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Company Act
1. Paragraph 5, Article 240 of the Company Act
The Ministry of Economic Affairs (MOEA) issued a ruling on 18 March 2020 that the broad of directors may distribute dividends and bonuses in cash by a special resolution as authorized by Articles of Incorporation (AOI). The distribution amount decided shall be reported to the shareholders’ meeting which shall not be further resolved by the same. However, if there is any other items in the agenda in relation to earning distribution or loss make-up which shall be resolved by the shareholders’ meeting, the directors can only be discharged from their liabilities after the approval by the same.
It is still the authority of the board of directors to make the decision under the AOI even if there is no cash distribution. The proposal for loss make-up is however not related to the cash distribution and is not within the authority granted under the AOI.
Reported by: Mike Lu / Melissa Tsai
Financial
2. Amendment to Regulations Governing Information to Be Published in Annual Reports of Financial Holding Company, Regulations Governing Information to Be Published in Annual Reports of Bank, Regulations Governing Information to Be Published in Annual Reports of Bills Finance Company and Regulations Governing Information to Be Published in Financial Institution Prospectuses for Offering and Issuance of Securities
On 24 March 2020, the Financial Supervisory Commission (FSC) announced the amendments to the "Regulations Governing Information to be Published in Annual Reports of Financial Holding Company", the "Regulations Governing Information to be Published in Annual Reports of Bank", the "Regulations Governing Information to Be Published in Annual Reports of Bills Finance Company" and the "Regulations Governing Information to Be Published in Financial Institution Prospectuses for Offering and Issuance of Securities for public consultation". We summarize below:
(1) To enhance the disclosure of corporate governance operation:
(a) Where the chairman and the general manager or the equivalent (the highest level of managers) are the same person, couples or the relatives within first degree of kinship, the company shall disclose relevant information, including the reasons, reasonableness, necessity and the response measures, etc.
(b) The resignation and discharge of the corporate governance officer shall be disclosed.
(2) To enhance the transparency of the remuneration of the directors, supervisors and senior managers, as well as its reasonableness:
(a) The number of remuneration range is revised from 8 to 10 if the company chooses to disclose aggregate remuneration information with the name(s) indicated for each remuneration range.
(b) To add the circumstances where the company shall disclose in its financial report (a) the remuneration of each director, supervisor, etc.; and (b) the top five manages receiving the highest remuneration.
(c) The company shall disclose the remuneration policy of the independent directors and the remuneration which the directors, supervisors and senior managers receive from the parent company.
(d) The information related to self-evaluation (or peer evaluation) of the board of directors conducted by Taiwan Stock Exchange listed or Taipei Exchange traded companies.
(3) To improve the disclosure quality of non-financial information:
(a) The matters required to be disclosed related to the performance of corporate social responsibilities are amended.
(b) The disclosure of any penalties imposed upon the company and its internal personnel is limited to where the outcome could materially impact shareholders' equity or the prices of the company's securities.
(c) The relevant information regarding the decrease in audit fees shall be disclosed if the audit fees for the current fiscal year are lower than that in the preceding financial year by 10% or more, instead of 15%.
(d) The relevant information regarding the execution rate of treasury shares shall be disclosed.
(c) The information related to the number and the salaries of full-time employees in non-management positions shall be disclosed.
Reported by: Stacy Lo / Mindy Liao
3. Amendment to Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Regulations Governing the Preparation of Financial Reports by Public Banks and Regulations Governing the Preparation of Financial Reports by Bills Finance Company
On 23 March 2020, the FSC announced the amendments to the “Regulations Governing the Preparation of Financial Reports by Financial Holding Companies”, “Regulations Governing the Preparation of Financial Reports by Public Banks” and “Regulations Governing the Preparation of Financial Reports by Bills Finance Company” to add that the financial holding companies, publicly banks and bills finance companies whose stocks have been listed on the stock exchange or over-the-counter markets shall disclose in their quarterly financial reports by the required format (1) the name of the shareholders holding at least 5% of total outstanding shares, (2) the number of shares held, (3) shareholding ratios and (4) other information of such major shareholders.
Reported by: Stacy Lo / Mindy Liao
Securities
4. Taiwan Depositary and Clearing Corporation Announced Relevant Regulations to Cope with the Opening of Securities Dealers to Operate Trading of Virtual Currency with Nature of Securities
On 18 March 2020, to cope with the opening of securities dealers to operate trading of virtual currency with Nature of Securities (Virtual Currency), the Taiwan Depositary and Clearing Corporation (TDCC) announced "Procedural Guidelines for Platform Enterprises to Report Information of Operating Business of Virtual Currency with Nature of Securities", and " Internal Control Template of Securities Dealers to Operate Trading of Virtual Currency with Nature of Securities" accordingly. The above-mentioned regulations have been effective from the announcement date.
Reported by: Jeffrey Liu / Eliza Lee
SITE/SICE
5. Amendments to SITE Incentive Plan
On 20 March, 2020, the FSC issued a ruling to amend the incentive plan for Securities Investment Trust Enterprises (SITE), which is mainly to amend the criteria related to one of the indices for evaluation, i.e. “assets under management and the growth”. The said amendments exclude ETF from the calculation of recognized assets under management (AUM) and increase the standard of recognizable AUM. Furthermore, the amendment also included more elaboration of examples of “other concrete contributions.”
Reported by: Jeffrey Liu / Lily Huang
6. Amendment to the Template Agreement of Trust Deed of Domestic Securities Investment Trust Funds including Open-ended Equity Funds
On 25 March 2020, the FSC approved an amendment by the Securities Investment Trust and Consulting Association (SITCA) to the template agreement for securities investment trust fund (including template trust agreements for domestic open-ended equity funds, overseas equity funds (i.e. multi-currencies denominated funds and NTD multi-currency funds, open-ended balanced funds, and open-ended fund of funds) to allow the reduction on the NAV threshold for termination of the agreement to average of NTD 50 million (around USD1.6 million) for the latest 30 business before 30 September 2020. Any amendment to the existing executed trust agreement reflecting the change does not require an approval of the beneficiary meeting but an application with a legal opinion on no material impact on the rights and benefits of beneficial owners shall be submitted to the FSC for approval.
Reported by: Jeffery Liu / Doris Huang
Insurance
7. Principle of directors and supervisors of the insurance enterprises concurrently acting as responsible persons of other financial enterprises
The FSC issued a ruling on 20 March 2020 to address the principle of directors and supervisors of the insurance enterprises concurrently acting as responsible persons of other financial enterprises. The ruling divides the situation of double hatting into three categories respectively, which includes (1) where the responsible person signs the declaration statement of no violation of Article 5 of the “Regulations Governing Required Qualifications for Responsible Persons of Insurance Enterprises” (Regulations), it will be presumed that there is no conflict of interest, (2) being presumed that there is a conflict of interest and shall submit a description of no conflict of interest and sign the declaration statement of no violation of Article 5 of the Regulations, and (3) being deemed as having conflicts of interest and the double hatting is prohibited.
Reported by: David Tsai / Aaron Lai
Futures
8. Amendment to Ruling Related to Regulations Governing Futures Trust Funds
On 19 March 2020, the FSC announced a ruling to amend the standard regarding termination of the futures trust deed mentioned in Article 83 of the “Regulations Governing Futures Trust Funds”. We summarize below:
(1) To revise criteria for funds that are required for compulsory closure, extending the time period during which a fund’s net asset value can fall below a certain level before having to be terminated from three days to 30 days; and
(2) To add that when the net asset value of a fund fluctuates extremely due to global/domestic changes of economic and financial circumstances, the futures trust enterprise may apply with the FSC for an ad-hoc exemption from the compulsory termination during a certain period.
Reported by: Jeffrey Liu / Mindy Liao
Taxation
9. Valuation of market price of privately placed securities on the date of inheritance or gift
On 23 March 2020, the Ministry of Finance (MOF) issued a ruling providing the valuation of market price of privately placed securities on the date of inheritance or gift. We summarize below:
(1) Private placement of exchange listed or OTC listed securities:
(a) The valuation shall be based upon the closing price of the securities on the date of inheritance or gift, or the average closing price in the previous month before the date of inheritance or gift, whichever is lower.
(b) Where no dealing price of the securities was available on the date of inheritance or gift, the valuation of such securities shall be based upon the closing price of the last date before the date of inheritance or gift, or the average closing price in previous month before such date, whichever is lower.
(c) Where no average closing price in the previous month before the date of inheritance or gift was available, the valuation shall be based upon the closing price of the date of inheritance or gift; where no dealing price of the securities was available on the date of inheritance or gift, the valuation shall be based upon the closing price on the last date before the date of inheritance or gift.
(2) Private placement of emerging company stocks:
(a) The valuation shall be based upon the weighted average dealing price on the date of inheritance or gift, or the average price of the weighted average dealing price in the previous month before the date of inheritance or gift, whichever is lower.
(b) Where no dealing price of the emerging company stocks was available on the date of inheritance or gift, the valuation shall be based upon the weighted average dealing price on the last day before the date of inheritance or gift, or average price of the weighted average dealing price in the previous month before such date, whichever is lower.
(c) Where no average price of the weighted average dealing price in the previous month before the date of heritance or gift was available, the valuation shall be based upon the weighted average dealing price on the date of inheritance or gift; where no dealing price of the stocks was available on the date of inheritance or gift, the valuation shall be based upon the weighted average dealing price on the last date before the date of inheritance or gift.
(3) For private placement of stocks which is not exchange listed, OTC listed, or emerging company, the valuation shall be based upon the net worth of the company.
Reported by: Stacy Lo / Bella Chiu
Factory
10. Factory Management Act
The Executive Yuan announced on 18 March 2020 that several articles of the Factory Management Act amended and published on 24 July 2019 shall come into force on 20 March 2020.
Reported by: Kang-Shen Liu
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2020-04-07
