Taiwan Legal Updates - July 2017
Legal News & Analysis - Asia Pacific - Taiwan - Regulatory & Compliance
9 August, 2017
The Ministry of Labor announced the partial amendment to “Enforcement Rules of the Labor Standards Act” on June 16, 201
The major amendments include: The annual paid leave to which the labor entitled under the Labor Standard Act may be exercised through negotiation by the labor and management. Except for using the work year (beginning the starting date of the labor) as a basis for caulculation, the annual paid leave also may be calculated based on calendar year, academic year of educational institution, fiscal year of enterprises or the one year term otherwise agreed by the labor and management. In addition, extraordinary work dates and periods such as injury and sick leaves and menstruation leaves will be excluded from the calculation of the average wage. (Queenie Chen)
Amendments to Article 11 of the Fair Trade Act
On June 14, 2017, the President promulgated an amendment to Article 11 of the Fair Trade Act. The period for Taiwan Fair Trade Commission (“TFTC”) to review the merger control cases is changed from 30 calendar days to 30 business days. If necessary, TFTC may shorten or extend the review period with a possible extension to 60 business days. In the event that one of the parties involved in the merger filing opposes to the merger, TFTC shall provide to necessary merger filing information to the opposing party and request the party to comment. (Alex Cheng)
Amendment to Article 7 of the “Regulations Governing Procedure for Board of Directors Meetings of Public Companies”
The Financial Supervisory Commission (“FSC”) announced the amendments to Article 7 of “Regulations Governing Procedure for Board of Directors Meetings of Public Companies”. The effectiveness review of the internal control system, which is set froth in Article 14-5 of Securities and Exchange Act, has been inserted in the amended Regulations to be a required discussion items for the board of directors since such item was deemed an important matter by the FSC.
In addition, the said amendment also requires that at least one independent director personally attend the meetings of board of directors if there is independent director(s) elected. With respect to the matters that required board of directors resolution, all of the independent directors must attend the board meeting. If qny independent director is unable to attend such meeting, he/she shall authorize another independent director to attend on his/her behalf. If any independent director expresses an objection or qualified opinion at such meeting, the said objection or opinion shall be recorded in the minutes of the board of directors meeting. (Chia-chi Chen)
Amendments to Articles 3 & 5 of the “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”
The FSC announced the amendments that permits the members of the Public Acquisition Review Committee and Special Committee for Merger and Acquisition to provide business, legal, financial and accounting services or advice for companies without being restricted by the provisions that an independent director cannot provid business, legal, financial and accounting services for a company or affiliated company during the 2 years immediately preceding his/her election to become independent director thereof. In addition, if a candidate of independent director has served as independent director for three consecutive terms, the company shall publicly announce the reasons for continuous nomination of said candidate and provide explaination to the shareholders before the election is held by the shareholders meeting. (Chia-chi Chen)
Amendment to Article 10-1 of the “Regulations Governing the Exercise of Powers by Audit Committees of Public Companies”
The amendmented regulation requires that the company record or video the entire meeting of the audit committee and preserve the audio or video record for at least 5 years. (Chia-chi Chen)
The Amendment to the Rules Governing Offshore Banking Branches
On May 22, 2017, the FSC amended the Rules Governing Offshore Banking Branches (the “Rule”). The amended Rule requires the offshore banking branches to comply with relevant rules of anti-money laundering in Taiwan and the Self-Regulations of Bankers Association of the Republic of China in performing client idenfification confirmation, and to include those rules and regulations in their internal control and internal audit procedure.
Further, the offshore banking branches may engage and seek assistance from the intermediaries to confirm client identification and submit its action plan and the list of intermediaries to the FSC for future reference. In addition, the offshore banking branches shall not encourage or assist domestic clients to transform into non-resident client and open offshore accounts. (Hector Chin)
The Ministry of Finance narrows the applicability of the business tax imposing on individuals who sell houses or the house constructed with others under a joint construction and allocation project on such individual’s own land
On June 7, 2017, the Ministry of Finance issued a letter narrowing the applicability of the business tax for certain individuals. Unless an individual who (1) has a fixed business place; (b) has a business name; (3) hires employees for handling sales of houses; or (4) conducts in any other ways that apparently constitute business activities, there will not be business tax imposed on individuals who sells a house after acquiring such house for more than 6 years or who owns the land for more than 10 yeas before providing such land in a joint construction and allocation project with others, even if such individual sells houses frequently or persistently. (Elvin Peng)
The Ministry of Economic Affairs (MOEA) eased the restrictions on mainland Chinese newly-established profit-seeking enterprises to establish office in Taiwan.
The MOEA issued a letter regarding the Regulations for Approval to Establish Branch or Office in Taiwan for Mainland Chinese Profit-Seeking Enterprises (“the Regulations”) on May 2nd, 2017, which eased the interpretation of the Regulation that a mainland Chinese company must have been established for at least 3 years before it could establish an office in Taiwan,. The letter stated that a new mainland Chinese company, who was established as a result of a merger with, or a reorganization or division from, the prior company already established for more than 3 years and received all or part of the business of such prior company, should be deemed to have met the three-year-establishment condition. (Dennis Chen)
For further information, please contact:
C. Y. Huang, Partner, Tsar & Tsai Law Firm