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Food and Drugs Administration
1. Draft Amendment to Regulations Governing Advertising and Promotion of Formula Foods for Infants or Older Infants
On September 12, 2014, the Ministry of Health and Welfare (MOHW) announced a draft amendment to the Regulations Governing Advertising and Promotion of Formula Foods for Infants or Older Infants for public consultation. According to the draft amendment, advertising of formula foods for infants or older infants will not be restricted to scientific medical journals or documents only for the use of medical personnel; however, such advertising may only provide information about what is labeled on the container or external packaging of the food as prescribed by law, as well as the price. Special exhibitions, the offering of coupons and “seal opening discounts,” as well as bundled selling are prohibited from being used for promotional purposes.
Reported by: Jolene Wang / Crick Liang
2. Draft Amendment to the Act Governing Food Safety and Sanitation
In response to the recent tainted-oil scandal, on September 25, 2014 the Executive Yuan approved a draft amendment to the Act Governing Food Safety and Sanitation (AGFSS), which will be submitted to the Legislative Yuan for reading. The draft amendment substantially increases prison terms and fines for illegal food production practices. We summarize the key points below.
(1) The maximum administrative fine for a food enterprise responsible for adulterated or counterfeit food production, etc. is increased from NT$50 million to NT$200 million.
(2) Increases in prison terms and fines:
a.For offences involving adulterated or counterfeit food production and the use of food additives that are not approved by the central competent authority, the maximum prison term is increased from five to seven years and the maximum fine is increased from NT$8 million to NT$80 million.
b.For offences that cause detriment to human health, imprisonment of one to seven years and a fine of up to NT$100 million will be assessed.
c.For offences causing severe detriment to human health, offenders will be sentenced to three to 10 years in prison and face fines of up to NT$150 million.
d.For cases ending in fatalities, the punishment will be from seven years to life in prison with a fine of up to NT$200 million.
(3) To deal with the double jeopardy issue, the clause concerning criminal fines for a legal entity or its representative, etc. has been canceled to ensure prompt assessment of the increased administrative fine.
Reported by: Jolene Wang / Crick Liang
Insurance
3. Draft Amendments to Insurance Act
To strengthen the competent authority's supervision of insurance companies and their exit mechanisms, the Executive Yuan has approved a draft amendment to the Insurance Act ("Draft Amendment") proposed by the Financial Supervisory Commission (FSC). According to the FSC, it will coordinate with the Legislative Yuan to pass the Draft Amendment as soon as possible.
We summarize the major points of the Draft Amendment below.
(1) To allow banks to engage in insurance broker or agent business - The Draft Amendment expands a bank's business scope to include either insurance brokerage or agent business, subject to the FSC's special permit and license. (Articles 8-1 and 163)
(2) An insurance company is required to engage an outside actuary to double check the actuarial report. (Articles 144 and 171)
(3) With respect to the failure to implement appropriate internal control or audit systems, the upper fine limit is increased from NT$3 million to NT$6 million (around US$100,000 to US$200,000). (Article 171-1)
Reported by: Ethan Su
4. FSC Issues Ruling to classify "Enterprises related to Insurance"
The "enterprises related to Insurance approved by the competent authority" mentioned in Sub-paragraph 3, Paragraph 1 of Article 146-4 of the Insurance Act, include the following foreign (with the exception of Mainland China) enterprises related to insurance
(1) Foreign shareholder companies which have no obligation to increase the capital of invested enterprise in any way;
(2) Foreign banking, bill, trust, credit card and financing rent enterprises;
(3) Foreign securities, futures, securities investment trust and securities investment consulting enterprises;
(4) Foreign consulting companies or risk management consulting companies which provide professional consulting services related to avoiding losses;
(5) Foreign asset management enterprises, the main business of which is providing management, consultation and advise related to financing or investment, and the income of which comes from administration fees (including commission, service charges, management performance rewards).
Reported by: David Tsai / Angela Chang
Company Act
5. Board meetings
The Ministry of Economic Affairs announced a ruling on 17 September 2014 that, by reference to Paragraph 3, Article 208 of the Company Act, if a director who received the most number of votes does not attend the first board meeting of his/her term, other directors who attend the meeting may elect another director to chair it.
Reported by: Kang-Shen Liu
6. Proposed expansion of scope of companies applying electronic voting
The Financial Supervisory Commission ("FSC") issued a press release on 2 October 2014 announcing that it is proposing to expand the scope of companies that can apply electronic voting regimes for shareholders' meetings. TWSE-listed or OTC-listed companies with paid-in capital of NT$2 billion or more and with 10,000 shareholders or more documented on their shareholders roster on the first date of the previous block trade period can adopt electronic voting as one of the ways for shareholders to cast votes. The relevant regulations will take effect in 2016 at the earliest.
Reported by: Kang-Shen Liu / Angela Lin
Listed Companies
7. CSR Report
The FSC issued a press release on 19 September 2014 requiring the following types of company to prepare a Report on Corporate Social Responsibilities (CSR Report) in accordance with the Global Reporting Initiative (GRI) in the near future.
(1) Listed companies that engage in foodstuff business, financial business or chemical business, listed companies whose paid-in capital is NT$10 billion or more and listed companies who receive 50% or more of their business income from food and drink services annually.
(2) The TWSE and OTC will amend the operational rules and order the companies specified above to prepare annual CSR Reports in accordance with the GRI by the end of June. The first CSR Report is due by the end of December.
Reported by: Kang-Shen Liu
Banking
8. Cooperation agreement between domestic financial institutions and legal persons or organizations in Mainland China may be reported after execution
The Financial Supervisory Commission ("FSC") issued a ruling on September 12, 2014, which provides that a cooperation agreement or other cooperation document entered into between domestic financial institutions/financial related organizations and legal persons or organizations in Mainland China are not required to be submitted to the FSC before execution. However, in accordance with Paragraph 2, Article 33-1 of the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, if the budget and audit reports are required to be submitted to the FSC in accordance with other laws and regulations, the cooperation agreement shall be reported to the FSC.
Reported by: Stacy Lo / Angela Lin
Securities Firms
9. Explanation regarding "Investment" under Paragraph 3, Article 45 of the Securities and Exchange Act
On September 16, 2014, the Financial Supervisory Commission ("FSC") issued a ruling (Ref. No: Jin-Guan-Zheng-Qi-Zi-1030028422) that when a securities firm acquires securities of other securities firms for hedging purposes when executing stock options or conducting market maker business for stock/futures, it will not be considered as an investment under Paragraph 3, Article 45 of the Securities and Exchange Act.
Reported by: Jeffrey Liu / Judy Tai
Trust Fund
10.Draft amendments to "Act Governing the Management of Collective Trust Funds" and "Rules Governing the Management and Employment of Collective Investment Trust Funds"
On September 15, 2014, the FSC announced that it will publish draft amendments to the "Act Governing the Management of Collective Trust Funds" and "Rules Governing the Management and Employment of Collective Investment Trust Funds" for consultation shortly. The key amendments are as follows:
(1) Act Governing the Management of Collective Trust Funds
a.To adjust thresholds for collective trust funds' investment percentages or amounts in securities which require the FSC's approval.
b.To add a product suitability mechanism.
c.To integrate and expand requirements for scope and diversification of assets under trust funds.
d.To force collective trust funds to establish trust supervisor mechanisms.
(2) Rules Governing the Management and Employment of Collective Investment Trust Funds
a. To include classification systems to classify customers to professional investors and non-professional investors.
b. To integrate and expand requirements for scope and diversification of assets under trust funds.
c. To enhance protection to non-professional investors and simplify governing on account of professional investors.
Reported by: Jeffrey Liu / Judy Tai
Multi-level sales
11.Draft amendment to Regulations for Multi-level Sale Enterprises to Set Up Plans of Security Measures for Personal Information Files and Disposal Measures for Personal Information after Termination of Business
The Fair Trade Commission ("FTC") announced a draft amendment to the Regulations for Multi-level Sale Enterprises to Set Up Plans of Security Measures for Personal Information File and Disposal Measures for Personal Information after Termination of Business ("Regulations") on September 15, 2014. This draft amendment provides that the multi-level sale enterprises shall set up a plan of security measures for personal information files and disposal measures for personal information after termination of business within 2 months after the multi-level sale enterprise has filed for record to the FTC.
Reported by: Stacy Lo / Mark Chen
Securities Firms
12.Amendments to Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers
On September 18, 2014, the Taiwan Stock Exchange Corporation issued a ruling to amend Articles 3-1, 6, 7 and 10 of Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers. The key amendments are as follows:
(1) To avoid the disclosure of research reports to third parties before it their announcement, the discussion of the content of a research report is not permitted except for necessary discussions with the review department within the review process;
(2) To add that performance evaluation methods are prohibited from affecting the independence of research personnel;
(3) To add that securities firms are permitted to provide research reports to professional institutional investors who are not their clients under certain conditions; and
(4) To add regulations related to content and announcements where research reports are being quoted/forwarded by use of media.
Reported by: Jeffrey Liu / Judy Tai
Financial Holding Companies
13.Draft amendments to Articles 2 and 4 of "Regulations Governing the Investment Limits to Venture Capital Subsidiaries of Financial Holding Companies investing Non-listed or Non-OTC Companies Outside of the Financial Industry and Binding Matters"
On September 23, 2014, the Financial Supervisory Commission ("FSC") issued a press release announcing that it will soon publish draft amendments to Articles 2 and 4 of "Regulations Governing the Investment Limits to Venture Capital Subsidiaries of Financial Holding Companies investing Non-listed or Non-OTC Companies Outside of the Financial Industry and Binding Matters”. The key points of the draft amendments are to specify that a venture capital subsidiary of a financial holding company can be exempted from 15% shareholdings limitations (provided under Article 37 of the Financial Holding Company Act) on non-listed companies invested by it if (1) the invested company is a specific cultural or creative industry governed by the Law for the Development of the Cultural and Creative Industries and the investment amount does not exceed NT$150 million; or (2) the invested company is from another qualified industry and the investment amount does not exceed NT$50 million.
Reported by: Jeffrey Liu / Caitlyn Kao
Securities Firms
14.Promulgation of the permitted scope for securities underwriters to engage in financial planning and consulting businesses
The FSC issued a ruling on 24 September 2014 (Ref. no.: Jin-Guan-Zheng-Quan-Zi-10300348301), permitting securities underwriters to engage in the following businesses: (1) financial planning, assessment and consulting businesses regarding the swap of shares, acquisition of another company's shares, businesses or properties; (2) business to consult property management companies or other sophisticated investment institutions to increase equity; and (3) financial consultation and advice to venture capital enterprises to increase equity. The ruling also states that rebate or compensation of the consulting fees in any form is not permissible when securities firms engage in financial plans and consultation business for issuance of ordinary corporate bonds, financial bonds and international bonds.
Reported by: Kang-Shen Liu / Angela Lin
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2014-10-07
