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Food and Drugs Administration
1. Amendment to Regulations Governing Rewards for Reporting Breaches of the Act Governing Food Safety and Sanitation
On November 5, 2014, the Ministry of Health and Welfare (MOHW) announced amendments to the Regulations Governing Rewards for Reporting Breaches of the Act Governing Food Safety and Sanitation (AGFSS). We summarize the key amendments as follows.
(1) Reports may now be made to a competent local authority instead of the central competent authority as previously stipulated. Further, anonymous reports without concrete evidence may be admissible.
(2) Rewards have been increased from 5-10% to at least 20% of fines imposed. An additional NT$0.1-2 million or NT$0.1-4 million for a present or previous employee of the offender may be rewarded, for: (i) breaches of any of paragraphs 1-3, Article 49 of the AGFSS; or (ii) other serious breaches of the AGFSS.
Reported by: Jolene Wang / Crick Liang
2. Newly Established Food Factories
The Ministry of Economic Affairs announced a ruling on 4 November that a food factory newly established under the Factory Management Act may only record its major products as foods and is not allowed to manufacture or process non-food products at the same factory site.
Reported by: Jolene Wang / Crick Liang
3. Draft Regulations of Binding Matters for Nutritional Claims of Packaged Foods
On 5 November the MOHW announced draft Regulations of Binding Matters for Nutritional Claim of Packaged Foods (the Regulations). The key points are summarized below.
(1) Nutritional claims are categorized into (i) "moderate intake only" claims and (ii) "supplement intake if appropriate" claims. The binding matters regarding the labeling of nutritional contents for the two categories are stipulated accordingly and separately.
(2) "Special nutritional foods" are not subject to the Regulations.
Reported by: Jolene Wang / Crick Liang
4. Draft Amendment to Regulations for Registration of Medicinal Products
The MOHW announced a draft amendment to the Regulations for Registration of Medicinal Products on November 10, 2014 for public consultation. This would bring testing specifications, methods and certificates of analysis required for registration of medicinal products made in Taiwan into line with those required for the registration of imported medicinal products.
Reported by: Jolene Wang / Crick Liang
Banking Act
5. Draft amendment to Banking Act
On November 13, 2014 the Executive Yuan approved a draft amendment to the Banking Act proposed by the Financial Supervisory Commission ("FSC"), which will be submitted to the Legislative Yuan for reading. We summarize the key points below:
(1) Removal of the restrictions that financial debentures issued by banks are to provide funding for medium-term or long-term credit extension and with the minimum tenor of two years. Banks may issue short-term financial debentures with tenor of one year or less in the future.
(2) Authorizing the Financial Supervisory Commission to enact regulations regarding relevant items for banks conducting financial derivatives business.
(3) Amendment to the calculation basis of the total amount for banks to invest in financial related businesses and non-financial related businesses, which will be calculated by net worth.
Reported by: Stacy Lo / Angela Lin
6. Draft of Implementation Standards of Banks' Liquidity Coverage Ratio
The FSC issued a press release on November 4, 2014 announcing the draft of the Implementation Standards of Banks' Liquidity Coverage Ratio ("Standards"), which is proposed to take effect from January 1, 2014. We summarize the key points below:
(1) Liquidity coverage ratio means the ratio of the total amount of qualified high quality liquidity assets (such as cash, deposit reserves of the Central Bank or government bonds) divided by the total net cash outflow during the following 30 calendar days.
(2) From 2015, the liquidity coverage ratio of banks shall be no less than 60% and the regulatory minimum limit shall increase by 10% per year. The liquidity coverage ratio of banks shall be no less than 100% from 2019.
(3) Banks shall calculate liquidity coverage ratios on a monthly basis and report relevant information. Banks shall report to the FSC and Central Bank immediately if such a ratio is less than the regulatory minimum limit.
(4) The Standards shall not apply to local branches of foreign banks and Mainland China banks, banks which the FSC has assigned officials to take receivership of or that have been ordered to suspend and wind up business or under liquidation, and export-import banks.
Reported by: Stacy Lo / Angela Lin
Labor
7. Amendments to Labor Standards Act
The Executive Yuan passed a draft amendment to the Labor Standards Act ("Amendment") on November 6, 2014, which will be forwarded to the Legislative Yuan for review soon. The Amendment aims mainly to address shortages of the pension reserve in the old age pension scheme of the Labor Standards Act ("LSA") and enhance the protection of payment of wages, severance and pensions. We summarize the Amendment below:
(1) The obligation written in the Enforcement Rules of the LSA for an employer to pay severance and pensions within 30 days following termination of employment or retirement is moved to the LSA (Articles 17 and 55 of the Amendment)
(2) The Amendment provides that pension and severance credits are accorded the same priority as credits secured by a first priority mortgage, pledge or right of retention, all of which shall be paid on a pro rata basis in terms of credit amounts. (Paragraph 1, Article 28 of the Amendment)
(3) The Amendment expands the payment scope of the Wage Payment Fund to include pensions under the old age pension scheme of up to 6-month wages and severance. The ceiling of the contribution rate to the Fund will be increased from 0.1% 0.15%. (Paragraph 2, Article 28 of the Amendment)
(4) Employers shall examine the account for the pension reserve under the old age pension scheme at the end of each year. In the case of any financial short fall for employees eligible for retirement within the next year, the employer shall make up the amount before the end of next March. In addition, the Amendment provides that a financial institution may examine the pension reserve balance with the competent authority. (Article 56 of the Amendment)
(5) Penalties for employers failing to pay severance or pensions are increased to between NT$300,000 (around US$10,000) and NT$1,500,000 (US$50,000). (Article 78 of the Amendment)
Reported by: David Tsai / Mark Chen
Listed Companies
8. Electronic voting
The Financial Supervisory Commission ("FSC") issued a ruling on 12 November 2014 requiring more listed companies to adopt electronic voting for shareholders' meetings. From 1 January, 2016, TWSE-listed or OTC-listed companies which have paid-in capital of NT$2 billion or more and 10,000 shareholders or more documented on their shareholders roster on the first date of the previous block trade period must adopt electronic voting as a means for shareholders to vote.
Reported by: Kang-Shen Liu / Angela Lin
Consumer Protect Act
9. Mandatory and Prohibitory Provisions of Standard Form Contracts for Home Loans and Auto Loans and Template of Standard Form Contracts.
On November 12, 2014, the FSC enacted the "Mandatory Provisions To Be Included in Standard Form Contracts for Home Loans", "Prohibitory Provisions of Standard Form Contracts for Home Loans", "Mandatory Provisions To Be Included in Standard Form Contracts for Auto Loans", "Prohibitory Provisions of Standard Form Contracts for Auto Loans", "Template of Standard Form Contracts for Home Loans" and "Template of Standard Form Contracts for Auto Loans" (collectively "Rulings"), which will take effect on August 12, 2015.
The rulings for standard form contracts for auto loans and home loans are similar, except that financial institutions may extend credits for home loans according to authorization forms for loan repayment provided by both parties and for home loans there are restrictions on acceleration clauses. The key points are summarized below.
(1) Where a borrower is late in repaying the principal or paying interest, the Rulings provide the conditions and calculations for penalties, and consecutive billing periods which penalties may be charged up to.
(2) If a home loan debt satisfies certain conditions, the financial institution shall not exercise the acceleration clause to foreclose the collaterals. Where a borrower finds it significantly difficult to fulfill a contract according to the original contract conditions, he/she may apply to the financial institution to extend the repayment period to 6 years.
(3) The Rulings provide the scope and order in which financial institutions can exercise their offset right and that financial institutions shall inform borrowers and guarantors in writing to express offset intent.
(4) The Rulings provide for the obligation and responsibility for financial institutions collecting, processing and using personal information of borrowers and guarantors for the purposes of contract performance.
(5) When a financial institution outsources operations, they shall urge the outsourced institutions to comply with confidentiality provisions in using information. Further, when a financial institution outsources loan collection operations, they shall inform the borrowers and guarantors in writing and in advance and announce the basic information of outsourced institutions in business premises and websites.
(6) When the borrower or third party provide collateral to establish any mortgage to a financial institution, the scope of the mortgage is limited to this loan debt unless written consent is provided by the collateral provider.
(7) Financial institutions shall not stipulate that the borrower who has signed an IOU or a borrowing certificate to render notes as collateral.
(8) Financial institutions shall not require a joint and several guarantor for self-use residence loan or personal auto loans. If the financial institution has obtained sufficient collateral, they shall not require provision of a guarantor. Unless agreed by the guarantor in writing, the term of the guarantee shall not be more than 15 years from the establishment date.
Reported by: Stacy Lo / Mark Chen
Intellectual Property
10. Amendments to Enforcement Rules of Patent Act and Regulations of Patent Fees
The Ministry of Economic Affairs announced amendments to Enforcement Rules of the Patent Act and Regulations of Patent Fees which took effect on November 6, 2014. The main points are summarized as follows:
(1) A 6-month grace period, during which certain types of disclosure are excluded when determining the novelty and inventiveness for an invention/utility model patent application, should be calculated from the date of earliest disclosure to the filing date on which the required documents for filing are submitted in full. Even for a patent application with a priority claim, such duration is calculated based on the filing date instead of the priority date.
(2) Where an applicant simultaneously files an invention patent application and a utility model patent application for the same creation on the same date, the applicant should make respective declarations in respect of the said applications when filing. In this regard, the "same day" shall mean that both applications have the same filing date, and if a priority claim is made, both applications must have the same priority date. In addition, an invention patent application shall not be granted if the utility model patent right has expired or has been fully and bindingly revoked after a decision is rendered on the invention patent application.
(3) Where an applicant files a subsequent patent application with a domestic priority claim based on an earlier patent application and has submitted a payment application for the patent certificate fee and the first-year annuity for grant of the earlier patent application, the patent authority shall notify the applicant to withdraw either the domestic priority claim or the payment application within a specified time period. If the applicant fails to withdraw either the domestic priority claim or the payment application, the earlier patent application shall not be granted, to avoid double patenting. Under such circumstances the applicant may request a refund of the patent certificate fee and the first-year annuity.
(4) For filing a petition for an invalidation action where there is a violation of simultaneous filing of both invention and utility model patent applications as prescribed in paragraphs 1 and 3 of Article 32 of the Patent Act, a fixed fee of NT$10,000 will be charged.
(5) For a divisional patent application for invention, where the application is filed with an English translation of the title of the invention, name of the applicant, name of the inventor and abstract, NT$800 will be deducted from the filing fee. However, this deduction shall not apply when the divisional application is originally filed with documents in English.
(6) Where a divisional patent application or a conversion patent application is filed electronically, NT$600 will be deducted from the filing fee.
Reported by: Jolene Wang / Linda Cheng
11. Direct Electronic Priority Document Exchange between USPTO and SIPO
The United States Patent and Trademark Office (USPTO) and the State Intellectual Property Office of China (SIPO) launched a new free service to facilitate electronic exchange of patent application priority documents, as of October 8, 2014. This new service is provided at no cost to the applicants, allowing the USPTO and SIPO to directly obtain electronic copies of priority documents filed with the other office from the electronic records management system. With this service, applicants will no longer need to obtain and file paper copies of priority documents; however, they remain responsible for ensuring that priority documents are provided in a timely manner. To qualify for this service, the U.S. patent application or the Chinese invention patent application or utility model patent application claiming priority from a first filed application in the other patent office, must be filed on or after October 8, 2014. This service does not apply for a Patent Cooperation Treaty (PCT) patent application or priority claim based on a PCT patent application.
Reported by: Jolene Wang / Linda Cheng
Financial Holding Companies
12. Amendments to "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 October 31, 2014, the Financial Supervisory Commission formally amended Article 2 and deleted Article 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. We reported the major points of the draft amendments in point 13 of Issue No. 209 of the Lexgroup Newsletter.
Reported by: Jeffrey Liu / Judy Tai
Insurance
13. FSC Issues draft amendments to "Regulations Governing Derivatives Transactions Conducted by Insurance Companies "
The FSC issued draft amendments to "Regulations Governing Derivatives Transactions Conducted by Insurance Companies" (the "Amendments"). The key points are below:
(1) To promulgate that the position of expected investment from future cash or reinvestment are hedged items;
(2) To delete the requirements related to credit rates of onshore financial institutions, which will be replaced by a relevant ratio between equity capital and risk asset;
(3) To add derivatives which can be conducted by onshore financial institutions and report relevant transaction information to the OTC for transaction items which may be conducted by insurance enterprises. This aims to increase investment efficiency.
(4) Insurance enterprises shall report information related to derivatives transactions conducted to the Risk Management Committee.
Reported by: David Tsai / Angela Chang
Company Act
14. Liquidators
The Ministry of Economic Affairs announced a ruling on 3 November 2014 that pursuant to Articles 128-1 and 322 of the Company Act, when the board of directors of a company limited by shares with 1 corporate shareholder (or legal person shareholder) resolve to dissolve, all directors shall be the liquidators unless the articles of incorporation provide otherwise. If articles of incorporation are silent on directors' refusal to perform duties as liquidators, the corporate shareholder (or legal person shareholder) may appoint a third party to be the liquidator and the company need not hold a shareholders meeting to elect the liquidator.
Reported by: Kang-Shen Liu
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2014-11-24
