1. MOEA's Rulings in Relation to Quorum and Voting Threshold
On 23 May 2019, the Ministry of Economic Affairs (MOEA) issued a ruling interpreting that if a company sets forth a higher quorum and/or voting threshold in its Articles of Incorporation (AOI) than those required in the Company Act during the period after 23 February 2011 but prior to 8 May 2019, the company may remain to apply such higher quorum and/or voting threshold under the AOI. However, for a company established or amending its AOI after 8 May 2019 a higher quorum and/or voting threshold than those required in the Company Act cannot be set forth except for these expressly specified under the Company Act.
Reported by: Mike Lu/Angela Lin
2. Interpretation of Financial Holding Company Act
On 27 August 2019, the Financial Supervisory Commission (FSC) announced a ruling interpreting that the subsidiaries referred to under Paragraph 2, Article 30 of the Financial Holding Company Act (Act) where a financial holding company holds all the outstanding shares or capital stock include the subsidiaries defined under Subparagraph 4, Paragraph 1, Article 4 of the Act of which all the outstanding shares or capital stock are held by the subsidiaries wholly owned by the financial holding company.
Reported by: Stacy Lo/Eliza Lee
3. Draft Amendments to Instructions for Reporting Voting Shares under Paragraph 2, Article 16 of Financial Holding Company Act and Instructions for Reporting Voting Shares under Paragraph 2, Article 25 of Banking Act
On 30 August 2019, the FSC announced for public consultation the draft amendments to the "Instructions for Reporting Voting Shares under Paragraph 2, Article 16 of Financial Holding Company Act" and the "Instructions for Reporting Voting Shares under Paragraph 2, Article 25 of Banking Act" (collectively, Instructions). We summarize the key points below:
(1) Where the same person, same concerned party, or the third party under Paragraph 4, Article 16 of the Financial Holding Company Act or Paragraph 2, Article 25 of the Banking Act is a legal person or an organization, the relevant beneficial owner or ultimate control person shall be listed in the scope of reporting.
(2) To add the exceptions exempting a beneficial owner or an ultimate control person from reporting.
(3) To amend relevant reporting forms.
(4) A shareholder who has reported under the Instructions shall report again.
(5) The Instructions will not be enforced until a grace period of 6 months.
Reported by: Stacy Lo/Will Chen
SITEs & SICEs
4. Restrictions from Adopting new Company Act by Securities Investment Trust Enterprises (SITEs) and Securities Investment Consulting Enterprises (SICEs)
On 21 August 2019, the Securities Investment Trust & Consulting Association (SITCA) issued a ruling restricting SITEs and SICEs from application of newly amended Company Act due to the highly regulated nature of the industry. We summarize the key points below:
(1) The AOI of SITEs and SICEs shall not include provisions: (i) to issue certain types of preference shares, (ii) to hold a shareholders' meeting by video conference, and (iii) to exercise directors' voting rights by written resolutions. In addition, the AOI of SITEs and SICEs shall specify that the notice of board meeting shall be given at least seven (7) days prior to the scheduled meeting date (instead of three (3) days provided under the newly amended Company Act);
(2) If a SITE and SICE privately places convertible bonds and bonds with warrants, the amount of private placement is still subject to the requirements or restrictions that the total amount of corporate bonds shall not exceed the remaining balance of assets after deducting liabilities; and
(3) A SITE or SICE must have a board of directors and the board must have at least three (3) members. In addition, it cannot issue shares without par value.
Reported by: Jeffrey Liu/Cindy Chien
5. Ruling Related to Investment in Real Estate by Insurance Enterprises
On 23 August 2019, the FSC announced a ruling related to investment in real property by insurance enterprises. We summarize the key points below:
(1) Where an insurance enterprise invests in the real estate required for the long-term care industry, the annualized rate of return of such real estate (i.e. annualized income divided by book value) can be no less than the benchmark interest rate (i.e. the mobile rate of small deposit for two-year postal reserve fund announced by Chunghwa Post Co., Ltd.); and
(2) The ruling deletes the requirement for reporting each investment target of real estate to, and having it passed by, the board of directors on a case-by-case basis and handled by authorization.
Reported by: David Tsai/Aaron Lai
6. Amendment to Notice on Use of Registered Trademarks
On 23 August 2019, Taiwan Intellectual Property Office (TIPO) announced the amendments to the Notice of the Use of Registered Trademarks, which has become effective on the same day. We summarize the key points below:
(1) To add the guidance for determination of trademark identity, and to provide some examples on how to determine the trademark identity, wherein the determination of identity involves two aspects: changing appearance, and adding words or graphic elements;
(2) To supplement some examples demonstrating acceptable evidence of the actual use of the registered trademarks; for example, a case in which the trademark as used includes other words or graphic elements; a case in which a registered trademark is used in combination of another trademark or mark; a case in which the disclaimer of one part is made, or a case in which the part without disputes is present;
(3) For determining whether the goods or services on which a registered trademark has actually used belong to the categories of the goods or services as designated in the trademark registration, to add some examples demonstrating that the goods or services on which the registered trademark are “substantially equivalent to” or “substantially same as” those designated in the trademark registration, belong to the reasonable category of the actual use; and
(4) To add the guidance for determining whether the internet use of the registered trademarks is regarded to belong to the category of the actual use; in particular, an evidence of the internet use of a registered trademark should meet the requirements provided in Article 5 of Trademark Act.
Reported by: Jolene Wang/Edda Yang
7. Ruling in Respect of Income Tax Return Filing of Surviving spouse Taxpayer
On 23 August 2019, the Taxation Administration, Ministry of Finance issued a ruling stating that where the surviving spouse is the taxpayer, the income tax paid after the death of the decedent for the income of the said decedent obtained before or in the year of death can be deducted from the total amount of the estate in accordance with Subparagraph 8, Paragraph 1, Article 17 of Estate and Gift Tax Act.
Reported by: Stacy Lo/Cindy Chien