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Explanation of Grand Justices
1. Explanation (Ref. No.: Shi-Zi No. 732) Made by the Grand Justices Regarding Land Expropriation of Area Adjacent to the MRT System
The Grand Justices of the Judicial Yuan issued an explanation (Ref. No.: Shi-Zi No. 732) on September 25, 2015, with respect to the land expropriation of areas adjacent to the MRT system, which relates to the following three provisions:
(1)Paragraph 4 of Article 7 of the Mass Rapid Transit Act dated May 30, 2001, provided that “The land required for ... the development of areas adjacent to the mass rapid transit system ... the competent authority may expropriate such land in accordance with applicable laws.”;
(2)Paragraph 3 of Article 7 of the Mass Rapid Transit Act dated July 1, 1988, provided that “the land required for the joint development … may be expropriated.” ; and
(3)Paragraph 1 of Article 9 of Regulations Governing the Development of Land of MRT System provided that “the acquisition of land required for the joint development …, the competent authority may expropriate such land in accordance with applicable laws.”.
The Grand Justices hold that the expropriation shall be used for the foundation of the transportation enterprise prescribed by the laws, and the range of the land expropriation shall be necessary for the foundation of said enterprise. The aforementioned provisions cause particular sacrifices for land owners and expropriates the land unnecessary for the development of the enterprise, neither of which is necessary for achieving the purpose of efficient use of land resources, for regional development, or for the benefit of national construction, nor the means of minimum infringement. The provisions are not in accordance with the Principle of Proportionality of Article 23 of the R.O.C. Constitution and also go against the rationale of the protection of people’s property right and freedom of residence. Said provisions no longer apply since the public announcement of this explanation.
Reported by:David Tsai / Robin Huang
Finance
2. Banks, Financial Holding Companies and Insurance Companies May Invest in Financial Technology Enterprises
The Financial Supervisory Commission (the "FSC") issued a ruling on September 16, 2015, stating that financial technology enterprises may be invested in by banks and financial holding companies and fall within the scope of "other enterprises determined by the competent authority as financial related" as specified in Paragraph 4, Article 74 of the Banking Act and Sub-paragraph 11, Paragraph 2, Article 36 of the Financial Holding Company Act. The "financial technology enterprises" include enterprises engaging in the following services:
(1)Use of information or Internet technology to conduct data collection, processing, analysis or supplying which assists the development of financial institutions' business (e.g. big data, cloud technology, machine learning, etc.);
(2)Use of information or Internet technology to improve the efficiency or safety of financial services or operation process (e.g. mobile payments, auto-investment advisors, blockchain technology, bio-identification, etc.); or
(3)Other digital or creative financial services designed or developed based on information or technology.
In addition, the major business of the financial technology enterprises invested in by banks or financial holding companies shall not be manufacturing, selling or leasing of hardware. Their annual business costs or annual business income contributed from financial enterprises (including financial holding companies, banks, securities firms, insurance companies and their subsidiaries) and financial services shall reach 51% of the total business costs or total business income of the financial technology enterprise, provided that the above do not apply to financial technology enterprises for which the banks and financial holding companies have no control or material impact (such as shareholdings below 20%).
The FSC also issued a press release proposing the draft "Scope of the Financial Technology Enterprises under Paragraph 4, Article 146 of the Insurance Act" on September 25, 2015, which allows insurance companies to invest in financial technology enterprises, provided that the above requirement including the income percentage is followed.
Reported by:Stacy Lo / Angela Lin
3. Amendment to Article 53 of the Financial Holding Company Act
The FSC announced the amendment to Paragraph 3, Article 53 of the Financial Holding Company Act on September 30, 2015, which provides that if the accumulated loss of a financial holding company has exceeded one-third of its paid-in capital, the competent authority shall request that the company supplement such capital deficits within a certain period.
Reported by:Stacy Lo / Angela Lin
Fair Trade Act
4. Draft Regulations Governing the Distribution of Rewards for the Reporting of Illegal Concerted Actions
The Fair Trade Commission (the "FTC") issued draft Regulations Governing the Distribution of Rewards for the Reporting of Illegal Concerted Actions (the "Regulations") on September 14, 2015. The Regulations are authorized by the newly provided Article 47-1 of the Fair Trade Act (the "FTA"), according to which the FTC may reward the reporter of illegal concerted actions with anti-trust funds. The Regulations apply to the concerted actions which are unknown to the FTC when reported and the FTC issues fines for those actions after investigation. The amount of rewards is 3% of the aggregate amount of fine or NT$5,000,000, whichever is lower.
Reported by:Kang-Shen Liu / Robin Huang
5. The Amendments to the Principles Governing the Fair Trade Commission’s Handling of Applications for Joint Procurement of Petrol by Domestic Individual Gas Stations
The FTC issued the Amended Principles Governing the FTC’s Handling of Applications for Joint Procurement of Petrol by Domestic Individual Gas Stations on September 29, 2015. Other than the changes to the articles referenced therein in line with the amendments to the FTA this year, the applicants are required to provide "each quarter's price and production and sales volume of the product or service in relation to the concerted action over the past three years" (previously, "information for two years" is required).
Reported by:Kang-Shen Liu / Robin Huang
Business Entity Accounting
6. Definition of the Generally Accepted Accounting Principles Mentioned in Article 2 of the Regulation on Business Entity Accounting Handling
The Ministry of Economic Affairs issued a ruling on September 16, 2015, stating that the generally accepted accounting principles mentioned in Article 2 of the Regulation on Business Entity Accounting Handling refer to "the statements of entity's accounting standards and interpretations developed by the Accounting Research and Development Foundation", which will come into force from January 1, 2016, while business entities may choose to adopt them from the first date of the fiscal year of 2015. Besides, business entities may also choose to adopt "International Financial Reporting Standards, International Accounting Standards and interpretations recognized by the Financial Supervisory Commission" based on their business needs.
Reported by:Kang-Shen Liu / Angela Lin
Fair Trade Act
7. Amendment to Fair Trade Commission Guidelines on Business Conduct of Financial Industries
The FTC amended and renamed the "Fair Trade Commission Guidelines on Business Conduct of Financial Industries" to "Fair Trade Commission Guidelines on Financial Industries" on September 25, 2015. We summarize the key points below:
(1)The FTC may adopt "cluster markets" concept, which means all products or services with remarkable substitution features or the products or services which are customarily provided or sold in a bundle, to define relevant market in financial business;
(2)The factors that the FTC may take into consideration when reviewing combination applications by financial industry are specified;
(3)Several exemplary types of illegal concerted actions are provided, such as (1) joint pricing, (2) restrictions on trading terms and conditions, (3) market division, and (4) bid rigging;
(4)Several types of actions which will not be treated as concerted actions are provided as well, such as a syndicated loan plan to satisfy the borrower's needs; and
(5)The FTA is not applicable to several types of activities, such as the overly high lending rates, fraudulent credit card transactions, high interest rates for loans extended under credit card/cash card or leakage of personal data.
Reported by:Kang-Shen Liu / Mark Chen
SITE Fund
8. Allowance for the Fund Manager of a Fund of Fund ("FoF") to Manage Other FoFs
On September 23, 2015, the FSC issued a ruling (Ref. No.: Jin-Guan-Zheng-Tou-Zi-1040035691) to amend the rule in connection with the number, quota and qualifications of the securities investment trust funds which the fund managers can manage. The amendment is to allow the fund manager of a FoF to concurrently manage other FoFs.
Reported by:Jeffrey Liu / Judy Tai
Consumer Protection Act
9. Draft Amendment to "Enforcement Rules of Consumer Protection Law" and "Criteria for Exceptions to Rescission Right under Mail Order Purchase"
The Executive Yuan announced a draft amendment to "Enforcement Rules of Consumer Protection Law" on September 18, 2015. The main amendment is to revise the definition of advertisement, which refers to the communications by certain methods that allow specific and nonspecific persons to know the content communicated.
In addition, the Executive Yuan announced a draft to "Criteria for Exceptions to Rescission Right" under Mail Order Purchase on September 18, 2015, to provide that products or services under certain circumstances shall not be subject to the restriction that the consumer of a mail order purchase may rescind the contract unconditionally within 7 days, including perishable goods, customized delivery of audio and video products, computer software, digital content, applications or online services with certain criteria.
Reported by:David Tsai / Mark Chen
Insurance
10. Amendments to the "Standards and Guidelines for Immediate Usage and Derived Benefit for Insurance Enterprises Conducting Real-Estate Investments"
The FSC announced amendments to the Standards and Guidelines for Immediate Usage and Derived Benefit for Insurance Enterprises Conducting Real-Estate Investments on September 24, 2015, which supplement that the "acquisition date" refers to the registration date for transferring ownership or the registration date for surface rights created.
Reported by:David Tsai / Angela Chang
Tax
11. Amendment to the Rules Governing the Applications for Exemption from Income Tax on Royalty and Technical Service Fees Collected by Foreign Profit-Seeking Enterprises from Manufacturing Industries, Technical Service Industries and Power-Generating Industries
The Ministry of Finance and Ministry of Economic Affairs announced the amendment to the "Rules Governing the Applications for Exemption from Income Tax on Royalty and Technical Service Fees Collected by Foreign Profit-Seeking Enterprises from Manufacturing Industries, Technical Service Industries and Power-Generating Industries" on September 25, 2015. We summarize the key points below:
(1)A foreign profit-seeking enterprise which applies for income tax exemption for patents, trademarks and copyrights of computer programs, shall submit the application during the effective period of the contact; and
(2)To apply for tax exemption to the royalty or technical service fees paid by a profit-seeking enterprise to a foreign profit-seeking enterprise, the approved effective period will be limited to 3 years in principle.
Reported by:Stacy Lo / Mark Chen
SICE
12. The Securities Investment Consulting Enterprises ("SICE") may Provide Insurance Planning Service
On September 25, 2015, the Securities Investment Trust and Consulting Association ("SITCA") forwarded the ruling issued by the FSC dated September 17, 2015 (Ref. No.: Jin-Guan-Zheng-Tou-Zi-1040027267), stating that a SICE is permitted to provide insurance planning services to its clients and such service is not subject to additional approval from the FSC. However, the SICE shall not be involved in activities such as (1) acting for an illegal insurance enterprise as its agent or broker or providing solicitation services for such enterprises; or (2) engaging in the businesses of insurance agents, insurance brokers, insurance notaries, or solicitation without the appropriate licenses. The SITCA also provides the template of internal management system in connection with the prescribed business for SICE's reference.
Reported by:Jeffrey Liu / Judy Tai
Securities Firm
13. Draft Amendments to ''Regulations Governing Offshore Securities Units''
On September 14, 2015, the FSC issued a ruling (Ref. No. Jin-Guan-Zheng-Quan-Zi-1040037950) to announce the draft amendments to Articles 2 and 3 of the "Regulations Governing Offshore Securities Units ". The major points are (i) to amend the deadline for the reporting to the FSC significant events from five days to five business days; and (2) to add a provision to specifically emphasize that for natural persons, juristic persons, government agencies, or financial institutions outside the territory of Republic of China, offshore securities units shall conduct business in accordance with relevant regulations provided by the competent authorities.
Reported by:Jeffrey Liu / Caitlyn Kao
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2015-10-13
