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Fair Trade Act
1. Amendment of Fair Trade Act
The Legislative Yuan passed amendments (Amendments) to the Fair Trade Act (FTA) on 22 January 2015, which were promulgated by the President on 4 February. Key changes include: business groups or trade associations consisting of enterprises and their members are now covered by the FTA, the method of calculating market share and sales amounts are changed, concerted action can in principle be established by the Fair Trade Commission (FTC), restrictions on resale prices with justifiable reasons can be imposed, evidence in investigations can be retained or seized by the FTC and appeals against FTC dispositions must be filed directly with an administrative court. Please refer to our Alert Sheet of 2 February for details: Amendment to the Fair Trade Act
Reported by: Kang-Shen Liu
Labor
2. Amendment of Labor Standard Act
On January 20, 2015, the Legislative Yuan passed three readings of Amendments to the Labor Standard Act. The main amendments include: the enhancement of priority of compensation for labor related credits, the expansion of the scope covered by the arrears wage fund, the obligation on employers to examine the status of designated accounts of labor pension funds and the examination mechanism of the status of designated accounts of labor pension funds by financial institutions. For details, please refer to our Alert Sheet (website: Approval of Amendments to the Labor Standard Act) dated January 31, 2015.
Reported by: David Tsai / Mark Chen
Financial Institutions
3. Amendments to Five Financial Acts
To enhance the international competitiveness of banks and insurance companies and to protect financial consumers, the Legislative Yuan passed three readings to enact the Act Governing Electronic Payment and to amend the Banking Act, Offshore Banking Act, Insurance Act and Financial Consumer Protection Act. The legislations above were announced by the President on February 4, 2015. We summarize the key points below:
(1) Act Governing Electronic Payment
(2) Banking Act
The basis on which total investment limits of banks are calculated is amended as "net value". In addition, starting from September 1, 2015, the cap for the interest rate of cash advance cards and revolving credit of credit cards will be 15%.
(3) International Financial Business Act
Insurance companies may establish Offshore Insurance Units (OIU) in Taiwan. OIUs may engage in the following business (i) offering life insurance to offshore individuals and legal entities as policyholders and insured; (ii) real estate insurance to offshore individuals and legal entities as policyholders for offshore real estate; (iii) any offshore re-insurance policies and (iv) any other insurance business as approved by the competent authorities.
(4) Insurance Act
The amendment provides a prompt corrective mechanism. Insurance companies are classified into four classes pursuant to their Risk Based Capital ("RBC") ratio, and different regulatory measures are adopted. Among them, for insurance companies with RBC ratio of "seriously inadequate", the measures of receivership, order to suspend business and rehabilitation or order to dissolve may be taken.
(5) Financial Consumer Protection Act
Where financial services enterprises violate regulations and infringe the rights of financial consumers, the regulator may, depending on the seriousness of the case, adopt sanctions of warning, suspension of product sale, suspension of the business, order suspended personnel to carry out their duties and order the discharge of duty of responsible persons. For serious violations, an operational license can be rescinded. Administrative fines for serious violations may be imposed within the amount of interest received without limitation.
Reported by: Stacy Lo / Mark Chen / Robin Huang
Food and Drugs Administration
4. Proposed Amendment to Enforcement Rules of Health Food Control Act
The Ministry of Health and Welfare (MOHW) announced a proposed amendment to the Enforcement Rules of the Health Food Control Act on January 9, 2015. The main points are summarized below:
(1) The title of the cited Act“Act Governing Food Sanitation” is amended to “Act Governing Food Safety and Sanitation” (the AGFSS)as previously amended.
(2) “Nutrients and contents” that must be labeled on health food are now governed by relevant provisions of the AGFSS and its related regulations.
Reported by: Jolene Wang / Liz Yao
5. Proposed Regulations that Contents of Health-Care-Effects Related Ingredients Must Be Labeled on Health Food and Revocation of Regulations Governing Labeling of Nutrition Facts and Contents on Health Food
The MOHW announced on January 19, 2015 proposed Regulations that Contents of Health-Care-Effects Related Ingredients Must Be Labeled on Health Food, and the expected revocation of the Regulations Governing the Labeling of Nutrition Facts and Contents on Health Food accordingly.
Reported by: Jolene Wang / Liz Yao
6. Amendment of AGFSS
The Legislative Yuan passed amendments to the AGFSS on January 20, 2015. We summarize the key points below.
(1) A food enterprise of the class and scale announced by the MOHW must actively apply for third-party verification of its Health and Safety Management System. Violators may be fined up to NT$3 million.
(2) For foodstuffs for direct sale and bulk foods, “other matters that must be labeled” are added. Specific matters that must labeled will be announced by the MOHW in the future.
(3) Relevant Agricultural products must be labeled with their source and production system.
Reported by: Jolene Wang / Crick Liang
7. Proposed Amendment of Regulations Governing Application for Registration by Food Enterprises
On January 20, 2015, the MOHW announced proposed amendments to the Regulations Governing the Application for Registration by a Food Enterprise, which are summarized below:
(1) A list is provided to stipulate the related contents to be registered regarding food additives and the type of material related information to be registered regarding manufactured, processed or imported utensils, containers and packaging for food by a food enterprise.
(2) A grace period until April 30, 2015 is given to food additive enterprises that have completed registration before the Regulations take effect to amend their registered information accordingly.
Reported by: Jolene Wang / Liz Yao
Tax
8. Business tax and income tax of house sales
On January 28, 2015, the Ministry of Finance published a ruling regarding (1) the conditions to levy business tax and profit-seeking enterprise income tax and (2) business registration, for house sales by individuals. We summarize the key points below:
(1) Where an individual builds a house on their own non-occupied residential land or on occupied residential land held for less than one year, and then sells the house, if certain criteria regarding land area, holding periods, household registration and rental or business use are met, the individual will be exempt from business registration, business tax and profit-seeking enterprise income tax. However, if such individuals have a fixed place of business or business license number or hire people to assist in the house sale, business registration is still required and business tax and profit-seeking enterprise income tax will be levied.
(2) Where any individual builds a house on their own occupied residential land which has been held for one year or more, and then sells the house, business registration will not be required. However, if such an individual has a fixed place of business or business license number or hires employees to assist with the house sale, business registration is still required and business tax and profit-seeking enterprise income tax will be levied starting from January 1, 2016.
Reported by: Stacy Lo / Mark Chen
Company Act
9. Shareholders' Rosters
The Ministry of Economic Affairs announced a ruling on 26 January 2015 specifying that when a company that retains A as its stock affairs agent while its supervisor retains B as its stock affairs agent for a particular shareholders meeting, the person who duly calls that shareholders meeting may request either A or B to provide the company's latest shareholders' roster.
Reported by: Kang-Shen Liu
Corporate governance
10. Amendment to "Sample Template of XXX Co., Ltd. Charter of Nominating Committee for Directors and Supervisors" by TWSE
To enhance the function of nominating committees, the Taiwan Securities Exchange Corporation (TWSE), with reference to international rules, amended the "Sample Template of XXX Co., Ltd. Charter of Nominating Committee for Directors and Supervisors" (Sample) on January 26, 2015. The composition, membership, tenure, authority, and meeting rules of such committees; resources to be provided by the company upon exercise of authority; together with information disclosure etc were specified. The TWSE encourages companies to establish a nominating committee and adopt the Sample.
Reported by: Kang-Shen Liu / Angela Lin
Securities Firms
11. Amendment to scope of securities firms accepting orders to trade foreign securities by FSC
The Financial Supervisory Commission (FSC) issued a ruling on January 29, 2015 (Ref. no.: Jin-Guan-Zheng-Quan-Zi-1030048726) to broaden the scope of foreign securities which can be traded by professional investors through securities firms' consigned trading business. As a result, where the principles are professional investors, they can trade foreign securities that are not traded in secondary markets.
Reported by: Jeffrey Liu / Angela Lin
12. Amendment to ''Directions for Conduct of Wealth Management Business by Securities Firms''
On January 21, 2015, the Financial Supervisory Commission ("FSC") issued a ruling (Ref. No . Jin-Guan-Yin- Quan -Zi- 10300522231) to announce the amendment of ''Directions for the Conduct of Wealth Management Business by Securities Firms ''. The major changes are as below:
(1) Reducing the regulatory capital adequacy ratio for applying to conduct the business of performing asset allocation on behalf of a customer by means of a trust to 150 percent. Securities firms must meet the threshold half year prior to making a application. Securities firms must also stop processing the business if the regulatory capital adequacy ratio fails to reach the threshold for two consecutive months.
(2) Requiring securities firms to establish dedicated departments when conducting collective management business for which a principal who involves discretionary investment business designates the scope or method of use.
(3) Specifying application procedures for securities firms conducting the business of collective management for which a principal who involves discretionary investment business designates the scope or method of use. According to the amendment, securities firms must submit the application to the Trust Association of the ROC, which shall review and forward a report to the FSC for its approval.
Reported by: Jeffrey Liu / Caitlyn Kao
13. Amendments to certain rulings relating to Article 15, Subparagraph 3 of ''Securities and Exchange Act''
On January 21, 2015, the Financial Supervisory Commission ("FSC") issued two rulings (Ref. No . Jin-Guan-Yin- Quan -Zi- 10300522232 & Jin-Guan-Yin- Quan -Zi- 10300522233) to announce amendments to rulings relating to Article 15, Subparagraph 3 of the ''Securities and Exchange Act''. The amendments are as below:
(1) Reducing capital adequacy ratio ("CAR") requirements for applying to conduct agency business for utilizing balances of clients' trading of securities, as well as brokerage business for investing clients' funds after settlement to money market funds to 150%. Also clarifying that securities firms shall meet such requirements for half a year prior to the application.
(2) Adding that where the CAR of a securities firm engaging in the above-mentioned agency business is less than 150% for two consecutive months after approval to conduct such business has been obtained, the securities firm shall suspend the subject business until (1) the CAR is in compliance with the regulatory requirements for three consecutive months; and (2) approval for resumption of business has been granted by the Taiwan Stock Exchange.
Reported by: Jeffrey Liu / Caitlyn Kao
14. Amendments to Ruling relating to Article 45, Paragraph 1 of ''Securities and Exchange Act''
On January 21, 2015, the Financial Supervisory Commission ("FSC") issued a ruling (Ref. No . Jin-Guan-Yin- Quan -Zi- 10300522234) to reduce the capital adequacy ratio requirement for a securities firm acting as an originator under the Financial Asset Securitization Act to 150%.
Reported by: Jeffrey Liu / Caitlyn Kao
Listed companies
15. Amendments to "Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings" and "Operating Rules of Taiwan Stock Exchange Corporation"
The TWSE amended the "Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings" and the "Operating Rules of the Taiwan Stock Exchange Corporation" on 26 January 2015. The amendment specifies that when companies in the food industry (including holding companies, foreign issuers and those generating 50% or more of their business revenue from food and drink in the latest fiscal year) apply to list their stocks, the following requirements must be met:
(1) A laboratory for self-testing.
(2) When testing of product materials, semi-finished products or finished products is outsourced to a third party, such third parties must be an institution or laboratory certified or accredited by the Ministry of Health and Welfare (MOHW), Taiwan Accreditation Foundation or other institutions authorized by the MOHW.
(3) An opinion issued by an independent expert on reasonableness of food safety monitoring plans, testing schedules and testing items etc. is necessary.
In the case of holding companies, at least one subsidiary must satisfy the above requirements.
Reported by: Kang-Shen Liu / Angela Lin
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2015-02-10
