11.    Rulings for Applicable Scope of Mandatory Establishment of Independent Directors and Audit Committee

 

On 19 December 2018, the FSC issued rulings for the scope of entities that are subject to establishment of independent directors and audit committee. We summarize the key points below: 

(1)  Mandatory Establishment of Independent Directors 

(a)  According to Article 14-2 of the Securities and Exchange Act (SEA), a financial holding company, bank,  bill finance company, insurance company, securities investment trust enterprise, and consolidated securities firm, which is a public company, and a listed futures merchant and listed non-financial institution, shall establish independent director(s) in their article of incorporation.  A non-financial institution listed on the emerging stock market shall also establish independent director(s) in their article of incorporation from 1 January 2020.  The number of independent directors shall be no less than two or one-fifth of the directors. 

(b)  According to Article 181-2 of the SEA, a company listed on the merging stock market shall establish  Independent director(s) after 1 January 2020, provided that the requirement will not apply to companies whose terms of office of current directors and supervisors will not become due in 2020 until expiration of the same. 

(2)  Mandatory Establishment of Audit Committee 

(a)  According to Article 14-4 of the SEA, a financial holding company, bank, bill finance company, insurance  company, securities investment trust enterprise, and consolidated securities firm, which is a public company, and a listed futures merchant and a listed non-financial institution with paid-in capital of NTD 2 billion or more, shall establish an audit committee to replace supervisor(s) from 1 January 2020, provided that a financial institution wholly owned by a financial holding company may either establish an audit committee or have supervisor(s). 

(b)  According to Article 181-2 of the SEA, for those directors and supervisors whose term of office have not due, the timings for the application are as follow: 

(A) For a listed non-financial institution, with paid-in capital of NTD 2 billion or more but less than NTD 10 billion, it shall have established an audit committee before the end of 2019. 

(B) For a listed non-financial institution, with paid-in capital less than NTD 2 billion, it shall have established an audit committee to replace supervisor(s) from 1 January 2020, provided that the requirement will not apply to companies whose terms of office of current directors and supervisors will not become due in 2020 until expiration of the same. 

Reported by: Mike Lu / Will Chen

 

Insurance

 

12.    Amendment to Insurance Act

 

On 25 December 2018, the Legislative Yuan passed its three readings of the amendment to Article 165 of the Insurance Act.  The amendment provides that where the insurance agency company or insurance broker company is a public issued company, it shall establish internal control and audit systems as well as business solicitation systems and procedures.

 Reported by: David Tsai / Aaron Lai

 

Insurance

 

13.    Draft Amendment to Insurance Act

 

On 20 December 2018, the FSC announced the draft amendment to the Insurance Act for public consultation.  We summarize the key points below:

 

(1)  To add that the proposer has insurable interest on the life or body of the spouse and the direct blood relatives, and the requirement of the insurable interest is exempted for the group insurance.

 

(2)  To clarify that the written agreement and the delivery of insurance premiums is not the requirements for the conclusion of the insurance contract, the current Article 21 is deleted and provides that the insurance contract is concluded when the parties have reciprocally declared their concordant intent.

 

(3)  To amend the definition of the double insurance and malicious double insurance.  To add that each insurer of the bona fide double insurance shall be jointly and severally liable for the payment of the insurance amount within the scope of the agreed insurance amount.  To add that the proposer may terminate the subsequent insurance contracts.  To add the provision of return or reduction of the insurance premiums.

 

(4)  To add that the insurer may apply with the public or non-public organization holding the relevant information for checking the contact information of the beneficiary.

 

(5)  To add that after the insurance contract is concluded, the insurer shall deliver the contract to the proposer for him/her to claim the rights of the contract.

 

(6)  To add that the proposer of the personal life insurance under which the term exceeding two years may revoke the contract.

 

(7)  To amend the inform obligation:

 

(a)  The inquiries submitted by the insurer shall be specific and clear.  The insurer shall inform the proposerand the insured of the legal effect of breaching the obligation of explanation.

 

(b)  If the matters are known to the insurer or the insurer should have known under usual attention or cannotdeny knowing, the proposer or the insured shall not be obliged to explain.

 

(c)   When the proposer is different from the insured, the insured shall also perform the obligation of informing the increasing risk and the obligation of true explanation.

 

(8)  To add that the competent authority may order the manager or staff be suspended for a certain period of time or order the insurance business to revoke the registration of the insurance salesman.

 

(9)  To add that the competent authority may designate an institution to conduct the data processing and exchange business of the insurance business's underwriting, claims, and condition changes.  The scope of the information allowed to be collected, processed or utilized by the designated institution is provided. 

Reported by: David Tsai / Aaron Lai

 

Broadcasting

 

14.    Radio and Television Act

 

On 17 December 2018, the Executive Yuan passed the draft amendments to the Radio and Television Act.  We summarize it below：

 

(1)  The television enterprises or radio enterprises specified by the competent authority shall implement self-discipline mechanism.  The news reports which violate fact-finding principles and jeopardize public interests shall be subject to the investigation by the self-discipline mechanism before being forwarded to the competent authority for review.

 

(2)  Punishments against the violators of the above requirement are included. 

Reported by: Kangshen Liu

 

Act Governing Food Safety and Sanitation

 

115.    Draft Amendment to the Act Governing Food Safety and Sanitation

 

The Legal Affairs Committee, Executive Yuan announced the draft amendment to the Act Governing Food Safety and Sanitation, which was submitted to the Legislative Yuan on 17 December 2018.  The draft adds Article 46-1 to deter false news.  It provides that anyone spreading rumors or untrue messages about food safety, thus causing damage to the public or other people shall be subject to imprisonment for no more than three (3) years, detention or a fine no more than NTD 1 million. 

Reported by: Kangshen Liu / Chenchi Wang

 

Statute for Industrial Innovation

 

16.    Draft Amendment to Article 10-1 of Statute of Industrial Innovation

 

On 20 December 2018, the Executive Yuan passed the draft amendment to Article 10-1 of the Statute of Industrial Innovation, which provides that a company or a limited partnership may get tax credit to deduct tax payable if it invests in smart machinery and relevant hardware, software, technology or technical service related to the fifth generation mobile network. 

Reported by: Kangshen Liu / Paul Hsu

 

Urban Renewal

 

17.    Amendment to Urban Renewal Act

 

On 28 December 2018, the Legislative Yuan passed three readings of the amendment to the Urban Renewal Act.  We summarize the amendments below. 

(1)  The Act specifies additional building bulk as award and expands the scope to enjoy tax benefits. 

(2)  The Act simplifies the process of urban renewal if all relevant residents agree on the urban renewal plans. 

(3)  The competent authority may soon designate dangerous buildings as renewal area. 

(4)  The Act adds a new chapter empowering the government to drive urban renewal plans. 

Reported by: Kangshen Liu / Albert Chia

 

Company Act

 

18.    Shareholders Having No Voting Right May Exercise the Calling Right of A Special Meeting.

 

On 26 November 2018, the Ministry of Economic Affair (MOEA) issued a ruling that the right to call a special meeting under Articles 173 and 173-1 of the Company Act is also applicable to shareholders without a voting right. That is, share without a voting right may also be counted for the purpose of exercising the right to call a shareholders’ meeting. However, according to Article 180 of the Company Act, the shares held without a voting right shall not be counted in the total number of issued shares for the resolution in the shareholders’ meeting. 

Reported by: Mike Lu / Ester Liu

 

Patent Act

 

19.    Draft Amendments to Patent Act

 

On 27 December 2018, the Executive Yuan passed the draft amendments to the Patent Act (Act), the key points of which includes:

 

(1)  Divisional Applications 

The current Act allows for a divisional application for inventions be filed within thirty (30) days after the date on which an approval decision for the original patent application in the first examination stage is served.  The Act proposes to relax the requirements to provide that a divisional application may be filed within three (3) months after the date on which an approval decision in either the first examination stage or the reexamination stage for the original patent application; and that the same rules and time limits for filing a divisional application for inventions shall also apply to patent applications of utility models and designs. 

(2)  Invalidation procedures 

The current Act provides that a requester of invalidation action may submit invalidation reasons or evidence within one (1) month after the date of filing the said action.  The Act proposes to extend the time limit from one (1) month to three (3) months and on the other hand restrict that the reasons or evidence submitted after the time limit shall not be taken into consideration.  The Act also proposes to specify the period of time during which the patentee may file a request for post-grant amendments. 

(3)  Post-grant amendments of utility model patent 

The Act proposes to specify the circumstances under which a request for post-grant amendments of utility model patent can be filed including those where an invalidation action or a technical evaluation report on said utility model patent is requested and still under examination, or an litigation case is involved, and provide that the specific patent agent shall conduct substantive examination on such post-grant amendments instead of formality examination under the current practice. 

(4)  Term of protection for design patents 

The term of protection for design patents is to be extended from the current 12 years to 15 years. 

(5)  Preservation of patent files

 

In order to solve the problem of file storage space, the Act proposes to change the current provisions of permanently keeping patent files to be only applicable to those with preservation value; for others, 30 years or less for storage. 

Reported by: Jolene Wang / Linda Cheng

 

20.  Amendments to Patent Examination Guidelines

 

The MOEA announced the amendments to the Patent Examination Guidelines, Part II, Chapter 14, Biology-Related Inventions on 7 December 2018 and the amendments to the Patent Examination Guidelines, Part II, Chapter 4, Unity of Invention on 17 December 2018, respectively, both of which took effective as of 1 January 2019. 

Reported by: Jolene Wang / Linda Cheng