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Securities
1. Public companies shall stop from holding the shareholders' meetings from 24 May 2021 to 30 June 2021
On 20 May 2021, the Financial Supervisory Commission (FSC) issued a public announcement that in response to the pandemic, public companies shall stop from holding shareholders' meetings during the period from 24 May 2021 to 30 June 2021 which shall be postponed to the period from 1 July 2021 to 31 August 2021. The relevant requirements under the Company Act and the Securities and Exchange Act that a shareholders' meeting must be held within 6 months after the close of each fiscal year shall cease for the time being.
Reported by: Mike Lu / Angela Lin
Special Act
2. Amendment to Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens
On 31 May 2021, the Legislative Yuan passed the three reading of the amendment to the Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens, under which the limit of the special budget is increased to NT$840 billion and the applicable period is extended by one year to 30 June 2022.
Reported by: Kangshen Liu / Aaron Lai
Banking
3. Flexible Measures for Banks in Response to COVID-19
On 25 May 2021, the FSC announced that in response to the COVID-19 pandemic, during the period where the Central Epidemic Command Center announced the Level 3 (or above) epidemic alert in any city or country, banks may adopt alternative measures to provide financial product and service to clients in compliance with internal control and under internal authorization, such as to conduct the business online, by fax, or email, where supporting measures shall be established to confirm the authenticity of transaction instruction by customers. The FSC also explained that, in consideration of the safety of employees and rights of customers, banks may apply to adjust the daily business hour in accordance with the "Regulations Governing Financial Institutions' Business Hours and Suspension during Natural Disasters".
Reported by: Stacy Lo / Lily Huang
Electronic Payment
4. Draft Amendment to Sub-Regulations and Rules of Act Governing Electronic Payment Institutions
On 20 May 2021, the FSC announced various draft amendments to the sub-regulations and rules of the Act Governing Electronic Payment Institutions (EPI Act) for public consultation. We summarize below:
(1) Draft Amendment to Regulations Regarding Paragraph 2, Article 3 of the EPI Act
For Electronic Payment Institutions (EPIs) license requirement of enterprises only conducting the business of collecting and making payments for real transactions as an agent under the EPI Act, the threshold amount for the balance of the fund received and paid is raised from NT$1 billion to NT$ 2 billion.
(2) Draft Amendment to Regulations Governing Cooperating with or Assisting Foreign Institutions in Engaging in Activities Associated with Electronic Payment Business within the Territory of the Republic of China
(a) The approved institutions to cooperate with foreign institutions for EPI business and such foreign institutions may provide settlement, system interface, information transmission and exchange services through foreign settlement institutions.
(b) For approved institutions to apply for cooperation with foreign institutions in different countries, the application procedures are simplified. For approved institutions to apply for cooperation with different foreign institutions in the same countries being approved, only a post report to the competent authorities is required.
(c) The identity confirmation mechanism of the approved institutions on recipient customers is strengthened and the database for transactions with local recipient customers shall be established.
(3) Draft Amendment to Regulations Governing Identity Verification Mechanism and Transaction Limits for Users of Electronic Payment Institutions
(a) The type and definition of contracted institution, identity verification procedures, credit review mechanisms, transaction limits, and transaction data retention requirements are provided.
(b) With reference to the regulations on the digital deposit accounts of banks, the classification of electronic payment accounts is revised as the first, second, and third types based on the strength of identity confirmation requirements.
(c) The identity verification mechanism of EPI is strengthened, where a mechanism to confirm the mobile phone number provided by users and name verification procedures is added, and the third type of digital deposit accounts are excluded from being used as financial instruments for identity verification.
(d) The transaction limit for domestic and foreign small-amount remittances is provided, and the maximum amount of stored value for the first type of electronic payment accounts is relaxed.
(4) Draft Amendment to Rules Governing Administration of Electronic Payment Business
(a) The EPIs may provide to users the automatic deduction service under pre-agreed payment instruction.
(b) The EPI shall notify the transaction result to the users or provide a record confirming the transaction after execution of payment instruction.
(c) The standard to determine the electronic payment account or stored value card with illegal or abnormal transactions and the procedure to suspend the service for the electronic payment account or stored value card is provided.
(d) The operating procedures and business specifications of the electronic payment business shall comply with the self-disciplinary rules stipulated by the industry association or electronic payment committee of the Bankers Association of the Republic of China.
(e) The qualifications and application documents for an EPI to apply for establishing an offshore branch is provided.
(f) A qualified EPI may apply with the regulator to establish the information system and backup system offshore.
(g) The specialized EPI shall conduct the public offering.
(5) Draft Amendment to Regulations Regarding Paragraph 6, Article 21 of the EPI Act
The percentage of payment amount (i.e. the amount collected and paid as an agent and the saved value after deducting the required reserve) which can be utilized by the EPIs is raised from 60% to 80%.
(6) Draft Amendment to Implementation Rules for the Internal Audit and Control System of Electronic Payment Institutions
(a) The board of directors is ultimately responsible for ensuring the establishment and maintenance of an appropriate and effective internal control system.
(b) The code of conduct for directors shall at least include that when directors discover that the specialized EPI may suffer major damage, they shall promptly and appropriately handle and supervise the EPI to notify the FSC.
(c) The business specifications and handling manuals shall include the handling mechanism for major incidents and the compliance management for anti-money laundering and counter-terrorism.
(d) The FSC may request the specialized EPI to designate a CPA to conduct an audit on personal data protection and anti-money laundering and counter-terrorism mechanism.
(e) When a major violation of laws and regulations occurs, the compliance unit shall immediately report to the board of directors.
(f) The internal audit unit shall grasp the inspection condition and inspection report results of the FSC, and establish an immediate reporting mechanism depending on the materiality to strengthen the function of the board of directors.
(7) Draft Amendment to Regulations Governing the Organization and Administration of Sinking Fund Established by Electronic Payment Institutions
The amendment adds the fee and interest incomes of the electronic stored value card issuer’s business revenue as the calculation basis for the appropriation of the sinking fund, and the sinking funds shall regularly disclose the fund's balance and utilization to EPIs.
(8) Draft Amendment to Mandatory and Prohibitory Provisions of Trust Agreement on Funds Received by Electronic Payment Institutions from Users
(a) Unless the court’s decision or other laws provided otherwise, the EPIs shall not delay in payment or accept third party requests to stop payment, remittance, or other similar requirements.
(b) The specialized EPI may utilize the payment amount up to a certain percentage in low-risk investment under the EPI Act, and thus the requirement that the fund collected or paid as an agent shall only be deposited or in custody of a trust account is deleted.
(c) A reasonable review period of the trust agreement shall be provided to the trustor.
(9) Draft Amendment to Mandatory Provisions of Standard Form Contract for the Business of Electronic Payment Institutions
The mandatory provisions for domestic and foreign small-amount remittances services and for stored value card business services are provided.
Reported by: Stacy Lo / Rady Lee / Will Chen
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2021-06-07
