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Criminal Procedural Code
1. Amendment to Criminal Code
On 6 December 2019, the Legislation Yuan passed the amendment to Articles 251 and 313 of the Criminal Code (Code). We summarize below.
(1) Paragraph 1 of Article 251 of the Code adds the third sub-paragraph that a person intends to raise the price and stock the necessities defined by Executive Yuan shall be considered as crime under this Article.
(2) The fine of the crime of defaming other's credit stipulated under Article 313 of the Code is raised from NT$30,000 to NT$200,000.
(3) Article 313 of the Code adds the second paragraph that the punishment of defaming other's credit through broadcasting, electronic communication, internet or other spreading vehicle shall increase up to 1/2.
Reported by: David Tsai / Alex Li
Intellectual Property
2. Draft Amendment to Trademark Act
The Ministry of Economic Affairs (MOEA) announced on 7 January 2020 the draft amendment to Trademark Act for public comment after two consultation meetings and one public hearing held by Taiwan Intellectual Property Office (TIPO). In the latest draft, a total of 14 articles were amended and two new articles were added. We summarize below:
(1) To specify the qualifications of trademark agents other than attorneys at law or agents who have been licensed to practice trademark matters under the laws of Taiwan, and to set the basis for the competent authorities to establish the rules for registration requirements and administration for trademark agents;
(2) To add the acceleration mechanism for examination of trademark applications, applicable to the applications for trademark registration only;
(3) To move the content “where a final judgment of the court on the infringement of copyright, patent right or other right has been rendered” regarding the provision of the reasons to determine whether to allow an application for registration or not, as the grounds of trademark invalidation filed by an interested party; and such is unbound by the five-year peremption period; and
(4) To retain the provisions on “opposition” system although TIPO proposed to replace the opposition system with the adversary system for trademark disputes in the future.
Reported by: Jolene Wang / Huaili Lu
3. Amendment to Enforcement Rule of Plant Variety and Plant Seed Act
The Council of Agriculture announced on 6 January 2020 the amendment to Articles 22-1 and 25 of the Enforcement Rule of Plant Variety and Plant Seed Act (hereinafter, the Rule). We summarize below:
(1) The amendment to Article 22-1 stipulates that in respect to the transgenic plant on which the results of the field trial has been approval after examination, the competent authority should take national interests, industrial policy, and overall developments into consideration to determine whether to grant the application for the use.
(2) The amendment to Article 25 stipulates that the above mentioned provisions become effective as of the date of the announcement.
Reported by: Jolene Wang / Huaili Lu
Taxation
4. Amendment to Enforcement Rules for Statute of Industrial Innovation
On 7 January 2020, the MOEA announced an amendment to the “Enforcement Rules for Statute of Industrial Innovation” (Enforcement Rules) which provides that, for domestic individual, company or limited partnership intending to apply for income tax deferral on shares, the issuing company shall now submit the application for recognition within four (4) months since the next day to the date of registration for incorporation or corporate registration for new share issuance. The rules for recognizing services in relation to application of the intellectual property rights to the company by individuals for two (2) or more years have also been amended. The amendment shall be implemented from 1 January 2020 and the implementation period has been extended to 31 December 2029.
Reported by: Mike Lu / Lily Huang
5. Amendment to "Regulations Governing the Application of Tax Double Deduction for Individual Corporate or Limited Partnership R&D Expenditures"
On 3 January 2020, the MOEA and the Ministry of Finance (MOF) announced the amendment to extend the expiry date of the " Regulations Governing the Application of Tax Double Deduction for Individual Corporate or Limited Partnership R&D Expenditures" from 31 December 2019 to 31 December 2029 in order to be in line with the amendment to the Statute for Industrial Innovation.
Reported by: Stacy Lo / Mindy Liao
6. Promulgation of the Regulations on Deduction of Undistributed Earnings and Application for Tax Refund for Substantial Investment Made by a Company or a Limited Partnership
To encourage companies and limited partnerships to use their earnings to make substantial investment in accordance with the Statute for Industrial Innovation, on 9 January 2020, the MOF promulgated the Regulations on Deduction of Undistributed Earnings and Application for Tax Refund for Substantial Investment Made by a Company or a Limited Partnership. We summarize below:
(1) To provide the range of substantial investment.
(2) The recognition method of the certain amount, investment amount and investment date of substantial investment.
(3) Procedures and required documents for companies and limited partnerships to use their amount of substantial investment to declare their undistributed earnings.
(4) The procedure of applying the refund of the overpaid tax and the recognition of the final date of completing investment for companies and limited partnerships which complete the investment after they have paid the additional profit-seeking enterprise income tax on their undistributed earnings.
(5) Provisions for handling the change of buildings, software or hardware equipment, or technology to be not for self-use in production or operation or the situation involving false reports.
Reported by: Stacy Lo / Melissa Tsai
Financial
7. Regulations Governing Capital Adequacy and Capital Category of Banks
On 27 December 2019, the Financial Supervisory Commission (FSC) issued a ruling to supplement the Regulations Governing the Capital Adequacy and Capital Category of Banks (Regulations). We summarize below:
(1) To elaborate the four criteria of calculating the importance of "systematically important banks" as stipulated in Paragraph 3, Article 7 of the Regulations, i.e., the scale, relevance, fungibility, and complexity, as well as their details and weight.
(2) A bank which is designated as a systemically important bank shall enhance its supervision and administration through setting aside extra capital, passing the stress testing of two-year-term on an annual basis and enacting the corresponding measures in the event of inadequate capital pursuant to relevant regulations and reporting it to the FSC.
(3) If the systematically important bank manages to comply with the requirements on supervision and administration set out above, it may enjoy automatic, preferential or accelerated approval when applying for specific businessitems.
Reported by: Stacy Lo / Doris Huang
Securities
Reported by: Jeffrey Liu / Melissa Tsai
9. Amendment to Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities
On 23 January 2020, the Taiwan Stock Exchange Corporation (TWSE) announced amendments to the "Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities" (Procedures). Since July 2020, where a listed company with paid-in capital as of the end of the preceding fiscal year or its shareholding ratio held by foreign and China investors recorded in the shareholders' roster as of the date of the shareholders' meeting of the most recent year meeting certain threshold (to be implemented by stages) have any of the defined material information as set forth in the Procedures, such company shall simultaneously input such information and explanation in English into the designated information reporting system. The requirement will be applied to all the listed companies from 2024.
Reported by: Mike Lu / Angela Lin
Insurance
10. Amendment to Regulations Governing Foreign Investments by Insurance Companies
On 31 December 2019, the FSC announced the amendment to the "Regulations Governing Foreign Investments by Insurance Companies". We summarize below:
(1) The amendment allows the insurance enterprises to invest in Sukuk.
(2) The requirements of the credit rating level and the calculation of the relevant limits of fixed income products are amended to be subject to the issuance rating of bonds. If there is no issue rating of bonds, such rating is replaced by credit rating of the issuance or guarantee institution. If the issuance rating of bonds is required originally, it shall not be replaced by credit rating of the issuance or guarantee institution.
(3) The amendment allows the funds of the insurance enterprises to be invested in the private placement bonds issued by the foreign listed enterprise and not traded on foreign exchange market or OTC market. The amendment also provides the conditions and limits of such investment.
(4) The amendment amends the relevant provisions of "significant sanctions" to "major sanctions and orders" and defines the definition of "major sanctions and orders".
(5) The amendment provides that the non-redeemable period does not apply to the "make whole call bonds".
Reported by: David Tsai / Aaron Lai
SITE/SICE
Reported by: Jeffrey Liu / Mindy Liao
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2020-01-22
