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Company Act
1. Board meeting minutes must be in Chinese
The Ministry of Economic Affairs ("MOEA") issued a ruling on August 4 that although directors can speak languages other than Mandarin at a board meeting, minutes must be in Chinese for record and reference. This requirement applies even when a company is incorporated by a foreign corporate shareholder.
Reported by: Kang-Shen Liu
2. Two resolutions passed by Supreme Court
On August 5, the Supreme Court passed two resolutions relating to the Company Act. One abandons a precedent (Ref. No. 63 Tai-Shan-965) due to inconsistent facts therein. The other states that a statutory quorum is a prerequisite to convene a valid shareholders meeting. Thus, a shareholders meeting without a quorum is invalid from a legal perspective and this irregularity cannot be treated as "illegal methods to adopt resolutions" prescribed in Article 189 of the Company Act.
Reported by: Kang-Shen Liu
State Compensation Law
3. Draft amendment to the State Compensation Law
On August 7, 2014, the Executive Yuan passed a draft amendment to the "State Compensation Law" ("Draft"). The Draft refers to the relevant judicial practice and opinions of theory to comprehensively amend the State Compensation Law ("SCL"). The key points of the Draft are summarized below:
(1) For state compensation matters not provided for in the SCL, the provisions of the Administrative Procedure Act ("APA") shall apply. If there are no relevant provisions therein, the provisions of the Civil Code shall apply mutatis mutandis.
(2) Local self-governing bodies shall be included to act as debtors of the state compensation.
(3) The State and local self-governing body shall be liable for intentional or negligent acts by any government employee. The Draft provides the scope of "intentional or negligent act".
(4) The State shall be liable for the judge or prosecutor for trial or prosecution duty if they infringe people's freedoms or rights by their final and conclusive judgment. The Draft provides the scope of "trial duty" and "prosecution duty".
(5) The Draft provides the requirement for a claim of compensation against the State or public servant of a local self-governing body, judge or prosecutor, and the matters which shall be considered for the amount and procedure of the claim.
(6) The Draft provides the interruption and non-interruption of the statutory period of the claim.
(7) The Draft provides how to determine the compensated authority and the procedure to resolve controversies.
(8) The claimant may engage an agent to negotiate with the compensatory authority when he/she seeks compensation in writing. The Draft provides the matters which shall be contained in writing, and the procedure and manner for negotiations.
(9) For state compensation lawsuits, it is the duty of the court to investigate evidence.
(10)When a claimant initiates administrative litigation for state compensation, the civil court shall suspend its proceeding.
(11)If specific groups or individuals who are directly authorized by law to exercise public authority for a specific matter infringe the right of people, the SCL shall not apply.
Reported by: David Tsai / Mark Chen
Food and Drugs Administration
4. Promulgation of the Enforcement Rules of the Act Governing Food Safety and Sanitation
Following the recently amended Act Governing Food Safety and Sanitation, the Food and Drug Administration promulgated the Enforcement Rules of the Act Governing Food Sanitation on August 13, 2014, which came into effect on the same day. Its key points are summarized below:
(1) Definitions and/or labeling norms for the following are added: "approval number for single food additives," "formula food for infants or older infants," "manufacturer," "responsible domestic company," "country of origin" and "bulk food."
(2) Amendments regarding the labeling of food additives:
a. Each individual raw material of a compound food additive must be labeled.
b. A food additive which is incorporated into the final food product through an approved food raw material and presents in an amount obviously lower than the amount required for direct addition, such that it has no function in the final food product, may be exempted from labeling.
c. Flavoring agents, emulsifiers, leavening agents and the like must be labeled in their generic name instead of their functional name.
(3) The labeling of food utensils, food containers or packaging shall be located on the packaging or major commodity of minimum unit for sales. However, for repetitively-used products, its name of material and heat-resistance temperature shall be labeled in the major commodity of minimum unit for sales. The length and width of font used in labeling shall not be smaller than 2mm.
(4) To specify the information about the method of testing, testing unit and the evidence used in interpreting the results that must be concurrently disclosed when publishing testing information on food sanitation.
Reported by: Chenchi Wang
5. Draft Regulations for Packaged Foods Raw materials Exempted from Labeling
The Ministry of Health and Welfare ("MOHW") announced on August 13, 2014 the Draft Regulations for Packaged Foods Raw materials Exempted from Labeling. According to the Draft Regulations, the following raw materials may be exempted from labeling: any raw material used in the manufacturing or processing of food for a specific technical purpose which is later neutralized, removed or deactivated such that it is substantially not a constituent material of the final food product and does not carry out said specific technical purpose in the final food product.
Reported by: Jolene Wang / Crick Liang
Science and Technology
6. Amendments to Regulations Governing MOEA Scientific and Technological Research and Development Results Ownership and Utilization
On August 13, 2014, the Department of Industrial Technology, MOEA announced the amendments to the Regulations Governing MOEA Scientific and Technological Research and Development Results Ownership and Utilization. According to the amendments, exclusive license and non-exclusive license of the research and development results ("R&D results") are relaxed and stipulated separately, as summarized below.
(1) Exclusive license:
Under MOEA’s examination, exclusive license of the R&D results shall be given to Taiwan research institutes or enterprises for manufacturing or use in the national territory. However, exclusive license of the R&D results would not be subject to the above-mentioned restrictions if such exclusive license does not jeopardize overall national industrial and technological development and has been approved by the MOEA.
(2) Non-exclusive license:
There is no explicit restrictions for non-exclusive license of the R&D results. Only in the case that the licensee or the territory of license is of the Mainland Area, Hong Kong, Macau, or other areas announced by the MOEA, the non-exclusive license must be approved by the MOEA before given.
Reported by: Jolene Wang / Crick Liang
Consumer Protect Act
7. Amendment to the Mandatory and Prohibitory Provisions of the Standard Form Contract for Commodities (Services) Coupons for Retail Industry or Others
On August 1, 2014, the MOEA announced a draft amendment to the Mandatory and Prohibitory Provisions of the Standard Form Contract for Commodities (Services) Coupons for Retail Industry or Others. The key points are summarized below:
(1) Coupon issuers shall provide a mechanism of performance guarantee for at least one year.
(2) If the issuer of a coupon uses a third party as the actual provider for the commodity or service, the paid-in capital of the issuer (that shall not be less than NT$30,000,000) and the relevant information of the actual provider shall be stated on the coupons. The issuer shall adopt the performance guarantee provided by a financial institution or deposit the issuance amount into a segregate trust account for exclusive use.
(3) If the issuer of a coupon uses a third party as the actual provider for a commodity or service, the following prohibitory provisions shall be excluded:
a.Any situation which will make consumption by the coupon holder unfavorable to cash consumption.
b.Any additional cost if the consumer requests a refund of the coupon.
c.If there is a dispute between the consumer and the actual provider for a commodity or service, any wording or similar meaning to exclude the liability of the coupon issuer.
Reported by: Stacy Lo / Mark Chen
Securities Firms
8. Securities Firms permitted to trade RMB-denominated bonds issued overseas with professional investment institutions
On August 1, 2014, the Financial Supervisory Commission ("FSC") issued a ruling to permit securities firms to trade RMB-denominated bonds issued overseas with professional investment institutions, as defined in paragraph 2, Article 4 of the Financial Consumer Protection Act, on GreTai Securities Market.
Reported by: Jeffrey Liu / Judy Tai
SITE Fund
9. Proposed amendment to the "Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises"
On August 13, 2014, the FSC announced draft amendments to "Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises" to simplify the registration process for certain types of local securities investment trust funds. The funds refer to those (i) raised/investing onshore, including bond funds, ETF, principle protected funds and money market funds; and (ii) raised onshore/investing offshore, including bond funds, balanced funds, index funds, ETF, principle protected funds and money market funds. The registration of funds (i) and (ii) above will take effect upon the lapse of 12 and 30 business days respectively after filing. For those securities investment trust enterprises meeting certain qualifications, 30 days can be shortened to 12. Given that the simplified registration process has become a principle for local funds, the draft amendments also provide an additional clause to specify filing types requiring the FSC's prior approval.
Reported by: Jeffrey Liu / Angela Lin
Insurance
10. Internal Audit and Control Systems of Insurance Enterprises
On August 5, 2014, the FSC announced a draft amendment to the "Implementation Rules of Internal Audit and Internal Control Systems of Insurance Industries". We summarize the key points below:
(1) The risk management mechanisms of an insurance enterprise shall include establishing identification, measurement and monitoring systems for anti-money laundering, preventing financing of terrorism and standard operational procedures to comply with anti-money laundering laws and regulations.
(2) By the end of each fiscal year, the audit plan for the following year shall be delivered to supervisors or the audit committee for examination and approval.
(3) The internal control system statements and CPA audit shall be reported to the competent authority by the end of March each year.
(4) A two-level system for legal compliance will be adopted. The legal compliance officer of the headquarters shall be established as a full-time position at vice presidential level. Furthermore, the legal compliance unit shall be an exclusively responsible unit under the general manager.
(5) In the event of significant deficiencies or noncompliance, the legal compliance unit shall analyze the cause, propose improvement suggestions and submit these to a board meeting after reporting to the general manager.
(6) The legal compliance unit shall evaluate the effects of the legal compliance activities of each unit. Such evaluation results shall be a basis for personnel evaluations.
(7) To coordinate with the two-level system for legal compliance, other units shall assign personnel to act as the legal compliance officer for their own unit.
(8) The self-evaluation task of legal compliance shall be performed at least semiannually. The results shall be sent to the legal compliance unit for further reference
Reported by: David Tsai / Angela Chang
Banking
11. Amendment to the "Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries"
The FSC promulgated the amendment to the "Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries" ("Implementation Rules") on August 5, 2014. We summarize the major points below.
(1) A headquarters legal compliance officer shall not serve any internal position other than the legal officer, and shall have a rank equal to vice president.
(2) The headquarters legal compliance officer and compliance unit staff shall have at least 15 hours of educational training every year.
(3) A legal compliance officer shall provide signed compliance opinion before a financial institution offers new products, services or engages in new business to take responsibility. A legal compliance officer also has the power to review the performance of the compliance unit.
(4) Financial holding companies and the banking industry shall establish relevant risk control systems to prevent money laundering and combat the financing of terrorism.
The Implementation Rule provides a 6-month grace period.
The FSC also referred to the Implementation Rules and enacted the "Guidelines of Internal Audit and Internal Control System of Institutions Engaging in Credit Card Business", which will take effect on February 1, 2015.
Reported by: Stacy Lo / Angela Lin
Offshore Funds
12. Supplements to the deadline for publishing annual/semi-annual reports of offshore funds ("Reports")
On August 11, 2014, the Securities Investment Trust and Consulting Association ("SITCA") forwarded an instruction from the FSC dated July 28, 2014 to supplement the deadline for publishing Reports and its Chinese summary translation in Taiwan. For offshore funds with investment by Taiwan investors of 50% or more (where there is no global announcement date and the announcement/mailing deadline of the Reports is after September 10, 2014), the Reports must be announced no later than the announcement deadline set up by the regulator of the fund's domicile. In addition, the Chinese summary translation must be announced at the same time.
Reported by: Jeffrey Liu / Judy Tai
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2014-08-23
