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Communication Security and Surveillance Act
1. Draft Amendment to the Communication Security and Surveillance Act
On January 29, 2014, the President announced the newly amended Communication Security and Surveillance Act (Act), which took effect on June 29, 2014. Despite being in force for less than four months, the Executive Yuan submitted a draft amendment to the Act (Draft Amendment) to the Legislative Yuan for further review on October 31, 2014. The draft amendment was proposed by the Ministry of Justice. We summarize its key points below:
(1) Collection of communication records by prosecutors or police officers
Under the Act, Article 3-1 provides definitions of communication records and communication users' information (Communication Record) and Article 11-1 provides that prosecutors or police officers must apply to a court in writing for approval to collect Communication Records. Under the Draft Amendment, there is no need to obtain court approval since Communication Records do not contain private dialogue. Given this, two articles are deleted.
(2) Extended surveillance
Paragraph 1 of Article 5 of the Draft Amendment extends surveillance to the following crimes: (i) spreading poisons and poisoning food openly on display, provided by the Criminal Code; (ii) forcing people into sexual transactions for profit by improper debt or other means, or forcing people by any means against their will to labor for consideration not commensurate with the work, provided by the Human Trafficking Prevention Act; and (iii) adulteration or counterfeiting of food and food additives, addition of any unapproved food additives or other violations causing harm to human health provided by the Act Governing Food Safety and Sanitation.
(3) Translation of surveillance records
Under the Act, Article 13 provides that any content of surveillance records not related to the stated purpose of the surveillance shall not be translated. The Draft Amendment states that to determine if surveillance records relate to the purpose of the surveillance requires more facts or evidence to be presented than is now necessary, as the current legislation impedes investigation. As such, all content of surveillance recordings could be translated under the Draft Amendment unless the content of surveillance records is not related to the stated purpose of the surveillance and the law provides that it cannot be used.
(4) Evidential information obtained from surveillance for other cases, outside of the purpose of surveillance or from illegal surveillance
Under the Act, Article 18-1 provides that information obtained from surveillance for other cases, outside of the stated purpose of the surveillance or from illegal surveillance shall not be permitted as evidence. Paragraph 3 of Article 27 punishes civil servants or former civil servants who violate Article 18-1. The Draft Amendment deletes these provisions as they may facilitate criminal activities.
(5) Deletion of the Legislative Yuan's supervision
Under the Act, Paragraph 2 of Article 32-1 provides that the Legislative Yuan may send personnel at any time to supervise communication surveillance. The Draft Amendment deletes this Article because it may impede investigations.
(6) Application of the Code of Criminal Procedure
Under the Act, Paragraph 3 of Article 32-1 provides that any matter not provided by this Act shall be subject to the Act Governing Duty Performance by the Legislative Yuan or other laws. The Draft Amendment deletes this Paragraph and the Code of Criminal Procedure shall apply.
Reported by: Chenchi Wang
Food and Drugs Administration
2. Second Draft of the Regulations Governing Advertising and Promotion of Foods Not Suitable for Long-Term Consumption by Children
The Ministry of Health and Welfare (MOHW) announced on November 5, 2013 draft Regulations Governing Advertising and Promotion of Foods Not Suitable for Long-Term Consumption by Children (Regulations), as summarized in Issue No. 188 of our Newsletter. On October 23, 2014, the MOHW announced a second draft of the Regulations for further public consultation. The subject matter for the Regulations is revised to include snacks, sweets, drinks, ice products and foodstuffs for direct sale to the customer, having one of the following nutritional contents: (i) calories from fats accounting for more than 30% of the total calories; (ii) calories from saturated fats accounting for more than 10% of the total calories; (iii) sodium content higher than 400 milligram (400mg) per serving; and (iv) calories from added sugar accounting for more than 10% of the total calories. Further, it is specified that the above-defined foodstuffs would be banned from being advertised on a dedicated TV channel for children and/or adolescents “from 5 pm to 9 pm”.
Reported by: Jolene Wang / Crick Liang
3. Draft Amendment to Regulations for Registration of Medicinal Products
The Food and Drug Administration (FDA) reiterated on October 29, 2014 in a press release that packaged restructured meat products must be fully and accurately labeled with their ingredients and food additives, e.g. sodium phosphate (coagulating agent) or glycine (flavoring agent), in compliance with Article 22 of the Act Governing Food Safety and Sanitation. Failure to do so could incur fines of up to NT$4 million as well as an obligation to withdraw from the market for correction. The FDA also announced that it will strengthen its supervision of dining enterprises regarding the indication of “restructured meat” on menus as applicable.
Reported by: Jolene Wang / Crick Liang
Company Act
4. Franchises and Paragraph 1, Article 247 of the Company Act
The Ministry of Economic Affairs (MOEA) announced a ruling on 16 October that according to Article 50 of the Business Entity Accounting Act, franchises are intangible assets. Since Paragraph 1, Article 247 of the Company Act does not exclude franchises from intangible assets, franchises shall be covered by Paragraph 1 of Article 247 to calculate limits on the total amount of corporate bonds.
Reported by: Kang-Shen Liu / Angela Lin
5. Preferred Stocks
The MOEA announced a ruling on 16 October that Article 269 of the Company Act prohibits a company limited by shares from publicly issuing preferred stocks. This restriction is not relevant to the ruling issued by the Financial Supervisory Commission (FSC) on 5 June 2012 about IFRSs adopted by insurance companies. The FSC may make judgments on a case-by-case basis.
Reported by: Kang-Shen Liu
6. Shares Abandoned by Shareholders of a Limited Company
The MOEA announced a ruling on 21 October that the Civil Code may apply where shareholders abandon their shares since the Company Act is silent on whether they can do so. As such, shareholders may abandon their shares in a limited company with effect from when they inform the company of such a decision.
Reported by: Kang-Shen Liu
Act for Industrial Innovation
7. Proposed amendment to "Regulations Governing Application of Tax Credit to Companies' expenditure on Research and Development"
To bring it into line with the amendments to the Statute for Industrial Innovation, the MOEA proposed the amendment of Article 2-1 of the "Regulations Governing Application of Tax Credit to Companies' expenditure on Research and Development" on 24 October. The proposed amendment states that companies that have not materially violated laws related to environmental protection, labor, food safety and sanitation over the past three years are entitled to deduct their R&D costs for business income tax purposes. The amendment may take effect retrospectively from 20 June 2014.
Reported by: Kang-Shen Liu / Angela Lin
Labor
8. Draft of Labor Occupational Accident Insurance Act
The Executive Yuan passed the Draft of the Labor Occupational Accident Insurance Act (Draft Act) proposed by the Ministry of Labor on October 30, 2014, which will remove the current provisions regarding occupational accident insurance from the Labor Insurance Act and allocate them in the Draft Act. The Draft Act will be forwarded to the Legislative Yuan for review. We summarize the key points below:
(1) All employed workers will be included in the protection scope of occupational accident insurance to provide employers with a simple way to apply for insurance for his/her employees.
(2) If recipients of social insurance old-age benefit re-engage in work, they may voluntarily apply for occupational accident insurance.
(3) An increase of the cap of insurance salary of occupational accident insurance.
(4) To provide that disability pensions and survivor's benefit may be calculated by 50% of the average monthly insurance salary.
(5) Increasing penalties to ensure insured units apply for insurance for their workers.
Reported by: David Tsai / Robin Huang
9. Proposal That When Employees are Not Able to Take Compensatory Leave for Overtime Work Within 6 Months, Employers Shall Pay For the Overtime Work.
On October 21, 2014, the Ministry of Labor issued a press release stating that a draft amendment to the Labor Standard Act will be proposed to provide that if an employee cannot take compensatory leave for overtime work within 6 months, an employer shall pay for the overtime work.
Reported by: David Tsai / Robin Huang
10. Ruling for Explanation of the Scope of Holidays Which Shall be Compensated if Such Dates Coincide With a Regular Day Off or Recess Day
On October 27, 2014, the Ministry of Labor issued a ruling (Ref. No.: Lao-Dong-Tiao-San-Zi no. 1030130894) to explain that "Holidays prescribed by Article 37 of the LSA and Article 23 of Enforcement Rules of the LSA" include the "Annual Festival of Indigenous Peoples", but exclude voting dates of elections or recall of the president, vice president and all kinds of civil servants.
Reported by: David Tsai / Robin Huang
SITE Fund
11. Amendments to "Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises"
On October 21, 2014, the FSC formally amended Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises. We reported the major points of the draft amendments in point nine, Issue No. 206 of the Lexgroup Newsletter.
Reported by: Jeffrey Liu / Judy Tai
SITE
12. Amendments to Ruling relating to Securities Investment Trust Funds
On October 22, 2014, the Securities Investment Trust and Consulting Association ("SITCA") forwarded the rulings issued by the FSC dated October 17, 2014 (Ref. No. Jin-Guan-Yin-To-Zi- 1030039815 and Jin-Guan-Yin-To-Zi- 10300398151). The former ruling provides that emerging stocks eligible for investment by a securities investment trust fund ("SITE Fund") only need to obtain consent from the Taiwan Stock Exchange or GreTai Securities Market for listing . The latter ruling amends the explanation regarding ''otherwise provided by the FSC'' under Paragraph 1, Article 10 of the Regulations Governing Securities Investment Trust Funds. We summarize below:
(2) Emerging stocks eligible for investment by a SITE Fund only need to obtain consent by the Taiwan Stock Exchange or GreTai Securities Market for listing. Where such emerging markets stocks are under initial listing, they can be excluded from the limitation on investment percentage of a SITE Fund.
Reported by: Jeffrey Liu / Caitlyn Kao
13. Draft Amendments to "Standards Governing the Establishment of Securities Investment Trust Enterprises" and "Regulations Governing Securities Investment Trust Enterprises"
On October 23, 2014, the FSC announced draft amendments to "Standards Governing the Establishment of Securities Investment Trust Enterprises" and "Regulations Governing Securities Investment Trust Enterprises". We summarize below:
(1) To adjust the thresholds which trust enterprises are required to file an application for concurrent operation of securities investment trust business before they may carry out the offering of a collective trust fund (i.e. 50% or more of the offered and issued amount, or NT$1 billion or higher);
(2) To stipulate that a name change by a securities investment trust enterprise ("SITE") requires advance approval by the FSC;
(3) To delete the restriction that a China securities investment fund management company invested by a SITE or the SITE's overseas subsidiary shall not provide services to either individuals or enterprises of the Taiwan area, provided that such service shall still be conducted in accordance with "Regulations Governing Approval and Management of Securities and Futures Transactions and Investment Between the Taiwan Area and the Mainland Area"; and
(4) To delete the restriction that a SITE can only invest in foreign or Chinese enterprises with the same business scope of such a SITE.
Reported by: Jeffrey Liu / Judy Tai
Securities
14. FSC relaxes limits on margin purchase and short sale of securities
On October 30, 2014, the FSC issued a ruling to relax the amount limits on margin purchase and short sale of securities, which took effect on November 3. We summarize the key points below:
(2) The amount limits on margin purchase and short sale of single exchange-listed securities for each client are increased to NT$30million. For single OTC-listed securities such limits are increased to NT$20 million.
(4) The highest short sale ratio for OTC-listed securities is increased from 50% to 60%.
Reported by: Jeffrey Liu / Angela Lin
Banking
15. Amendment to Regulations Governing Authorization and Administration of Service Enterprises Engaging in Interbank Credit Information Processing and Exchange
On October 24, 2014 the FSC announced an amendment to the "Regulations Governing Authorization and Administration of Service Enterprises Engaging in Interbank Credit Information Processing and Exchange". This provides that financial institutions and financial related businesses appointed by the FSC shall submit information of derivatives business to service enterprises engaging in interbank credit information processing and exchange. Service enterprises engaging in interbank credit information processing and exchange shall enact the regulation of scope and filing for information of derivatives business.
Reported by: Stacy Lo / Mark Chen
16. Explanation of Paragraph 1, Article 12 of the "Regulations Governing Banking Activity and the Establishment and Investment by Financial Institutions Between the Taiwan Area and the Mainland Area"
The FSC issued a ruling on October 29, 2014 explaining that the credit amount extended by third-area branches and OBUs of a Taiwanese bank to "branches established in Mainland China by Taiwanese banks" shall be included in the aggregate amount of credits extended to Mainland China under Paragraph 1, Article 12 of the Regulations Governing the Banking Activity and the Establishment and the Investment by Financial Institutions Between the Taiwan Area and the Mainland Area.
Reported by: Stacy Lo / Angela Lin
Insurance
17. Draft Amendments to "Regulations Governing Derivatives Transactions Conducted by Insurance Companies"
The FSC issued draft amendments to the "Regulations Governing Derivatives Transactions Conducted by Insurance Companies" (Amendments). The key points are below:
(1) To promulgate that the expected investment from the future cash or the re-invested positions are hedged items;
(2) To delete the requirements related to credit rates of onshore financial institutions, which are replaced by the standard rates related to equity capital and risk asset;
(3) To add the derivatives which can be conducted by onshore financial institutions in accordance with the law and shall report the relevant transaction information to the OTC are the transaction items which can be made by insurance enterprises to increase investment efficiency.
(4) Insurance enterprises shall report information regarding derivatives transactions to the Risk Management Committee.
Reported by: David Tsai / Angela Chang
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2014-11-07
