Cyber Security
1.Draft Amendment to Cyber Security Management Act
On 4 July 2024, the Executive Yuan passed a draft amendment to the “Cyber Security Management Act”, which is subject to further review by the Legislative Yuan. We summarize below:
(1)To amend the competent authority of the Cyber Security Management Act to the Ministry of Digital Affairs (“MODA”), and to stipulate that the Administration for Cyber Security (“ACS”), MODA, is in charge of the administration of the national cyber security matters.
(2)To add that the ACS may conduct periodical or irregular audits of the implementation of cyber security maintenance plans by government agencies and specific non-government agencies.
(3)To prohibit government agencies and specific non-government agencies from downloading, installing and using products that may compromise national cyber security.
(4)To stipulate that in the event of a major cyber security incident, the ACS may dispatch cyber security personnel from various agencies to provide support.
(5)To grant the central authority in charge of relevant industry the power to conduct administrative investigations, and to prescribe the relevant penalties for those who evade, obstruct or refuse to comply with the investigation.
(6)To stipulate that the cyber security incidents involving the leakage of personal data files shall be handled separately in accordance with the Personal Data Protection Act and its related laws and regulations.
Reported by: Stacy Lo / Mandy Wu
Financials
2.Interpretation of Article 140 of The Company Act
On 13 June 2024, the Financial Supervisory Commisison (FSC) issued an interpretative ruling regarding Article 140 of the Company Act that the requirement under Article 140 of the Company Act (i.e. issue price of share certificates shall not be less than the par value) shall not apply if an issuer issues new shares for mergers and acquisitions by following the process below.
(1)Before the board of directors is called for an approval, the issuer shall engage experts to provide opinions on necessity, reasonableness, and impact on shareholder rights and interests for issuing new shares at a discount. After the board’s approval is obtained, relevant information shall be disclosed on the Market Observation Post System.
(2)The aforementioned expert opinions shall be included with the notice of the shareholder meeting to be provided to the shareholders, unless the shareholders’ meeting is not required.
Reported by: Mike Lu / Eva Chiu
Electronic Payment
3.Draft amendment to Rules Governing Administration of Electronic Payment Business
On 28 June 2024, the FSC announced the draft amendment to the “Rules Governing Administration of Electronic Payment Business” for public consultation. We summarize below:
(1)To expand the scope of transactions where the automatic payment deductions for a non-specific amount may apply, and stipulate relevant risk control mechanisms;
(2)To add that, delivery platform enterprises, taxi transportation service platform enterprises and parking service platform enterprises may be contracted merchants although they are not the ultimate recipient of payments, and stipulate the requirements for such enterprises; and
(3)To add the regulations on cloud outsourcing operations by specialized electronic payment institutions.
Reported by: Stacy Lo / Linda Chu / Zoe Chen
SITE/SICE
4.Draft Amendment to Regulations Governing Securities Investment Consulting Enterprises
In order to strengthen the supervision of robo-advisor, on 3 July 2024, the FSC announced the draft amendments to Regulations Governing Securities Investment Consulting Enterprises (Regulations). We summarize below:
(1)Enhance important provisions in self-regulatory regulations to the Regulations: Specify the definition of robo-advisor and matters to be followed when executing portfolio rebalancing transactions for clients, etc.
(2)Enhance important provisions in self-regulatory regulations to the Regulations: Specify the definition of robo-advisor and matters to be followed when executing portfolio rebalancing transactions for clients, etc.
(3)Strengthen external review and self-discipline mechanisms: Specify the application for providing robo-advisor service and changing the algorithm adopted will be reviewed by the Securities Investment Trust and Consulting Association (SITCA). The SITCA will further update the self-regulatory regulations related to robo-advisor service.
(4)Grace period: One (1) year grace period will be given to the enterprises who have provided robo-advisor service.
Reported by: Jeffrey Liu / Amy Su
Insurance
5.Amendments to Regulations Governing Loans and Other Transactions of Insurance Enterprises to Same Party, Same Related Party or Same Affiliated Enterprise
On 4 July 2024, the FSC announced to amend Article 4 of the “Regulations Governing Loans and Other Transactions of Insurance Enterprises to Same Party, Same Related Party or Same Affiliated Enterprise”. We summarize below:
(1)Given that the statutory standard will be adjusted from 200% to 100% due to the different calculation basis for the ratio of total adjusted net capital to risk-based capital, the language of “200%” previously provided is amended to “the statutory standard for adequate capital as stipulated in Subparagraph 1 of Paragraph 2, Article 143-4 of the Act” or “the statutory standard” so as to facilitate the integration of regime.
(2)To amend the serial numbers of articles of the disclosure of transaction information.
Reported by: David Tsai / Sean Tsai
| Editors: Mike Lu (Partner) Stacy Lo (Partner) Jeffrey Liu (Partner) Kang-Shen Liu (Partner) David Tsai (Partner) Angela Lin (Partner) Paul Hsu (Partner) | Counselors: Echo Yeh Sue Su Jolene Wang (Lexcel Partners IP) |