Taiwan Legal And Regulatory Updates - January 2020.
Legal News & Analysis - Asia Pacific - Taiwan - Regulatory & Compliance
11 February, 2020
The Legislative Yuan passed the Commercial Case Adjudication Act
The Legislative Yuan passed the Commercial Case Adjudication Act (the “Act”) on December 17, 2019. The Act provides for the establishment of a specialized commercial court to hear the “commercial cases”, which include commercial litigation matters (e.g., those concerning major commercial or financial disputes with an amount in controversy of NTD 100 million or more, validity of the resolution of the meeting of shareholders or board of directors of a publicly traded company, civil disputes between a shareholder and the company or its responsible person, etc.) and commercial non-litigation matters (e.g., share price appraisal for a publicly traded company, petition for appointment or dismissal of temporary manager or inspector pursuant to the Company Act, etc.). The highlights of the Act include:
(1) Establishment of a specialty court: the new commercial court will combine the former Intellectual Property Court and be named the Intellectual Property and Commercial Court, and is at the same level as the High Court. The new court has the exclusive jurisdiction over the aforementioned commercial matters and adopts a two-level, two-instance adjudication system;
(2) Mandatory representation by attorneys: attorneys shall be engaged to conduct the litigation in the new commercial court of behalf of the parties;
(3) Electronic submission of legal documents: all legal briefs and documents shall be submitted via the electronic legal documents submission system; any submission of documents by other means shall be deemed invalid;
(4) Mandatory mediation: the Act expressly provides that a pre-litigation commercial mediation must be conducted; (5) Expert witness: the parties may engage expert witnesses to provide professional opinions with the permission of the court; and (6) Confidentiality preservation order: either party or a third party holding trade secrets may request the court to issue a confidentiality preservation order upon spelling out the reason therefor. (Genson Hung, Esq.)
The Legislative Yuan passed the Amendment to the Code of Criminal Procedure, providing for the right to participate criminal procedure and the protection of the victim of crime, and the procedure of motion for retrial.
The Legislative Yuan passed the amendment to the Code of Criminal Procedure on December 10, 2019. The highlights of the amendment include:
(1) the victim of a major crime, such as violation of the right life, body, freedom or sexual autonomy, etc., may file an application with the presiding court for participation in the criminal procedure. The victim, after being allowed to participate in the procedure, may engage an attorney as legal representative, who may examine the file documents and evidence and may transcribe, duplicate and photogragh the same on behalf of the victom. The notification of hearings and trials shall be served upon the participant and the attorney. The participant may express opinions regarding the investigation of evidence and the sentencing.
(2) For protection of victims, the victim may be adequately seperated from the defendant by protective device during the investigation. In addition to the victom’s legal representative, spouse and reletives, the victom’s psychiatrist, counselor, and trusted person may also appear with the victom with the victom’s consent.
(3) The movant of a motion for retrial may engage an attorney to file the motion. The court shall allow the movant an opportunity to express opinion before the court. If the court denies the motion for retrial, an application for reconsideration may be filed within 10 days. (Andy Lee, Esq.)
The Code of Criminal Procedure was further amended concerning procedural protection, specifying addition types of preventive detention and extending the prescriptive periods of remedy.
The Legislative Yuan passed further amendment to the Code of Criminal Procedure on December 17, 2019. The highlights of the amendment include:
(1) In terms of the procedural protection in the investigation stage, the amendment expressly provides that the defendant to examine the investigation transcripts with the assistance of counsel, and express opinion concerning the transcripts.
(2) In terms of the protection concerning the procedure of arrest, the amendment provides that the defendant or suspect shall only be arrested without summons only when “necessary”; and that the reason for the arrest shall be specify in writing to the defendant or suspect and the designated friend or family member while making the arrest.
(3) The major crimes with higher rate of recidivism, the crimes that violate physical autonomy or sexual autonomy and the crime of aggravated fraud are added to the list of offenses that preventive detention is allowed;
(4) The time period for an application for reconsideration is extended to 10 days, the time period for filing an appeal is extended to 20 days, and the time period for submitting supplementary reasons for appeal is extended to 20 days;
(5) When an appeal is pending in the third instance court, the restriction on border or island exit shall be imposed or removed by the second instance court. (Andy Lee, Esq.)
Amendment to the State Compensation Act was passed to add new provisions, including that the state shall have no liability when people engages in dangerous activities.
The Legislative Yuan passed the amendment of the State Compensation Act (the “Act”) on December 3, 2019, which was promulgated by the President and became effective on December 18, 2019. The highlights of the amendment include: where the managing authority has placed appropriate warnings or signs regarding the use of public properties and facilities therein, the State’s shall bear no or reduced liability to those who nonetheless engage in adventurous or dangerous activities thereon; the “physical liberty” is included as one of protecting objects under the Act; and the State shall be liable for damages incurred from the use of the public facility which is commissioned for management by a private organization or individual. (C.H. Chen, Esq.)
The Financial Supervisory Commission (“FSC”) set the guidelines for the representative of a financial enterprise to serve concurrently as the director or supervisor of a bank.
On November 13, 2019, the FSC issued the letter interpretation No. Jin-Guan-Yin-Kong–Zhi-10802733981 to specify the guildlines for principal officers of a financial enterprise to serve concurrently as director or supervisor of a bank. Under the current regulations, the directors or supervisors of a bank may be concurrently served by the principal officers of a financial enterprise by virtue of the investment relationship between the bank and the financial enterprise or upon the approval by the competent authority. The FSC indicates in the letter that the aforesaid “investment relationship” shall mean:
(1) the financial enterprise has directly invested in the bank, or
(2) the holding company of the financial enterprise or a subsidiary of such holding company has invested in the bank.
Further, in order for the principal officer of a bank to effectively perform the duties of both positions and to avoid conflict of interest, the FSC divides the circumstances of the principal officer of a financial enterprise serving concurrently as director or supervisor of a bank into three categories:
(I) No conflict of interest is presumed: This includes: the director or supervisor of a bank is concurrently served by the principal officer of its holding company, or a subsidiary of the holding company which is engaged in non-financial business, or a foreign bank whose holding company has no branch in Taiwan; or by the manager of a non-business departmet of a domestic or foreign bank (whose holding company has branch in Taiwan). It is presumed that there exists no conflict of interest in these circumstances provided that such person execuates a declaration stating that there is no conflict of interest.
(II) Conflict of interest is presumed: This includes: the director or supervisor of a bank is concurrently served by the director or supervisor of a domestic or foreign bank whose holding company has branch in Taiwan, or by the manager of a department of a domestic or foreign bank (whose controlling company has branch in Taiwan) that operates a different line of business. It is presumed that a conflict of interest exists in these circumstances. The person is to serve both positions must elaberate the lack of conflict interest by a signed declaration and submit it to the FSC for determination. The FSC will approve or deny the proposed concurrent positions on a case by case basis.
(III) Deemed to have a conflict of interest: The FSC specifically indicates that the chairperson or general manager of a domestic or foreign bank whose holding company has branch in Taiwan, or the manager of a department of a domestic or foreign bank (whose controlling company has branch in Taiwan) that operates the same line of business shall not concurrently serve as director or supervisor of a bank.
The FSC relaxes the control threshold over foreign futures commission merchants which conduct sub-brokerage business exclusively.
Article 22 of the Regulations Governing Futures Commission Merchants provides that
(1) when shareholders’ equity of a futures commission merchant is less than 60% of minimum paid-in capital, such futures commission merchant shall immediately report to the FSC-designated institution, and when it is less than 40%, such futures commission merchant shall immediately cease accepting orders from futures traders and submit a rectification plan to the FSC designated institution;
(2) when adjusted net capital of a futures commission merchant is less than 20% of the total amount of customer margins required for the open positions of futures traders, such futures commission merchant shall immediately report to the FSC or the FSC-designated institutions; and when it is less than 15%, such futures commission merchant shall immediately cease accepting orders from futures traders and submit a rectification plan to the FSC or the FSC-designated institutions.
The FSC relexes the aforementioned regulation by its letter No. Jin-Guan-Kong-Chi-Zhi 1080360743, dated October 30, 2019. Now, a future commission merchant does not need to report until its shareholders’ equity is less than 50% of minimum paid-in capital, and does not need to cease accepting orders from futures traders or submit a rectification plan until the ratio is less than 30%.
In addition, if the parent company of a foreign future commission merchant has included the operation risk of the Taiwan subsidiary when calculating its net capital amount or ratio pursuant to the laws and regulations of its local jurisdiction and if such amount or ratio meets the regulative standards thereof, such future commission merchant may, upon approval by the FSC, be exempt from the above-referenced regulations in connection with the adjusted net capital. (Andy Lee, Esq.)