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Electronic Stored Value Cards
1. Act Governing Issuance of Electronic Stored Value Cards
On April 23, 2015, the Executive Yuan approved the draft amendment to the Act Governing Issuance of Electronic Stored Value Cards, and will send the same to the Legislative Yuan for review. We summarize the key points below:
(1) Use for multiple payment purposes of the electronic stored value cards excludes that the institution uses the Internet or a payment platform as an intermediary to receive the stored amount;
(2) When the registered electronic stored value cards meet certain conditions, the card holder may transfer his/her stored amount into to the electronic payment account under his/her name;
(3) The issuer of electronic stored value cards may concurrently engage in the business of the electronic payment institution, and vice versa;
(4) The interests or other benefits derived from the amount received by the issuer shall be set aside in certain ratio for use as feedback to the card holder or other usages stipulated by the competent authority;
(5) When the bank or electronic payment institution concurrently engages in the business of electronic stored value cards, certain articles are not applicable; and
(6) The issuer and the institution who concurrently engages in the business of electronic stored value cards shall join the self-regulatory organizations.
Reported by:Stacy Lo / Mark Chen
Labor
2. Amendments to the Labor Standards Act
The Executive Yuan passed the draft amendment to the Labor Standards Act ("Amendment") on April 23, 2015, which will be forwarded to the Legislative Yuan for review. The main purpose of the Amendment is to shorten the statutory normal working hours and initiate two days off a week. We summarize below:
(1) The employer shall provide the calculation method for each wage line upon payment.
(2) The statutory working hours will be reduced to 40 hours per week; and employers must preserve the attendance records for 5 years, an increase over the current number. In addition, the employer cannot reduce an employee's wage due to a reduction in working hours.
(3) Possible overtime hours will be increased to 54 per month.
(4) The time between shifts for an employee performing shift work shall be no less than 11 hours.
(5) The changes to the exception of consecutive working hours and recess time for an employee are also forthcoming.
(6) If the employer violates relevant provisions of the Labor Standards Act by making an employee work on his/her regular day off, the employer shall pay the wages due and grant compensatory leave to the employee.
(7) To provide the standard of compensatory leave for overtime work, on days off or paid leave, and the deadline for providing compensatory leave.
(8) To increase the punishment for employers' violating relevant provisions regarding working hours.
Reported by:David Tsai / Robin Huang
3. To Increase Tax Free Amount of Meal Allowance
On April 20, 2015, National Taxation Bureau of Taipei, Ministry of Finance issued a press release, stating that Ministry of Finance issued a ruling to provide that from January 1, 2015, the limitation of employee's meal allowance that can be exempted from taxes will be increased to NTD2,400. It also reminds that the profit-seeking enterprise shall not reduce wages or use to upgrade the meal by circumventing the ruling. If any violation occurs, the National Taxation Bureau will certify and eliminate such amount. For the profit-seeking enterprises which are unable to increase wages and meal expenses in a timely manner, the expenses of each month afterward may be recognized retrospectively.
Reported by:David Tsai / Robin Huang
SITE/SICE
4. Report Requirements for Significant Accidental Event
On April 20, 2015, the Securities Investment Trust and Consulting Association forwarded a ruling issued by the Financial Supervisory Commission ("FSC") on April 14, 2015 (Ref. No. Jin-Guan-Zheng-Tou-Zi-10400134021) to require securities investment trust enterprises and securities investment consulting enterprises to report to the Securities and Future Bureau of the FSC where any significant accidental event occurs. The significant accidental events include man-made or natural disasters, fraud resulting from poor internal controls or significant deficiencies in the operation, media reports which might affect the reputation or the operation of the enterprises, suspicions of any dishonesty or improper action engaged in or involved in by the enterprise or its personnel, or other significant events.
Reported by:Jeffrey Liu / Judy Tai
Securities Investment
5. Amendment to the ruling relating to Paragraph 2, Article 4 of the ''Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals''
On April 22, 2015, the FSC issued a ruling to subject financial bonds and corporate bonds (and other positions) to a ceiling of 30% of the total funds remitted by overseas Chinese persons and foreigners. The FSC also stated overseas Chinese persons and foreigners are entitled to keep the position as of April 22, 2015 until the maturity date even if the sum of the financial bonds and corporate bonds plus other holding are greater than the 30% threshold. However, under this circumstance new holdings are banned.
Reported by:Kang-Shen Liu / Caitlyn Kao
Finance
6. Banks to invest in securities through discretionary investment mandate
The FSC announced a ruling on April 23, 2015, which provides that when a bank invests in securities through discretionary investment mandate, the institution being engaged shall be limited to securities investment consulting enterprises ("SICE"), securities investment trust enterprises ("SITE") and trust enterprises which have been approved by the FSC to conduct discretionary investment business and the fund assets and discretionary assets managed by them shall be no less than NTD$ 1 billion, and the bank shall follow the regulations below:
(1) When choosing the institution to be engaged, the bank shall consider risk diversification, management performance, conflict of interest and other parameters and shall set out internal operational guidelines, which shall be submitted to the board of directors for approval before taking effect. In addition, the internal operational guidelines and the list of such institutions shall be filed to the FSC for record, and their management performance shall be reported to the board of directors at least on a quarterly basis.
(2) The internal audit unit of the bank shall take the above operation as a part of the annual audit plan and prepare the audit report accordingly.
(3) The aggregate amount of the securities investment of the bank shall be calculated together with the amounts invested in securities by the institutions being engaged and such investment shall comply with the Directions Governing Limitations on Types and Amounts of the Securities in which a Commercial Bank May Invest.
(4) If a bank engages a SICE, SITE or a trust enterprise which belongs to the same holding company of the bank to conduct discretionary trading, such engagement shall be handled in accordance with Article 45 of the Financial Holding Company Act.
Reported by:Stacy Lo / Angela Lin
7. Regulations Governing Domestic Branches of Financial Institutions
On April 30, 2015, the FSC announced an amendment to the Regulations Governing Domestic Branches of Financial Institutions. The main point is that any financial institution applying for establishment of a branch that is good for urban/rural development must apply in May of each year. A financial institution which has been approved to establish such a branch can only submit a new application after completion of the establishment and starting the business.
In addition, the FSC's press release dated April 28, 2015 explains the relevant measures below:
(1) The financial institution which supports the government's financial supervisory policy by assisting in disposal of distressed financial institutions and the location applied for is good for the balance of urban and rural development, and banks or credit cooperatives that meet certain conditions of financial soundness may apply to establish a branch.
(2) "The location that is good for the balance of urban and rural development" refers to the zone that has no domestic banks or credit cooperatives and whose average population served by each financial institution (including the farmers' and fishermen's associations and post office) is higher than the national average.
(3) When the FSC review the application, "the loans for innovations of small and medium enterprises" and "hiring those with disabilities in accordance with relevant laws" will be two of the rating items.
Reported by:Stacy Lo / Mark Chen
8. Proposed amendments to the Regulations Governing Foreign Exchange Business of Banking Enterprises
The Central Bank announced draft amendments to the Regulations Governing Foreign Exchange Business of Banking Enterprises ("Draft") on April 21, 2015. The Draft aims to consolidate relevant rulings, simplify the application procedures of relevant businesses, and expand the scope of foreign exchange derivatives products. We summarize the key points below:
(1) To permit agricultural banks to apply for acting as a designated foreign exchange bank and conducting foreign exchange business.
(2) To specify the qualifications for the personnel handling the business of foreign exchange derivatives products.
(3) To simplify the application procedures for the foreign exchange (including RMB) derivatives products, electronic trading business, handling foreign exchange business during non-business hours, and setting up of foreign currency automatic teller machines.
(4) To permit the designated foreign exchange banks to issue negotiable certificates of deposit in foreign currencies.
(5) To permit designated foreign exchange banks concurrently conducting the business of management and utilization of collective investment trust funds accounts in foreign currencies.
(6) To expand the scope of the foreign exchange derivatives products:
a. To permit foreign exchange derivatives products to be promoted or introduced by the branches designated by the head office.
b. To expand the scope of counterparties of the non-delivery NTD foreign exchange forward business.
c. To relax the regulations on conducting of foreign currency credit derivatives.
d. To apply the same regulations on the foreign currency derivatives products denominated in RMB and to expand their scope.
Reported by: Stacy Lo / Angela Lin
Real Property Right
9. The Ministry of the Interior pre-announced the drafted amendments to "Regulations on Permit for the Citizens of Mainland China to Acquire, Create or Transfer Real Property Rights in Taiwan"
The Ministry of Interior pre-announced the amendments to "Regulations on Permit for the Citizens of Mainland China to Acquire, Create or Transfer Real Property Rights in Taiwan" ("Draft Amendments") on April 28, 2015, which we summarize below:
(1) Citizens of Mainland China cannot acquire those types of land set out in Paragraph 1, Article 14 of the Land Act. (Article 2 of the Draft Amendments)
(2) Citizens of Mainland China can only acquire one premises, which however cannot be leased or serve any non-residential purposes. Within five years from title registration, however, any further transfer or pre-registration of transfer of real property rights is banned. (Article 7 of the Draft Amendments)
(3) The financial institutions of Mainland China registered in Taiwan may apply to acquire, create or transfer real property rights to extend loan facilities. Within five years from title registration, however, any further transfer or pre-registration of transfer of real property rights is banned. ( Article 8 of the Draft Amendments)
Reported by:Kang-Shen Liu / Angela Chang
Insurance
10. Draft Amendments to the Regulations Governing Offshore Insurance Branches
On April 29, 2015, the Central Bank formally announced the amendments to the ''Regulations Governing the Foreign Exchange Business of Insurance Companies''. Please refer to section eleven of Issue No. 222 of the Lexgroup Newsletter.
(1) To provide the qualifications of offshore insurance unit ("OIU"), including the capital adequacy ratio, no discipline resulting from the serious violation in the 3 years period prior to the application date, among others. In addition, the OIU shall allocate working capital for its operation at the minimum amount of US$2 million;
(2) To provide the requirements regarding the financial control of OIU, including the internal control and audit system, the capital adequacy ratio, reserve funds, and restrictions on funds usage;
(3) To provide the filing requirements of OIU products. Except for parts of non-life insurance products, OIU is required to make post report with respect to the products to the FSC or other institutions designated by the FSC; and
Reported by:Stacy Lo / Judy Tai
Securities Firm
11. Amendments to Certain Regulations of Taiwan Securities Association
On April 17, 2015, Taiwan Securities Association (''TSA'') announced amendments to "Taiwan Securities Association Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities”, “Operational Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities” and “Regulations Governing Securities Firms' Practice on Recommending Principals to Buy and Sell Foreign Securities”. We summarize the major points below:
(1) Taiwan Securities Association Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities:
a. To comply with Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities and the FSC ruling (Ref. No. Jin-Guan-Yin- Quan -Zi-1030022701);
b. To specify where a securities firm only accepts orders from corporate clients to trade foreign securities, its internal person may, after obtaining consent from the securities firm, be exempted from the restriction on opening accounts with the securities firm he/she belongs to for trading; and
c. To provide that an internal person of a securities firm can be exempted from certain restrictions (e.g. check of conflict of interest or whether such transaction involves unpublished information) when trading offshore funds.
(2) Operational Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities:
To provide that a securities firm can only trade bonds and securitized products on foreign OTC markets with counterparties after reporting to the TSA's platform for consigned trading of foreign securities.
(3) Regulations Governing Securities Firms' Practice on Recommending Principals to Buy and Sell Foreign Securities:
To specify that it is not required to provide summary Chinese translations of materials or research reports provided to specific investors where (1) the investors are professional institutional investors or foreigner persons; or (2) the securities firm has obtained the written consent from professional investors.
Reported by:Jeffrey Liu / Caitlyn Kao
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2015-05-07
