Financials
1.Amendment to Corporate Governance Best-Practice Principles for Banks
On 8 August 2024, the Financial Supervisory Commission (FSC) announced the amendments to “Corporate Governance Best-Practice Principles for Banks.” We summarize below:
(1) To amend the text of the Principles to align with the “Directions for the Implementation of Continuing Education for Directors of TWSE Listed and TPEx Listed Companies”.
(2) To amend the requirements for continuing education of directors and supervisors (if applicable), including changes to the timing for initial participation in continuing education and increasing the flexibility in course and hour requirements.
Reported by: Stacy Lo / Eva Chiu
Securities
2.Announcement of relevant rulings regarding Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals
On 23 August 2024, the FSC announced a number of rulings regarding the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals. We summarize below:
(1) Where foreign institutional investors (FINI) invest in domestic securities in accordance with the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals (Regulations), they may appoint more than one custodians, designating one as the primary custodian and up to three as secondary custodians.;
(2) When the FINIs designate more than one custodian, the restrictions related to utilizing funds, the limit on repatriation of proceeds from the sale of borrowed securities, and the lending limits for securities related to privately placed mutual funds and unit trusts by offshore foreign institutional investors, shall be calculated or handled separately based on the custodial assets entrusted to the primary and secondary custodians.
(3) In response to allowing the FINIs to designate more than one custodian, the Taiwan Stock Exchange has also revised the operational guidelines for the designation of multiple custodians by FINIs.
Reported by: Jeffrey Liu / Winnie Su
Electronic Signature
3.Draft amendments to Enforcement Rules of Electronic Signatures Act and Regulations Governing Permission of Foreign Certification Service Providers and draft Regulations on Required Information for Certification Practice Operational Standard for Electronic Signatures
In line with the amendment of the Electronic Signatures Act, on 23 August 2024, the Ministry of Digital Affairs announced the draft amendment of the “Enforcement Rules of the Electronic Signatures Act” and the “Regulations Governing Permission of Foreign Certification Service Providers” and the draft “Regulations on Required Information for Certification Practice Operational Standard for Electronic Signatures” for public consultation. We summarize below:
(1) Enforcement Rules of the Electronic Signatures Act:
(a) Regarding Paragraph 4, Article 5 of the Electronic Signatures Act, which stipulates that the counterparty shall be given a reasonable period of time and method for an opportunity to refuse, the principle of reasonable period of time and method is added;
(b) To stipulate that when a certification service provider that is not a government agency applies for permission from the competent authority, it is required to provide certificate of legal person registration in Taiwan and to explain the financial position, accounting procedures and the personnel system;
(c) To add that the competent authority may conduct inspections to ensure that certification service providers provide services in accordance with the permitted certification practice operational standard; and
(d) To add that to collect information on the application of electronic signatures in Taiwan, the competent authority may request certification service providers to cooperate in providing relevant information.
(2) Regulations Governing Permission of Foreign Certification Service Providers:
(a) To add that when applying for permission, foreign certification service providers shall provide certificate of permission in their own country or other certificate proving their certification business is lawful; and
(b) To add more situations when the competent authority may waive the application procedure and grant permission to a foreign certification service provider, which includes technical docking cooperation between the competent authority and governments of other countries, NPOs, regional organizations and international organizations, and exchange of the list of certification service providers.
(3) Regulations on Required Information for Certification Practice Operational Standard for Electronic Signatures:
(a) Significant information that could affect the trustworthiness of a certificate issued by the certification service provider or the certification service provider’s operation, which includes the purpose of the certification and the confidentiality of business information etc.;
(b) Grounds for the certification service provider to revoke a certificate without being requested;
(c) Retention of the information related to the verification of the content of a certificate;
(d) Methods and procedures implemented to protect personal data; and
(e) Other important information, which includes the fees and intellectual property rights etc.
Reported by: Stacy Lo / Zoe Chen
Financials
4.Personnel of a Domestic Bank Concurrently Serving in Foreign Branches
On 21 August 2024, the FSC issued a ruling, which took effect immediately. The ruling provides that if a domestic bank appoints a responsible person or a general staff member who is not a responsible person to hold or concurrently hold any position at a foreign branch (including foreign representative offices, branches, subsidiaries, and joint venture banks), as defined in Point 2 of the Directions Concerning the Establishment of Foreign Branches by Domestic Banks, such an appointment will not be subject to the non-competition restrictions applicable to “other banks” under Article 35-1 of the Banking Act. Consequently, such appointments is not subject to the restrictions under Article 35-1 of the Banking Act or Paragraph 3, Article 3-1 of the Regulations Governing Qualification Requirements and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of Banks, which prohibit responsible persons from holding concurrent positions.
Reported by: Stacy Lo / Mandy Wu
SITE/SICE
5.Amendment to Article 42 of Corporate Governance Best-Practice Principles for SITE/SICE, Article 4 Of Code for Approval of Remuneration for Fund Managers of SITE and Article 6 of Principles for Sales Personnel Remuneration System of Members Companies of the SITCA
On 20 August 2024, the Securities Investment Trust and Consulting Association (SITCA) announced the amendments to Article 42 of Corporate Governance Best-Practice Principles for Securities Investment Trust Enterprises (SITE)/Securities Investment Consulting Enterprises (SICE), Article 4 Of Code for Approval of Remuneration for Fund Managers of SITEs and Article 6 of Principles for Sales Personnel Remuneration System of Member Companies of the SITCA. The amendments are mainly to add that when SITEs and SICEs design a reasonable remuneration system, the rewards and punishments of managerial officers, fund managers and sales personnel shall also be included as one of the considerations for remuneration assessment.
Reported by: Jeffrey Liu / Amy Su
6.Code of Conduct for Fund Managers of Securities Investment Trust Funds and Investment Managers of Discretionary Investment Businesses
On 21 August 2024, the SITCA promulgated the “Code of Conduct for Fund Managers of Securities Investment Trust Funds and Investment Managers of Discretionary Investment Businesses” (Code of Conduct). We summarize below:
(1) A “Know Your Employee” due diligence process must be carried out for newly appointed managers.
(2) The Code of Conduct clearly outlines prohibited behaviors for managers and the matters to be followed when dealing with fund assets and discretionary investment assets.
(3) The Code of Conduct clearly outlines the matters to be followed for fund managers who concurrently manage or co-manage multiple funds, as well as for personnel holding concurrent positions.
(4) The Code of Conduct clearly outlines the matters to be followed for using information and communication equipment, as well as social media.
Reported by: Jeffrey Liu / Jason Su
Securities
7.Amendment to Regulations Governing Borrowing or Lending Money in Connection with Business by Securities Firms.
On 19 August 2024, the FSC announced the formal amendments to “Regulation Governing Borrowing or Lending Money in Connection with Securities Business by Securities Firms.” While key points of the amendments are the same as its draft amendments, please refer to Lexgroup Newsletter (Issue No. 441) for details.
Reported by: Jeffrey Liu / Eva Chiu
| 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 Firm) |