity and the dispatch business entity violate the provision of LSA or relevant safety and health regulations, and causes the occupational accident to the dispatched worker, the 2 entity shall jointly and severally bear the compensation liability.

Reported by: David Tsai / Paul Hsu

5. Designation of workers under Article 84-1 of Labor Standard Act

On 23 May 2019, the Ministry of Labor announced that the personnel whose monthly salary exceeds NT$150,000 eligible for the nature of the supervisory/managerial employee stated in Subparagraph 1, Article 50-1 of Enforcement Rules of the Labor Standards Act shall be deemed as the worker stated in Article 84-1 of Labor Standard Act.

Reported by: David Tsai / Paul Hsu

Act for Management of Telecommunication

6. Act for Management of Telecommunication

On 31 May 2019, the Legislative Yuan passed the third reading of the Act for Management of Telecommunication.  We summarized the key points below:

(1) The requirements and required documents of the application for the registration of telecommunication business, and the circumstances under which the competent authority may nullify the registration are provided.

(2) The regulations that the telecommunication business providing telecommunication service shall comply with, and the obligation that the telecommunication business shall provide communication record, accounting record, portable number and confidentiality obligation.

(3) Without justifiable causes, telecommunication business shall not deny the negotiation with respect to the other telecommunication business's request for interconnection.

(4) Evaluation of telecommunication business is provided.

(5) The merger between telecommunication business, transfer or acquisition of the whole or the major part of the business or assets of other telecommunication business, or direct or indirect holding of the shares or share capital of other telecommunication business at a certain percentage shall obtain the approval of the competent authority.

(6) The competent authority may adopt mechanism to facilitate market competition or special control measures.

(7) The establishment, management of telecommunication network and the improvement of infrastructure are provided.

(8) The management of dedicated telecommunication and amateur radio is provided.

(9) The management of telecommunication number and domain name of network is provided.

Reported by: Kangshen Liu / Paul Hsu

Taiwan and Mainland

7. Amendment to Article 5-3 of Act Governing Relations between the People of the Taiwan Area and the Mainland Area

On 31 May 2019, the Legislative Yuan passed the third reading of the amendment to Article 5-3 of the Act Governing Relations between People of Taiwan Area and Mainland China Area.  We summarize the key points below:

(1) Any agreements involving political issues shall be submitted with agreement plan and assessment report of constitutionalism or materially political impact with the Legislative Yuan by the Executive Yuan prior to any negotiation.  The agreement plan shall be passed by the Legislative Yuan before the negotiation for the execution of agreements.  

(2) The competent authority responsible for negotiation shall proceed with the negotiation in accordance with the agreement plan and report to the Legislative Yuan in due course.  

(3) The competent authority may be requested to terminate the negotiation where the Legislative Yuan estimates that the negotiation cannot be carried out in accordance with the plan.  

(4) The competent authority responsible for the negotiation shall report the draft agreement negotiated according to the agreement plan to the President for approval after the resolution of the Executive Yuan Council.  After the President's approval, the full context of the draft agreement shall be published by the Executive Yuan and submitted to the Legislative Yuan for review.  

(5) After the draft agreement passed by the Legislative Yuan, it shall be subject to a referendum. 

(6) The Legislative Yuan shall hold a hearing for the draft agreement and constitutionalism or materially political impact assessment before the review.

(7) The negotiation or agreement involving political issue violating this Article shall be void.  

Reported by: Mike Lu / Will Chen

8. Punishment Standards for Handling Illegal Investment in Taiwan by Mainland China Investor

On 31 May 2019, the Financial Supervisory Commission (FSC) established the Punishment Standards for Handling Illegal Investment in Taiwan by Mainland China Investor (Punishment Standards), which shall be effective from 1 June 2019, to enforce Article 93-1 of Act Governing Relations between People of Taiwan Area and Mainland China Area (Act).  We summarize the key points below:

(1) The Punishment Standards apply to individuals, juristic persons, organizations, other institutions from Mainland China and companies in a third area invested in by the same (Mainland China Investor). 

(2) The Mainland China Investor engaging in investment in violation of Paragraph 1 of Article 73 of the Act shall be subject to fines ranging from NT$120,000 to 4% of the total investment amount depending on the investment amount.  

(3) The fine imposed on the violating Mainland China Investor can be raised to up to NT$25 million where there is any of the following events:

(a) To invest in the business item which is limited or forbidden; 

(b) To act as the invested company's director or supervisor;

(c) To hold the shareholding to the extent of having substantial control over or affecting the company's management; 

(d) To avoid from inspection;

(e) To significantly affect the securities and future market or national security; or

(f) Other significant violation.  

(4) The Mainland China Investor failing to make a filing or filing with a untrue or incomplete documents will be subject to a fine as follows:

(5) Where an investor's agent filing with untruthful documents with intention or gross negligence, the amount of fine shall be from NT$60,000 or more to NT$600,000 or less if a violation is trivial; the amount of fine shall be from NT$600,000 or more to NT$2,500,000 or less if a violation is material.  

Reported by: Mike Lu / Will Chen

Foreign Trade Act

9. Draft amendment to Foreign Trade Act

The Executive Yuan passed draft amendments to partial articles of the Foreign Trade Act on May 16, 2019 and would request the Legislative Yuan to review.  We summarize the key points below:

(1) Exporters/importers shall not use false or untrue measures to apply or use relevant trade permissions and certificate documents.

(2) As to any untrue labeling made by exporters/importers in respect of the place of origin, an award to reporters is newly added.

(3) The criminal fine against the businesses who illegally export strategic high-tech commodities to restricted regions is raised. 

(4) The amount of administrative fine against the behaviors, such as illegal export, labeling of untrue places of origin, and disturbance to trade order through improper means, is raised. 

Reported by: Kangshen Liu / Chenchi Wang

Taxation

10. Draft Amendment to Tax Collection Act

On 10 May 2019, the Ministry of Finance announced the draft amendment to the Tax Collection Act.  We summarize the key points below:

(1) A delinquency charge shall be charged from every two days of delay to every three days of delay.  

(2) The procedure objectives for administrative remedies include the decision made in a tax assessment notice, and the matters of prescription incompletion for the assessment periods are added.

(3) Amendments to the taxation preservation:

(a) A prohibitory injunction is not applicable where the sufficient property has been provided as collaterals.

(b) The limitation to deregistration of the profit-seeking enterprise which failed to pay the tax is removed. 

(c) To advance the application timing for provisional attachment to the court by tax collection authorities.

(d) Unless otherwise specified, the implemented preservation measures shall be lifted after the decision made in a tax assessment notice has been conclusively withdrawn by the administrative remedies.

(e) To avoid that the taxpayer neglects to exercise his/her rights or acts prejudicially to the rights of the creditors, Articles 242 to 245 of the Civil Code and Articles 6 and 7 of the Trust Law shall apply mutatis mutandis to the collection of taxes.

(4) The amount which the taxpayer shall pay for the recheck decision and then its compulsory execution will be held in abeyance is adjusted from “major” to one third”, and the applicable principle of this amendment during the transition period is provided. 

(5) Different proposal for the criminal provisions of the tax evasion is provided as follows:

【case A】To amend the statutory punishment. 

【case B】To amend the statutory punishment, and add the aggravated punishment for the serious case of the tax evasion. 

【case C】To amend the statutory punishment, include the negative tax evasion into the punishment subjects, and add in the aggravated punishment for the serious case of the tax evasion .  

Reported by: Stacy Lo / Eliza Lee

Securities and Exchange Act

11. Removing special surplus reserve requirement for the expenses of employees due to FinTech

On 15 May 2019, the Financial Supervisory Commission (FSC) issued a ruling stating that from the fiscal year of 2019, public banks may not set aside special surplus reserve for the expenses of employees incurred for the development of FinTech, but shall still list certain amount designated for employees in transition and training so as to protect employees' interests and rights. Moreover, from 2019 public banks' expense of transferring or rearranging employees, or training for the development of FinTech may be reversed to the extent of the remaining special surplus reserve set aside during the fiscal year of 2016 to 2018.

Reported by: Stacy Lo / Cindy Chien

Company Act

12. Rulings of Company Act

The Ministry of Economic Affairs (MOEA) issued rulings on 8 May 2019 and 21 May 2019 respectively that (i) quorum and vote required for an approval at shareholders' meeting and board meeting of a company limited by shares; and (ii) vote required for an approval by shareholders of a limited company, can be raised only when the Company Act allows so by prescribing the higher threshold in the company’s Articles of Incorporation.

Reported by: Mike Lu / Deborah Lee

13. Rulings of Company Act

On 20 May 2019, the MOEA issued a ruling that  articles of incorporation of a company may not restrict director(s) (or chairman) from being re-elected for consecutive terms or being re-elected only for once in the.

Reported by: Mike Lu / Bella Chiu

SITE Fund

14. Disclosure of the information regarding credit rating

On 28 May 2019, the Securities Investment Trust and Consulting Association (SITCA) forwarded the instruction of the FSC to the securities investment trust enterprise (SITE) to require that (1) the SITE is not permitted to use the average credit rating as sales appeal in offering and issuance of securities investment trust funds, (2) to improve the transparency, where a SITE discloses the information of average credit rating in the monthly reports, sales documents or prospectus, the calculation method of such average credit rating, asset items included in the calculation, the method to decide the credit rating of the underlying investment objects, and relevant proportion of credit rating shall be disclosed as well

Reported by: Jeffrey Liu / Cindy Chien

Trust Enterprise

15. Trust enterprise re-adjusting the investment portfolio according to the trust agreement does not constitute new trust investment case

On 28 May 2019, the Trust Association of R.O.C issued a ruling providing that when the trust enterprise signing a trust agreement with the client stipulating that in certain conditions, the trust enterprise shall re-adjust the investment portfolio to the original agreed proportion, the nature of such adjustment is a performance of the contract rather than a new trust investment case under Article 12 of the Regulation Governing Trust Enterprise Establishing Product Suitability Procedures for Non-Professional Investors.

Reported by: Stacy Lo / Bella Chiu

Cosmetic Hygiene and Safety Act

16. Regulations related to Cosmetic Hygiene and Safety Act

On 28 May 2019, the Ministry of Health and Welfare (MOHW) announced new rulings and amendments to the regulations related to the Cosmetic Hygiene and Safety Act (CHSA).  We summarize the key points below:

(1) “The Regulation for the Issuance of Permits of Specific Purpose Cosmetics” was announced, providing that for the manufacturing or importing the specific purpose cosmetics as designated and announced by the central competent authority, an application for examination and registration shall be filed. Neither manufacture nor importation therefor shall be allowed until a permit is issued.  The term “specific purpose cosmetics” as used herein refers to the cosmetics specific for sunscreen, hair dyeing, perming, antiperspirant, tooth whitening or other uses as designated and announced by the central competent authority which are used. However, the cosmetics containing any prohibited ingredient according the CHSA, or those with the labeling on the outer packages, labels or inserts which are not in compliance with the requirements of the CHSA, or those harm to human health shall not be permitted.

(2) “The Regulations for the Issuance of Permits for Projected Specific Purpose Cosmetics” was announced, providing that an application for examination and registration is not required if the specific purpose cosmetic samples projected for the purposes of such application, or researches or experiments according to the CHSA.

(3) “A Table of the Scope and Categories of Cosmetics” is amended to newly add Class 14 covering “tooth paste and mouthwash for non-medical use.”

(4) “The Restriction of Importation of Specific Purpose Cosmetics for Personal use Exempted from Applications for Examination and Registration” was announced, providing that for importation of any specific purpose cosmetics for personal use, no application for examination and registration is required if the number of samples is no more than 12 for each category and the total number is no more than 36, however which are prohibited to be used for supply, sale, public display, consumers’ trials, or transferred for other uses.

Reported by Jolene Wang / Huaili Lu

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