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Criminal Code
1. Draft amendments to partial articles of Criminal Code
On 1 July 2020, the Executive Yuan proposed the draft amendments to partial articles of the Criminal Code of the Republic of China. We summarize below:
(1) Regarding the revocation of parole, the current article provides that the parole shall be revoked once a person intentionally commits another offense sentenced to the imprisonment. The draft amendment provides that if the person is sentenced to imprisonment for not more than 6 months, whether the parole shall be revoked shall be determined by the court.
(2) It provides that any person obstructs the duty of a public officer by driving a motor vehicle or with any weapon, he/she shall be sentenced to imprisonment for not less than 6 months but not more than 5 years.
(3) It provides that a person who gambles by using telecommunication equipment, Internet or other similar means also constitutes the crime of gambling.
Reported by: David Tsai / Paul Hsu
Taxation
2. Agreement between Taiwan and Czech Concerning the Entry into Operation of the Provisions on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Agreement between Taiwan and Czech Concerning the Entry into Operation of the Provisions on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income took effect on 12 May 2020 and will be implemented on 1 January 2021, which aims to provide appropriate measures of tax reduction and exemption for the income which is generated from Czech by Taiwan residents (including individuals and enterprises) to eliminate double taxation and to provide dispute resolution mechanism which can prevent and exclude the relevant issues of cross-border taxation.
Reported by: Angela Lin / Melissa Tsai
Commodity Tax Act
3. Draft Amendment to Commodity Tax Act
On 1 July 2020, the Ministry of Finance announced the draft amendment to Articles 2, 4 and 12-5 of the Commodity Tax Act, which provides the definition of deemed-released from the factory as the basis for tax collection purpose and extends the application period of reduced commodity tax on new vehicles for five (5) years to 7 January 2026 for those who scraps or exports vehicles meeting certain requirements and purchases a new one.
Reported by: Angela Lin / Bella Chiu
Insurance
4. Amendment to Directions for Insurance Enterprise Handling Electronic Commerce Business
On 30 June 2020, the Financial Supervisory Commission (FSC) announced the amendment to "Directions for Insurance Enterprise Handling Electronic Commerce Business". We summarize below:
(1) Permitting insurance enterprise to engage in cross-industry cooperation to conduct online insurance business and services.
(2) Permitting the consumers to complete registration and identity verification via digital accounts (accounts under category 1) or member accounts of other industries.
(3) Adding "investment-linked annuity insurance" and "overall marine activities insurance" as online insurance products, provided that insurance enterprises shall conduct 100% telephone interview and establish relevant control and response measure in regards to investment-linked annuity insurance.
(4) Where there is a requirement of medical examination or other abnormal circumstances during online insurance operation, it shall be transferred to manual underwriting in accordance with regulations governing insurance enterprise on underwriting.
Reported by: David Tsai / Doris Huang
5. Compliance Matters for Life Insurance Enterprises Conducting Image Delivery Business of Claim
The FSC stipulated Compliance Matters for Life Insurance Enterprises Conducting Image Delivery business of Claim on 3 July 2020. We summarize below:
(1) The definition of the life insurance enterprise conducting image delivery business of claim.
(2) The condition for the policy holder to apply for claim.
(3) Life insurance enterprises shall collect the consent of policy holder when the policy older applies for image delivery business of claim for the first time and set forth processing procedure for insured’s compliant.
(4) Life insurance enterprises shall announce the services content of the business on their website.
(5) Life insurance enterprises shall implement law compliance, personal data protection and customer’s rights protection when conducting the business.
(6) Life insurance enterprises shall set forth the processing procedure for image delivery of claim and include it into the internal control system and regularly review the conducting results at least every 6 months when conducting the business.
Reported by: David Tsai / Melissa Tsai
6. Directions for Declaration of Operation Deficiencies in Supervision Documents by Insurance Enterprises
On 6 July 2020, the FSC announced the Directions for Declaration of Operation Deficiencies in Supervision Documents by Insurance Enterprises. We summarize below:
(1) Scope of Point-Keeping:
The following deficiencies on monthly report, various statements of annual reports, statistical documents on operation, experience information and other information designated by the FSC that shall be declared regularly by insurance enterprises:
(a) Delay in or lack of declaration; and
(b) Wrong declaration or inconsistent documents.
(2) Standard of Point-Keeping
One point shall be kept for each statement if there is any delay or lack of declaration; and one point shall be kept for each system if there is any wrong declaration or inconsistent document. The point may be additionally kept depending on circumstance of each case.
Reported by: David Tsai / Bella Chiu
7. Draft Amendment to Insurance Act
On 6 July 2020, the FSC announced a draft amendment to the Insurance Act for public consultation. We summarize below:
(1) To be in line with the development of FinTech, in addition to written consent and revocation, a life insurance contract entered into by a third party may also be consented or revoked by the insured in other form recognized by the competent authority;
(2) The amendment authorizes the competent authority to promulgate the guidelines for restrictions on concurrent posts, prohibition on conflicts of interest and other matters to be complied with by the responsible person of an insurance enterprise. For any violation, the responsible person shall be discharged or subject to an order of correction within the given timeframe;
(3) The amendment authorizes the competent authority to promulgate the regulations for transfer or withdrawal of branch units by insurance enterprises;
(4) The amendment authorizes the competent authority to promulgate the regulations for real estate investment by insurance enterprises;
(5) The net worth ratio of an insurance enterprise is included as a supervisory indicator;
(6) The calculation basis of an insurance enterprise's investment limit in corporate bonds is amended from the "paid-in capital" to the "owner's right", and the calculation basis of an insurance enterprise's investment limit in shares is amended to the ratio of the number of the outstanding issued shares; and
(7) The investment by the insurance company's funds in the project, public utilities and social welfare enterprises may be subject to a post recordation.
Reported by: David Tsai / Cindy Chien
8. Draft Amendment to Regulations Governing Business Solicitation, Policy Underwriting and Claim Adjusting of Insurance Enterprises
On 13 July 2020, the FSC announced the draft amendment to the "Regulations Governing Business Solicitation, Policy Underwriting and Claim Adjusting of Insurance Enterprises", which provides that the age for the requirements for keeping the sale records of process by the method of audio or video and the evaluation of appropriateness when selling the investment-linked products to the customers will be amended from 70 years old to 65 years old. The amendment will take effect from 1 September 2020.
Reported by: David Tsai / Lily Huang
Bank
9. Supplement to the Requirements for the Systematically Important Banks
On 2 July 2020, the FSC issued a ruling to supplement Item 2 of the ruling announced previously (Ref. No.: Jin-Guan-Yin-Fa-Zi-10802746441) regarding the requirements on enhanced supervision and administration for the systematically important banks. The new supplement provides that the required internal management capital may be set aside by the end of each of the four years equally starting from 2021, and the corresponding measures to deal with operational crisis (such as capital inadequacy) may be reported by 31 August 2021.
Reported by: Angela Lin / Lily Huang
Fund
10. Guidelines for Prepayment to Sales Agents for Contingent Deferred Sales Charge (CDSC) Share Classes
The Securities Investment Trust and Consulting Association (SITCA) announced an addition of Article 5-1 to the Guidelines for Channel Remuneration Payments and Sales Activities for SITCA Members and their Sales Agents on 3 July 2020. According to the aforesaid clause, in the event that an offshore fund institution, a master agent or a securities investment trust enterprises (SITE) would like to prepay the handling fee for CDSC shales classes to its sales agents before any income is actually received, such entity shall evaluate, amongst others, (i) the "reasonableness" of the handling fee rates between front-end load and CDSC share classes, and (ii) the maintenance or turnover rate of the fund size.
Reported by: Jeffrey Liu / Jack Tai
Operating Rules for Discretionary Investment Business by Trust Enterprises
11. Amendment to Operating Rules for Discretionary Investment Business by Trust Enterprises
On 30 June 2020, the Trust Association of the R.O.C. announced the amendment to the "Operating Rules for Discretionary Investment Business by Trust Enterprises" to be in line with the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises of Securities Investment Trust and Consulting Association of the R.O.C.. We summarize below:
(1) Relevant requirements for the professional institutional investors and non-professional institutional investors are provided.
(2) Method for operation of investment or trading analysis of discretionary investment is provided, which shall be set forth in the internal control system and the control operation shall be recorded and saved; where such operation is conducted through electronic documents, relevant control activities shall be included in the internal control system of trust enterprises for information processing system.
(3) Written report requirement is removed.
(4) Personnel handling investment or trading decision is not permitted to concurrently serve as the personnel conducting proprietary trading of securities.
Reported by: Angela Lin / Cindy Chien
Securities
12. Draft amendment to Regulations Governing Securities Firms
On 9 July 2020, the FSC announced a draft amendment to the "Regulations Governing Securities Firms". We summarize below:
(1) The surplus earning distribution or loss off-setting proposal of the securities firm shall be made based on the financial statements audited or reviewed by a certified public accountant.
(2) The financial report of the securities firm submitted to the board of directors shall be signed or sealed by the chairman, manager, and accounting officer.
(3) For hedging purpose of exchange traded notes issued by the securities firm, the securities firm may borrow or sell short the underlying securities and is exempted from relevant restrictions on the selling price.
(4) The Taiwan Stock Exchange may collect, process or use various type of credit information of the investors and may request for the information from securities firm and the institutions approved by the FSC.
(5) Where the securities firm is a branch office of a foreign company, the functional duties of the director or the supervisor stipulated in the Regulation shall in principle be exercised by the responsible person of the branch office authorized by the head office (or regional command center) of such foreign company.
Reported by: Jeffrey Liu / Mindy Liao
Financial
13. Draft amendment to Directions Governing the Acquisition of Treasury Stock by Exchange-listed and OTC-listed Financial Institutions
On 9 July 2020, the FSC announced a draft amendment to the "Directions Governing the Acquisition of Treasury Stock by Exchange-listed and OTC-listed Financial Institutions". We summarize below:
(1) The transfer period is extended from 3 years to 5 years from repurchasing the treasury stocks by financial institutions for the purposes of transferring the shares to employees or for equity conversion.
(2) The requirements of capital adequacy ratio (or net worth ratio) of banks, financial bills companies and insurance companies (subsidiaries) are adjusted/increased.
(3) Relevant conditions related to the financial soundness of banks and the financial bills companies, such as non-performing loan ratio and the bad debt reserve coverage ratio, are strengthened.
Reported by: Angela Lin / Mindy Liao
Telecom
14. Telecommunications Management Act
On 29 June 2020, the Executive Yuan announced that except for a limited number of articles, such as Articles 54 and 61, the Telecommunications Management Act announced on 26 June 2019 shall come into force on 1 July 2020.
Reported by: Kang-Shen Liu
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2020-07-22
