SITE/SICE
1.Amendment to the Code of Conduct for Mandated Institutions Handling Private Placement of Offshore Funds
On 2 February 2026, the Securities Investment Trust and Consulting Association (SITCA) amended Article 2 of the Code of Conduct for Mandated Institutions Handling Private Placement of Offshore Funds (Codes). The amendment provides that where an investor is a defined professional institutional investor or a professional investor, such investor shall not be deemed as a financial consumer under these Codes. Accordingly, the provisions requiring mandated institutions to explain important contractual terms and disclose risks to financial consumers shall not apply
Reported by: Jeffrey Liu / Alva Wu
Food and Drug Administration
2.Amendment to Pharmaceutical Affairs Act and Amendment to Drug Injury Relief Act
On 30 January 2026, the Legislative Yuan passed the draft amendment to the Pharmaceutical Affairs Act and the draft amendment to the Drug Injury Relief Act. These amendments aim to strengthen the stability and resilience of the national medicine supply and ensure the medication rights of our citizens. We summarize below:
(1) Amendment to Pharmaceutical Affairs Act
(a) To strengthen the monitoring of essential drug supply: Pharmaceutical businesses holding licenses for essential drugs are required to regularly report the manufacturing, import, and supply status of such drugs, including current inventory and future supply plans (Article 27-2).
(b) To ensure drug supply stability and provide a legal basis for regulation: When a drug shortage is anticipated, the central competent authority may publish the information on a public website and grant special approval for the manufacture or import of the drug or its alternatives. Furthermore, the authority may impose restrictions on the scope, period, quantity, and target of the supply (Article 27-3).
(c) To address emergency or major public health events: The central competent authority is authorized to grant special approval for the manufacture or import of specific drugs to prevent or treat life-threatening diseases or respond to public health emergencies (Article 48-2).
(d) To optimize the drug recall mechanism: The requirement for mandatory recall of drugs solely due to changes in packaging, labels, or inserts is removed, as such changes do not involve quality issues, thereby avoiding resource waste and the risk of drug shortages (Articles 80 and 94).
(2) Amendment to Drug Injury Relief Act: Granting special approval for manufacture or import of a specific drug due to potential shortages or public health emergencies is now included in the scope of the drug injury relief system, ensuring that patients can receive timely relief in the event of drug injury (Article 3).
Reported by: Jolene Wang / Crick Liang
SITE/SICE
3.SITEs and SICEs Engaging in Discretionary Investment Management Are Permitted to Invest Entrusted Assets in Private Equity Funds
On 4 February 2026, the Financial Supervisory Commission (FSC) issued a ruling to permit securities investment trust enterprises and securities investment consulting enterprises engaging in discretionary investment management business to further invest entrusted assets in private equity funds. We summarize below:
(1) Securities investment trust enterprises or securities investment consulting enterprises engaging in discretionary investment management business are permitted to use entrusted assets to invest in private equity funds.
(2) Clients mandate to invest in private equity funds must meet certain eligibility criteria.
(3) Standards to be met by private equity funds and required disclosure items are specified.
(4) Where securities investment trust enterprises or securities investment consulting enterprises engaging in discretionary investment management business use entrusted assets to invest in private equity funds, such investments shall be aggregated with investments in spot commodities such as gold, minerals, and bulk commodities, and the total investment ratio shall not exceed forty percent (40%) of the net asset value of the discretionary investment account.
Reported by: Jeffrey Liu / Eden Hsieh
Financial
4.Amendment to the Scope and Reporting Procedure of Material Incidental Events and Other Compliance Matters for Financial Institutions
On February 6, 2026, the FSC amended the Scope and Reporting Procedure of Material Incidental Events and Other Compliance Matters for Financial Institutions. We summarize below:
(1) To include foreign worker remittance companies as financial institutions required to report material incidental events.
(2) Considering that the Central Bank has cancelled the previous fax reporting procedure, reports shall instead be submitted through the Central Bank’s “Financial Data Reporting System”.
(3) For material incidental events reported by foreign worker remittance companies, if the Banking Bureau evaluates the case and notifies that no formal written report is required, then detailed information or follow-up handling status need not be submitted within seven business days.
Reported by: Stacy Lo / Alva Wu
SICE/SITE
5.Ruling regarding Income Equalisation of Active ETF
On 9 February 2026, the Securities Investment Trust and Consulting Association of the Republic of China (SITCA) issued a ruling regarding actively managed ETFs that adopt an income equalization mechanism for dividend distributions. The SITCA stated that as such products do not track a specific index, they are not required to set or determine a reference distribution rate, regardless of whether a performance benchmark is established. However, firms must clearly explain in their internal policies the methodology used to determine distribution rates and amounts, and retain relevant records for compliance purposes. In addition, marketing and promotional materials may not primarily emphasize high distribution or use similar income-focused appeals as the main selling point. All advertising activities must comply with applicable marketing regulations and be subject to prior review and approval by compliance or authorized units.
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) Alex Li (Partner) | Counselors: Echo Yeh Sue Su Jolene Wang (Lexcel Partners IP Firm) |
