Criminal Procedural Code
1. Enforcement Law of Criminal Procedural Code
On 17 December 2019, the Legislative Yuan passed its third reading to add Article 7-12 of the Implementation Law of the Criminal Procedural Code ("New Article 7-12"). We summarize below:
(1) While the amendment to the Criminal Procedural Code removes the authority and obligation of a court to appeal a judgement of life imprisonment, the New Article 7-12 provides that any judgement of life imprisonment rendered before the effective date of the new amendment does not apply.
(2) The amendment to the Criminal Procedural Code raises the appealing period from within 10 days to within 20 days. The New Article 7-12 provides that the new 20-day appealing period applies to judgements for which appealing period have yet to expire when the amendment to the Criminal Procedural Code becomes effect.
(3) The amendment to the Criminal Procedural Code raises the time period for supplementing the appealing grounds from 10 days l to 20 days. The New Article 7-12 provides that the new 20-day time period for supplementing the appealing ground applies to cases where the judgments have yet to be rendered when the amendment to the Criminal Procedural Code becomes effect.
Reported by: David Tsai / Paul Hsu
Commercial Matter Adjudication Act
2. Commercial Matter Adjudication Act
On 17 December 2019, the Legislative Yuan passed its third reading of the Commercial Matter Adjudication Act. We summarize below:
(1) Establishment of commercial court: The level of trial is the same as that of High Court to be two-level courts and two instances. The commercial court has exclusive jurisdiction over defined commercial cases.
(2) Mandatory legal representation by attorney(s): Parties and related parties must engage attorneys to engage in the relevant legal procedures and attorney fees form a part of procedural fees. Where the attorney fails to attend the hearing, the failing party will be deemed as absent.
(3) Electronic legal documents submission system: The legal documents must be submitted through the electronic legal documents submission system.
(4) Remote hearing: A hearing can be held through audio or video device when the court deems appropriate.
(5) Prior mediation proceeding: A mediation must be proceeded with before the trial and held by the judge or persons with the relevant expertise. The parties, legal representatives and attorneys shall attend the mediation hearing.
(6) Inquiry systems for parties: For the purpose of preparing for claim or evidence, parties may list necessary matters and inquiries for the explanation by the other party. Where a party refuses to the inquiries without a justifiable reason, the court may hold the other party’s allegation as truth.
(7) Expert witness: Parties may engage expert witnesses to provide professional opinion and may also inquire about the professional opinion provided by the other party. The court may also request the expert witness to state his/her opinion at the hearing.
(8) Order of confidentiality: Where the documents, objects to be inspected, or data required for expert testimony submitted during the procedure involve the commercial secret, the holder may apply for an order of confidentiality with the court. Violator to the order shall be sentenced to the imprisonment for not more than 3 years.
Reported by: David Tsai / Alex Li
Foreign Trade
3. Foreign Trade Act
The President announced the amendments to the Foreign Trade Act on 25 December 2019. We summarize below:
(1) Exporters/importers shall not apply for or use relevant trade permissions and certificates by false or untrue measures.
(2) Awards are granted against untrue place of origin labeled by exporters/importers.
(3) The criminal fine against the enterprises who illegally export strategic high-tech commodities to restricted regions is raised.
(4) The administrative fine against the irregularities, such as illegal exports, labels of untrue places of origin, and improper activities to disturb trade order, is raised.
Reported by: Kang-Shen Liu / Will Chen
Medical Device Management Act
4. The Third Reading of the Medical Device Management Act Passed
On 13 December 2019, the Legislative Yuan passed the third reading of the Draft Medical Device Management Act. The medical device management is isolated from the Pharmaceutical Affairs Act, and the administration of medical devices will be governed by the Act independently. The effective date will be further announced by the Executive Yuan. We summarize below:
(1) To facilitate research and development of industrial technology and product innovation, those who design medical devices and launching the products in their name are treated as the medical device manufacturers.
(2) The enterprises who maintain/repair medical devices will be regulated under the Act. The sale and supply for patient specific medical devices will also be governed by the Act.
(3) The management of medical device manufacturers and sellers, product source flows, requirements for manufacturing quality management systems, and management of distribution are established under the Act.
(4) Product risk classification management is implemented, under which some low-risk medical devices are not subject to the inspection and registration system but to the electronic online registration system instead.
(5) Any adverse effects related to clinical trials during the period of medical device trials shall be reported. Where safety concerns, clinical trials may be suspended or terminated. The clinical trials of medical devices which are announced with no risks are exempt from government approval.
(6) The Act strengthens the safety supervision and management of medical devices after marketing. Safety surveillance shall be implemented for some specific high-risk medical devices, and medical institutions are obliged to cooperate. The Act also requires relevant enterprises to actively monitor the risk of marketed products and implement necessary corrective and preventive measures.
Reported by: Jolene Wang / Ethan Lin
Company Act
5. Ruling Regarding for Amendment to Articles of Incorporations of A Limited Company Converting to a Company Limited by Shares
A limited company may be convertible to a company limited by shares with the consent of a majority of all voting shares according to the Company Act. On 17 December 2019, the Ministry of Economic Affairs issued a ruling that for an amendment to the articles of incorporations reflecting such conversion, shareholders who disagree to the conversion shall be deemed to have agreed according to Paragraph 4, Article 106 of the Company Act for the purpose of meeting the higher shareholders' voting threshold (namely consent of two thirds or more of voting shares) for the amendment to the articles of incorporations of a limited company. After a limited company is changed to a company limited by shares with only one single juristic person shareholder, the articles of incorporation shall be further revised accordingly.
Reported by: Mike Lu / Melissa Tsai
Taxation
6. Ruling for Management, Utilization, and Taxation of Repatriated Offshore Funds Act
On 23 December 2019, the Ministry of Finance (MOF) issued a ruling that residual assets exceeding original amount of capital contribution as distributed after a liquidation upon dissolution of an invested enterprise in countries or jurisdictions outside Taiwan, Penghu, Kinmen and Matsu over which a profit-seeking enterprise has the controlling power or significant influence, shall be included in the "investment income derived from an offshore invested enterprise" stipulated in the Management, Utilization, and Taxation of Repatriated Offshore Funds Act (the Act). For such income repatriated by the profit-seeking enterprise the management, utilization and taxation under the Act may apply.
Reported by: Stacy Lo/ Mindy Liao
Financial Institution
7. Amendment to Regulations Governing the Capital Adequacy and Capital Category of Banks
On 23 December 2019, the Financial Supervisory Commission (FSC) announced the amendment to the Regulations Governing the Capital Adequacy and Capital Category of Banks. We summarized below:
(1) To define the "statutory capital adequacy ratio" as the minimum capital adequacy ratio plus the capital additionally contributed.
(2) Where necessary, the competent authority may require banks to make a provision of the anti-business cycle buffer capital.
(3) The competent authority may designate and announce the domestic systemically important banks and request the same to make a provision for additional capital according to factors such as scale of the bank, relevance, substitutability and complexity.
(4) To amend the basis for producing financial statements adopted for the calculation of consolidated capital adequacy ratio and leverage ratio, and to provide the minimum standard of leverage ratio.
(5) To revise the definition of the common equity Tier 1 capital.
(6) To amend the requirements when a bank redeems the outstanding additional Tier 1 capital and Tier 2 capital not being common equity before maturity or buys back the same from the market.
Reported by: Stacy Lo/ Paul Hsu
8. Amendment to Instructions for Reporting Voting Shares in Accordance with Paragraph 2, Article 16 of Financial Holding Company Act and Instructions for Reporting Voting Shares in Accordance with Paragraph 2, Article 25 of Banking Act
On 25 December 2019, the FSC announced the amendment to the “Instructions for Reporting Voting Shares in Accordance with Paragraph 2, Article 16 of Financial Holding Company Act” and “Instructions for Reporting Voting Shares in Accordance with Paragraph 2, Article 25 of Banking Act” (the “Regulations”). We summarize below:
(1) When the same person, same concerned person or the third party under Paragraph 4, Article 16 of the Financial Holding Company Act and Paragraph 4, Article 25 of Banking Act is a juristic person, its beneficial owners or the persons who have ultimate control shall also be subject to the report requirement under the Regulations, including the individuals owning directly or indirectly more than 25% of the juristic person’s shares or capital, exercising control over the juristic person through appointment, contract, etc., having decision-making power over the juristic person, and directly or indirectly controlling the juristic person through a trust.
(2) Certain entities are not subject to the report requirements, such as entities listed on a stock exchange outside the R.O.C. that are subject to regulatory disclosure requirements of their major shareholders, subsidiaries of such entities, financial institutions regulated in the R.O.C. and investment vehicles managed by such financial institutions, financial institutions established outside the R.O.C. subject to AML/CFT requirements consistent with the standards set out by the Financial Action Task Force on Money Laundering (FATF) and investment vehicles managed by such financial institutions, and the funds administered by the R.O.C. government.
(3) The amendment will be effective from 1 July 2020. However, if the prescribed entity/person has filed the report before the effective date and the number of shares held by such entity/person on the effective date still meets the conditions for making the report, a report shall still be made to the competent authority again within 10 days from the effective date.
Reported by: Stacy Lo / Lily Huang
Insurance
9. Amendment to Guidelines for Operation Outsourcing by Insurance Enterprises
On 26 December 2019, the FSC announced the amendment to the "Guidelines for Operation Outsourcing by Insurance Enterprises". We summarize below:
(1) The outsourcing of collection of premiums, and principal and interest payments on policy loans or other loans shall be subject to the relevant self-regulations.
(2) Adding the requirements in respect of outsourcing of cloud services, including:
(a) An insurance enterprise shall ensure the risk control of operation;
(b) An insurance enterprise shall bear the ultimate supervisory obligation of the cloud service providers;
(c) An insurance enterprise shall ensure the access of themselves, competent authorities or the designated entities to the relevant information of operation implemented by the cloud service providers;
(d) An insurance enterprise may engage an independent third party for auditing;
(e) An insurance enterprise shall adopt effective protection measures to protect transmission of clients' information to, and storage these of the cloud service providers;
(f) An insurance enterprise shall keep full ownership of information outsourced to the cloud service providers for processing;
(g) In principle, the clients' information and storage location thereof shall be within Taiwan; and
(h) An insurance enterprise shall have an emergency contingency plan in place.
(3) The filings in respect of the outsourcing of cloud service has been classified in 2 types, depending on its importance: Regulatory approval or recordation with the competent authority.
Reported by: David Tsai / Rady Lee
Renewable Energy
10. Renewable Energy Development Act
On 20 December 2019, the Executive Yuan announced that the amendment to the Renewable Energy Development Act promulgated on 1 May 2019 shall take effect on 1 January 2021.
Reported by: Kang-Shen Liu
2020-01-07
