Liu & Partners Newsflash (November 2013)

Date: Nov 2013

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Insurance

  • Amendment to Article 5 of the Regulations Governing the Procedures for Insurance Institutions to Evaluate Assets and Deal with Non-performing/ Non-accural Loans

International Trade

  • The Amendment to Foreign Trade Act

Securities/Futures

  • The FSC Announced the Up-To-Date Futures Trading Permission List of the Foreign Exchange Institutions and the Contracts
  • The FSC updated the Ruling regarding “the credit rating at or above a prescribed level by an FSCapproved or recognized credit-rating institution" provided in the Regulations Governing Securities Investment Trust Funds

SITE/SICE

  • The FSC released the restriction on the SITE to re-entrust its funds investment within Asia and Oceania to a third party if such funds’ major

Insurance

Amendment to Article 5 of the Regulations Governing the Procedures for Insurance Institutions to Evaluate Assets and Deal with Nonperforming/ Non-accural Loans

Reported by Steven Chen

On October 16 2013, the Financial Supervisory Commission announced the amendment to Article 5 of the Regulations Governing the Procedures for Insurance Institutions to Evaluate Assets and Deal with Nonperforming/ Non-accrual Loans (“NPLs”)(the “Regulations”).

According to this amendment, insurance companies shall allocate sufficient reserves against NPLs. The amount of such reserves shall not be lower than either of the following standard:

1. 1% of an insurance company’s current loans deducting policy loans, premium loans and its debts to Taiwan government;

2.The aggregate amount of delinquent accounts and overdue receivables which has been reasonably evaluated as unsecured; or

3. The reserves against bad debts in accordance with the GAAP.

The amendment will be made effective as of January 1, 2014 and a grace period of three years will be granted for the insurance companies to complete the reserves.

International Trade

The Amendment to Foreign Trade Act

Reported by Alice Pan

On November 6, 2013, The President of Taiwan announced the amendment to the Foreign Trade Act.

According to the newly inserted Article 20- 3, qualified exporter/importer defined by the regulator can issue the certificates of origin by themselves provided such exporter/importer 1. shall not violate the standards of origin identification or make fraudulent origin label; and 2. shall keep relevant documents for the regulator’s verification.

Also, the amended Article 28 stipulates that the Bureau of Foreign Trade (“BOFT”) may issue its warning, impose an administrative fine or suspend the export/import. BOFT may even rescind the license of exporter/ importer if it commits following violations: 1. Trading with prohibited or restricted country; 2. Exporting/importing temporary suspended goods, or violating other necessary measures; 3. Exporting/importing prohibited goods; 4. Exporting without permission or importing without the permission by exporting country; 5. Failed to proceed its export/import within the scope prescribed in the permission; 6. Commiting prohibited acts prescribed in Foreign Trade Act; 7. Refused to provide documents or information, or rejecting inspection; and 8. Prejudicing the business interests of others.

Securities/ Futures

The FSC Announced the Up-To-Date Futures Trading Permission List of the Foreign Exchange Institutions and the Contracts

Reported by Pru Li

On October 25, 2013, the Financial Supervisory Commission (The “FSC”) announced its ruling of Jin-Guan-Zeng-Chi-Zi No.1020038786 to update the list of the permissible futures transactions under Article 5 of Futures Trade Act, which allows the futures traders to transact within 9 countries, 2 regions, 23 exchange institutes and 350 products in total.

The content of the amendment is as follows,

1. Kansai Commodities Exchange (the “KCE”) was renamed as Osaka Dojima Commodity Exchange (the “ODCE”).

2. Ericsson (L.M.) Telephone Co. ADR Option Contract in Chicago Board Options Exchange (the “CBOE”) was renamed as Ericsson ADR Option Contract.

3. Schweizerische Ruckversicherungs- Gesellschaft AG-N Option Contract in Eurex Frankfurt AG (the “Eurex”) was renamed as Swiss Re AG-N Option Contract; Zurich Financial Services Option Contract was renamed as Zurich Insurance Group AG Option Contract.

4. To terminate the transactions of 6 option contracts in the CBOE, including Global Crossing Ltd., Genzyme Corporation, National Semiconductor Corporation, Novellus Systems, Inc., Qwest Communication Int’l and RETAIL HOLDRS TRUST. Such contracts are not tradable after the announcement of Ruling.

Furthermore, the FSC also approves the transactions of the SGX MSCI Indonesia Index Futures Contract in Singapore Exchange Derivatives Trading Limited (the “SGX-DT”) under its supplementary Ruling of Jin-Guan- Zeng-Chi-Zi No.1020042811 dated October 31, 2013.

The FSC updated the Ruling regarding “the credit rating at or above a prescribed level by an FSC-approved or recognized credit-rating institution" provided in the Regulations Governing Securities Investment Trust Funds

Reported by Victoria Liu

According to Article 90 of the Regulations Governing Securities Investment Trust Funds (the “Regulations”), the definition of "the credit rating at or above a prescribed level by an FSCapproved or recognized credit-rating institution" provided in the Regulations shall be announced by the FSC.

On October 21, 2013, the FSC announced the Ruling of Jin-Guan-Chen-Tou-Zi No.1020043038 to supplement and amend the Ruling of Jin- Guan-Chen-Tou-Zi No. 09900600149 dated November 10, 2010 in the following aspects:

1. In response to Article 14-1 of the Regulations amended on October 16, 2013 by the FSC, the new regulations on the credit ratings of (i) collaterals provided by securities borrowers; and (ii) foreign appointed agents were inserted; and

2. The contents of the previous Ruling regarding Moody's Investors Service were deleted due to the close of its operations in Taiwan.

SITE/SICE

The FSC released the restriction on the SITE to reentrust its funds investment within Asia and Oceania to a third party if such funds’ major investments are not in such areas

Reported by Nancy Hsu

On October 30, 2013, the FSC announced its Ruling of Jin-Guan-Chen-Tou-Zi No. 1020043596 to replace its previous Ruling regarding the management of funds by SITEs. Under such new ruling, in order to enhance the efficiency of Funds management, a SITE may re-entrust its funds investment within Asia and Oceania to a third party if such funds’ major investments are not in such areas.

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