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Insurance
1. Amendments to Insurance Act
The Executive Yuan passed the Amendments to Insurance Act on February 20, 2014, which was delivered to the Legislative Yuan for review. We summarize the main changes below:
(1) Insurance enterprises shall establish an independent director and audit commission. Supervisors will be replaced by audit commissions.
(2) Exist mechanisms for insurance enterprises will be enhanced.
(3) Rights and obligations of guaranty funds are to be specified.
(4) Investment restrictions for insurance enterprises will be revised.
(5) The calculation basis on foreign investment limitation for insurance enterprises will be adjusted.
(6) Penalties are to be introduced for individuals who circulate rumors or cause damage by fraud to the credits of insurance enterprises.
Reported by: David Tsai / Angela Chang
2. Amendments to the "Standards and Guidelines for Immediate Usage and Derived Benefit for Insurance Enterprises Conducting Real-Estate Investments"
The Financial Supervisory Commission ("FSC") announced amendments to the Standards and Guidelines for Immediate Usage and Derived Benefit for Insurance Enterprises Conducting Real-Estate Investments. We summarize the main changes below:
(1) Given that the National Development Council has proposed amendments to the "Special Act for Free Economic Pilot Zones", it has been proposed that investments in unused land located in free economic pilot zones by investment enterprises shall not be subject to the time limit requirements on development of ordinary vacant land.
(2) For real-estate invested after November 19, 2012, it has been proposed to prohibit from transferring the real-estates achieving the usable status within five (5) years following the acquisition of the real-estate; and from transferring the ownership of vacant land within ten (10) years following the acquisition of the land.
(3) It has been proposed that when an insurance enterprise invests in land adjacent to land owned by the insurance enterprise before November 19, 2012, the insurance enterprise may apply with the competent authority to be exempted from the restrictions on investment in unused land to the extent that the unused land does not exceed 10% of the land already owned by the insurance enterprise.
Reported by: David Tsai / Angela Chang
Bankruptcy Law
3. Draft Amendment of Bankruptcy Law
On February 14, 2014, the Judicial Yuan announced draft amendments to the Bankruptcy Law. In addition, the name of the Bankruptcy Law will be changed to the Debt Liquidation Act. The amendments are summarized below:
(1) The amendments not only include details of compromise and bankruptcy but also provide reorganization procedures to replace those for corporate reorganization in the Company Act. The amendments also provide debt liquidation procedures for public juristic persons and recognition of foreign debt liquidation procedure.
(2) Compromise procedures
a. Where a debtor is unable to pay a debt, unlikely to pay a debt, or their assets are insufficient to settle the debt where the debtor is a juristic person or non-juristic person, either debtor or creditor may apply for compromise.
b. Once the compromise procedure begins, the debtor typically is still entitled to run their business as well as manage and dispose of properties under a supervisor's monitoring and supervision.
c. Once the compromise procedure begins, enforcement of claims by creditors stays automatically. Secured creditors, such as a mortgagee and pledge, and preferred creditors will not be affected by the compromise procedure though.
d. Once a court approves the compromise proposal, the payment for debts set out in the compromise proposal shall be made accordingly and other debts typically will cease to exist.
(3) Bankruptcy procedures
a. Where a debtor is unable to pay a debt, unlikely to pay a debt, or assets are insufficient to settle a debt where the debtor is a juristic person or non-juristic person, either debtor or creditor may apply for bankruptcy.
b. Once bankruptcy procedures begin, a debtor is deprived of the right to manage or dispose of properties in the pool of bankruptcy property.
c. Once bankruptcy procedures begin, enforcement of claims by creditors stays automatically. Secured creditors, such as mortgagee and pledge, and preferred creditors will not be affected by the bankruptcy procedure though.
d. Upon a court's ruling to terminate or cease bankruptcy procedures being definitive and biding, the relevant rules of the Consumer Debt Liquidation Act shall apply mutatis mutandis when a debtor is a natural person, which means that the debtor shall be exempt from other debts by a court's ruling.
e. The personality of juristic person would vanish when the bankruptcy procedure terminates or ceases.
(4) Reorganization procedures
a. For any juristic person whose registered amount of property or capital amount is NT$100 million or more, such juristic person or its stakeholders may apply for reorganization if it is unlikely to pay the debt, suspends operations or is likely to suspend business operations due to financial difficulty.
b. Once reorganization procedures begin, the management of juristic persons cannot administer or manage any longer. The receiver is entitled to run the business, manage and dispose of the properties of such juristic persons.
c. Once a reorganization procedure begins, enforcement of claims by creditors stays automatically. Secured creditors, such as mortgagee and pledge, and preferred creditors have to exercise their rights through reorganization procedures.
d. Once a court approves a reorganization plan, the debts set out in the plan shall be settled or kept accordingly. Other debts existing before the commencement of reorganization and membership would vanish.
Reported by: Kang-Shen Liu / Robin Huang
Laws and Regulations Governing Foodstuff
4. Changes to Foodstuff-Related Regulations.
The Ministry of Health and Welfare (MHW) announced five (5) draft changes on foodstuff-related regulations on February 17, 2014 according to the recently amended Act Governing Food Safety and Sanitation. We summarize the major changes below:
(1) The MHW announced that "anyone manufacturing, processing, formulating, repackaging, importing or exporting individual food additives described in 'standards for scope, quantity limit and specification of using of food additive', except spices, shall conduct review and registration."
(2) The MHW announced the abolition of the requirement that "anyone manufacturing, processing, formulating, repackaging, importing or exporting individual food additives described in 'standards for scope and quantity of using of food additive', except spices, shall conduct review and registration."
(3) The MHW announced "the number of approval certificate of individual food additives shall be clearly labeled."
(4) The MHW announced the requirement that "food additive enterprises shall conduct registration."
(5) The MHW announced the abolition of "the items added to be labeled for food additives."
Reported by: Chenchi Wang
Labor
5. Organization Laws for the Ministry of Labor and its Subordinated Agencies
On December 11, 2014, the President announced the "Organization Law of the Ministry of Labor", the "Organization Law of the Bureau of Labor Insurance of the Ministry of Labor", the "Organization Law of the Workforce Development Agency of the Ministry of Labor", the "Organization Law of the Bureau of Labor Funds of the Ministry of Labor", the "Organization Law of the Occupational Safety and Health Administration of the Ministry of Labor", and the "Organization Law of the Institute of Labor, Occupational Safety and Health of the Ministry of Labor". The laws took effect on February 17, 2014 as announced by the Executive Yuan.
Reported by: David Tsai / Robin Huang
SITE
6. Operation Guidelines for Reporting Natural Disasters by SITE
On February 17, 2014, the Securities Investments Trust & Consulting Association of the ROC ("SITCA") announced the "Operation directions for reporting natural disasters by the securities investment trust enterprise (SITE)" (Ref. No.:Zhong-Xin-Gu-Zi-1030050278). This provides for the immediate monitoring and control of SITE operations in the event of natural disasters to protect investors' benefits and rights.
Reported by: Jeffrey Liu / Judy Tai
Offshore Funds
7. Amendments to the "Offshore Incentive Plan"
On February 19, 2014, the FSC announced the amendment of the "Offshore Fund Incentive Plan" to relax previous requirements on certain qualifications (Ref. No.: Jin-Guan-Zheng-Tou-Zi-1030003387). Major changes include reduction of the average investment amount which offshore fund institutions can invest in domestic investment trust funds in the most recent 12 month period from NT$ 5 billion to NT$ 4 billion. Two new evaluation standards on the training of personnel were also added. The new incentive plan also provides broader definitions on new types of offshore funds.
Reported by: Jeffrey Liu / Judy Tai
Securities
8. Amendments to the "Criteria Governing Internal Control Systems of Securities Firms"
On February 21, 2014, the Taiwan Stock Exchange Corporation (TSEC) announced amendments to the "Criteria Governing Internal Control Systems of Securities Firms" (Ref. No.:Tai-Zheng-Ji-Zi-1030003287). The section "Wealth management business: Trust-type wealth management business" is to be amended to bring it in line with applicable laws and regulations.
Reported by: Jeffrey Liu / Judy Tai
TSEC
9. Amendments to the Template Guidelines for Financial and Business Matters Between XXX Corporation and its Affiliated Enterprises
On February 21, 2014, the TSEC announced an amendment to Articles 8, 10, 11, 13 and 14 of the Template Guidelines for Financial and Business Matters Between XXX Corporation and its Affiliated Enterprises to bring it in line with the recent amendment of securities related laws and regulations.
Reported by: Kang-Shen Liu / Susan Chen
OSU
10. The scope of products conducted by the Offshore Securities Unit ("OSU")
On February 25, 2014, the FSC announced the scope of products which can be introduced by the OSU (Ref. No.: Jin-Guan-Zheng-Quan-Zi-10300032443), which shall be limited to those denominated in foreign currency. Except for certain products approved by the competent authority, the underlying objects of such products shall not be foreign exchange ratio with NT$, index of NT$ interest, or NT$ denominated products. The portfolio of such products' underlying object shall not involve NT$ denominated products as well. For products involving NT$ as approved by the competent authorities, the qualified counter-parties are only limited to natural persons, juridical persons, and government agencies outside the territory of the R.O.C. An application form and checklist have also been announced.
Reported by: Jeffrey Liu / Judy Tai
TSEC
11. Shortening of Stock Matching Time
The TSEC announced in a press release on February 24, 2014 that stock matching time will be further shortened from 15 seconds to 10 seconds. Once the matching time is shortened, the frequency with which trading information is published will also be increased. As a result, real-time information will be provided to decrease volatility, which it is hoped will encourage investors to undertake transactions and boost turnover ratio in the long term.
Reported by: Kang-Shen Liu / Angela Lin
Government Organization
12. Organization Act of the Ministry of Science and Technology as well as the Authorities thereof.
The National Science Council (NSC) announced on February 21, 2014 that the organization acts of the Ministry of Science and Technology, which has developed from the NSC, and the authorities thereof would take effect on March 3, 2014. Business previously handled by the NSC will be undertaken by the Ministry of Science and Technology.
Reported by: ChenChi Wang
Finance
13. Amendment to Examination Manuals for the Financial Industry
To comply with amended regulations and examination requirements, the Financial Examination Bureau (FEB) of the Financial Supervisory Commission (FSC) published the 2013 fourth quarter amendment to the Examination Manuals on February 17, 2014. All examination items by the fourth quarter of 2013 had been consolidated in the "complete version" of the Examination Manuals, and the comparisons of the updated information for that quarter were consolidated in the "revised version" of the Examination Manuals. For the relevant contents please refer to "Financial Examination Manuals" published on the official website of the FEB.
Reported by: Stacy Lo / Angela Lin
Tax
14. Calculation of the holding period under the Specifically Selected Goods and Services Tax Act
The Ministry of Finance issued a ruling (Ref No.: tai-cai-shui-zi 10204055940) on February 26, 2014 stipulating that when a surviving (existing) or newly incorporated company in a merger or spin-off pursuant to the Business Mergers and Acquisitions Act and the Financial Institutions Merger Act sells real estate assumed from the dissolved company or the spun off company and registered as transferred and owned, the holding period of the dissolved company or the spun off company can be counted in when calculating the holding period under Paragraph 3, Article 3 of the Specifically Selected Goods and Services Tax Act.
Reported by: Stacy Lo / Angela Lin
Multi-level Sales
15. Guidelines on Investigations in Multi-levels Sales Cases.
On February 21, 2014, the Fair Trade Commission amended the "Fair Trade Commission Guidelines on Investigations in Multi-levels Sales Cases" (Guidelines), which took effect immediately. The legal basis of the Guidelines is amended to the Act Governing Multi-level Sales. Furthermore, pursuant to the laws for multi-levels sales, the main source of income shall come from the marketing or sale of goods or services at reasonable market prices, rather than from introducing the participation of others. The original Guidelines stipulate the judgment standard for the “main source of income" and “reasonable market price”, but those judgment standards are deleted under the amended Guidelines.
Reported by: Stacy Lo/ Mark Chen
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2014-03-10
