Taiwan Update - April 2017.
Legal News & Analysis - Asia Pacific - Taiwan - Regulatory & Compliance - Energy & Project Finance - Labour & Employment
11 April, 2017
Changes in law and regulations
The Electricity Act was amended to liberalize the electricity market in Taiwan — The long-awaited amendments to the Electricity Act was approved by the Legislative Yuan on January 11, 2017 and promulgated by the President on January 26, 2017. The main revisions include: (1) power generation will be opened up for private investment; (2) renewable energy providers will be allowed to sell their power directly to customers; (3) consumers will have options to access green energy or conventional electric power. (Eugenia Chuang)
The “Directions Governing Anti-Money Laundering and Countering Terrorism Financing of Insurance Sector” were amended on Februray 2, 2017. The amended Article 3 provides that the Directions shall also apply to professional reinsurance enterprises and banks concurrently operating the insurance agent or insurance broker business. (Yen-ling Liu)
The “Regulations Governing the Preparation of Financial and Business Reports by Insurance Enterprises” were amended on January 24, 2017. With respect to the requirement to disclose investments and business operations in the Mainland Area, the amendments restrict such requirement’s applicability to an insurance enterprise exercising, directly or indirectly, significant influence or control over, or having a joint venture interest in, an investee company in the Mainland Area. In addition, when disclosing related party transactions, the amendments require insurance enterprises to set forth the names of the related parties and the nature of the relationship; where the transaction amount or balance of a disclosed related party transaction reaches 10% or more of the said insurance enterprise’s aggregate amount or outstanding balance for such transactions, the names of the related parties shall be listed individually. (Yen-ling Liu)
Article 163 of the Insurnace Act was amended on December 28, 2016. With respect to the obligation of an insurance broker to provide a written analysis report to an insured prior to negotiating a insurance contract on behalf of the insured, the amendment limits the applicability of the obligation to situations falling within the scope prescribed by the competent authority. (Yen-ling Liu)
The Financial Supervisory Commission (“FSC”) amended the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” — The FSC amended the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” on February 9, 2017. The main amendments include: (1) loosening the standard governing the obligation of large companies to publicly announce and report on the acquisition or disposal of business or operational facilities in non-related party transactions; (2) exempting public companies engaging in the business of investing from public announcement requirements when acquiring and disposing of securities; (3) expressly requiring companies, when informed of errors or omissions in their public announcements, to provide new announcements and reports that include all of the items previously included, within two days starting from the next day of being so informed; (4) exempting the requirement for an expert opinion in transactions involving a parent company merging with its wholly-owned subsidiary or the merger of two wholly-owned subsidiaries of the same parent company. (Cherry Chen)
Legal news and case development
The Ministry of Labor issued a letter explaining the calculation of the overtime payment to employees who had agreed to work on a flexible rest day but who asked for leave on that day－ On February 7, 2017, the Ministry of Labor issued a letter regarding the overtime payment to be paid to an employee who agrees to work on flexible rest day but who asks for leave for a part of that day. In addition to the one-day salary that shall be paid by the employer according to Article 39 of Labor Standard Act (“LSA”), the overtime payment shall be calculated by the following formula: (the total overtime payment under Article 24 of the LSA assuming the employee did not ask for leave) minus (the overtime payment for the hours that the employee asked for leave based on the type of the leave). The payment to be deducted shall be calculated in accordance with the overtime payment on flexible rest days. (Elvin Peng)
Companies listed on the TSEC / OTC shall list electronic transmission as one of the methods for exercising voting rights when convening a shareholders’ meeting — The FSC issued a ruling on January 18, 2017, stating that all TSEC/OTC-listed companies shall list electronic transmission as one of the methods for exercising voting rights, in accordance with Paragraph 1, Article 177-1 of the Company Act. This requirement is no longer limited to those listed companies with paid-up capital of more than NT$2 billion and with over 10,000 shareholders as recorded in the shareholder register as of the last date on which share transfers were suspended. (Cherry Chen)
Judicial Yuan Interpretation No. 745: The Income Tax Act’s different treatment of income from professional practice and income from salaries and wages is without justification, and thus the relevant provisions are declared to be in violation of the Constitution. － The Justices of the Constitutional Court issued Judicial Yuan Interpretation No. 745, holding that: under the Income Tax Act, in the calculation of income earned from professional practice, necessary expenditure and expenses (e.g. rent for or depreciation of the place of business, depreciation of and repairing expenses for the facilities and equipment required for business) may be deducted. In contrast, when calculating income from salaries and wages, a taxpayers is only allowed to deduct a fixed statutory amount, and cannot deduct a greater amount by itemizing such expenses. Therefore, Judicial Yuan Interpretation No. 745 holds that the Income Tax Act’s different treament of income from professional practice and income from salaries and wages is without justification, and the relevant provisions are incompatible with the principle of equality under the Constitution. The competent authority is thus asked to revise the relevant provisions within two years. (Elvin Peng).
For further information, please contact:
C. Y. Huang, Partner, Tsar & Tsai Law Firm