LEGAL UPDATES - TAK Associes and Ecovis International

Amendment on guidelines of furlough for local labor authority


In July 2020, the Ministry of Labor (MOL) announced that local labor authorities shall follow revised guidelines to exam reporting of furlough from business entity and make a clear report line to its supervised authority.  The labor authority shall focus on the following matters:

1.  Furlough shall be effective under the consent between business entity and the employee.
2. Furlough shall be reported to labor authorities actively, and if there is a change of prescribed furlough, business entities shall report to labor authorities from time to time.
3.  Furlough shall be constructed on the basis of furlough agreement provided by the MOL.
4.  If labor authorities receive any complaint regarding furlough issue, the authorities will initiate examination procedure and other actions.

Business entities shall therefore be more cautious on procedural issues and, substantive matters (wage calculation, working hours, etc.) when implementing furlough policies for employees.


Specialized Business Court Business Disputes Procedure Act will be effective in July 2021


On January 15, 2020, was announced the Business Disputes Procedure Act (the Act) to be effective by July 1st, 2021.  The enforcement of this Act will change the procedure, the measurement and other related regulations involving a business dispute.

It refers to cases involving operations of at least NT$ 100 million for listed company. These business cases shall be settled in a prompt manner. Special Business court is used to tackle with these issues under the Act. Whenever the dispute arises in connection with those cases, the dispute shall be settled in Special Business Court and shall follow the procedure of the Act.

It is mandatory to assign lawyers to tackle with business cases. Mediation procedure is also mandatory to undergo with expertise of related fields, and has to last up to 60 days. Only if no agreement is reached, the parties would enter litigation procedure.

Also, this procedure adapts technological measurements, such as, filing brief and submitting evidence through internet; the hearing can also be handled via video conference. This may reduce time of transmission of the documents, transportation and thus can speed up the whole hearing procedure.

Other new approaches, such as inquiring system, professional witness, secret protective order, are integrated into the Act. Related regulations, assignment of lawyers, calculation on remuneration of lawyers, procedure on brief transmission, etc., are under drafting to finalize the enforcement of the Act.


COVID-19: New policy on entering Taiwan as from August 1st, 2020


On August 1st, 2020, National Immigration Agency of the Ministry of the Interior (MOI), announced a new policy on entering Taiwan in this difficult time of COVID-19.

1.  People are subject to a 14-day quarantine after entering Taiwan:
Holders of Taiwanese nationality, and foreigners holding legal alien resident certificate (ARC) or alien permanent resident certificate (APRC) shall be subject to a 14-day quarantine.

2.  People shall submit the a negative test for COVID-19 three days before boarding, and are subject to a 14-day quarantine:
Applicable to non-holders of ARC or APRC.

3.  People from Hong-Kong and Macau shall submit a negative test for COVID-19 three days before boarding, and are subject to a 14-day quarantine after entering Taiwan, if:
 (1) They are holding a special permit for business’ purpose, humanity reasons; or
 (2) They are students holding legal entry permit issued by Ministry of Education.

 4. People from Mainland China
 (1) People subject to a 14-day quarantine after entering Taiwan:
A. Applicable to a Taiwanese spouse or a Chinese kid less than two-years-old who has a Taiwanese parent who holds a legal residential certificate.
B. Applicable to people who are graduating students approved by the Ministry of Education.
 (2) People shall submit the negative test for COVID-19 three days before boarding, and are subject   to a 14-day quarantine after entering Taiwan.
Applicable to people accompanying a kid to enter Taiwan who hold legal entry permit due to family reunion.


Accelerated Examination Program of Trademark Application


The number of trademark applications has been skyrocketing for the past years in Taiwan with a record of 86,794 applications in 2019. The Intellectual Property Office (“the IPO”) was thus mandated to speed up the application procedure to meet the needs of applicants, and to ensure robust protection against infringement.

The trademark examination procedure suffers from being under-staffed, which encouraged the IPO to introduce an accelerated examination program. This fast track mechanism will shorten the examination term for trademark application from 5 to 4 months.

This program will begin on May 1st with online applications. Graphic trademarks (i.e. any sign with distinctiveness: words, devices, symbols, colors, ...) shall be subject to this application, while trademarks in three-dimensional shapes, motions, holograms, sounds or certification marks, collective membership marks, and collective trademarks are excluded from this program.

Name of graphic trademarks must be consistent with the reference provided by the IPO and the application fee can be paid online.

Labor Issue: New Compliant Approach Against Sexual Harassment


The Minister of Labor (“MOL”) announced the amendment to the Regulations for Establishing Measures of Prevention, Correction, Complaint and Punishment of Sexual Harassment at Workplace to protect employees or candidates’ rights when suffering from sexual harassment at work.

According to the current Regulationsany employer with over 30 employees is required to set up measures of prevention, correction, complaint and punishment of sexual harassment. These measures shall be then posted in the workplace and be acknowledged by all employees.

In case of sexual harrasment, the employee or candidate will have two channels of protection, either through the internal complain channel, or through external complain with local authority if the perpetrator is the employer. The employer is obligated to add this amendment to its current measures.

The amendment of the Regulations concerns more than 30,000 employers and will be enforced starting November 1st.  Any failure to abide by this amendment will result in fines ranging from 20,000 to 300,000 NTD.

Regulation for Subsidy Under Quarantine of COVID-19


The government issued the Special Act of COVID-19 Prevention and Financial Reliefs and Related Regulations to counter the effects of COVID-19.

One of them, issued late March by the Ministry of Health and Welfare, allows citizens under quarantine to apply for subsidies of 1,000 NTD per day. The subsidy can however be perceived only if the applicant complies with the quarantine instructions given by the National Health Command Center.

The Ministry of Health also calls for subsidy applicants to act in good faith by, for instance, refraining from making unnecessary trips to Level 3 countries, as prescribed in the travel notice. Failure to comply with this rule will result in the exclusion from the subsidy program.


Measures In Response To The COVID-19 Coronavirus Outbreak

The public and many industries are greatly affected by the COVID-19 coronavirus outbreak. As a result, the Taiwanese Government issued a Special Act of COVID-19 Prevention and Financial Reliefs on February 25th. The purpose of this Act is to support the public in preventing the disease and, when needed, recovering from it. The Act also provides financial relief to industries most impacted by the virus, whether financially or operationally

Regarding people in quarantine, professionals unable to work because they take care of family members in quarantine are entitled to a quarantine leave.  They may apply for a government-granted subsidy up to 1,000 NTD per day . Companies granting paid quarantine leave to their employees are entitled to tax reduction.

As regards industries, companies producing protective equipment or raw materials requisitioned by the government can apply for subsidy or compensation granted in the Act.

Additional measures will soon be taken by the Ministry of Labor, such as subsidy programs for employees with unpaid-leave and companies with operational difficulties.



Draft Amendment to Regulations On Foods Products' Labeling


On March 11th, the Ministry of Health and Welfare promulgated a draft amendment to the Regulations Governing of Criteria for the Label, Promotion and Advertisement of Foods and Food Products Identified as False, Exaggerated, Misleading or Having Medical Efficacy.

Under the amendment, food products labeled as “healthy” are prohibited unless they have been certified by the Health Food Control Act authorities. Such certification aims to avoid misleading labels and consumer confusion on products' health benefits.

This amendment will only be enforced starting January 1st, 2022, yet at this date, transgressing manufacturers will risk fines ranging from 40,000 NTD to 4,000,000 NTD. The authorities are also entitled to recall and correct the label within a prescribed time period.



Taiwan Taxation Rules On Share Transfer


The Taiwan Ministry of Finance issued an explanation on February 21st, on the taxation of transfer of shares of a Limited Company (only).
The Ministry basically clarified that:
1. Shares of Limited Companies are not securities and are thus exempt from the securities transaction tax (0.3%);
2. Any gain made from that transaction (sales amount – original capital investment) is considered as income from property;
3. Any income or loss resulting from that share transfer shall be reported on the annual return to be filed by those shareholders involved.



Draft Amendment Regarding Patent Application Online


According to current Patent Act in Taiwan, applicants can file their patent application online, although the process can be time-consuming and the required documents too heavy to upload.

Consequently, the Ministry of Economic Affairs intends to facilitate the electronic filing mechanism under the Regulations Governing the Implementation of Filing Patent Applications and Services by Electronic Means.

Applicants will have non-electronic alternatives to file their application if file sizes are beyond a predetermined size, or if the information system encounters a breakdown.

Besides, the filing date shall differ depending on the filling medium. In general, the date on which the authority receives the file will be the filing date. However, if it is delivered by post-office, the postmark date will be the filing date.


New Proceedings For Commercial Matters


The President and the Administration Yuan published on January 15th the Intellectual Property Court and Commercial Court Organization Act and the Commercial Matter Proceeding Act. These new measures aim to promote economic development in Taiwan, and facilitate proceedings to reach fairer decisions in commercial disputes. It is the first time that major cases of commercial disputes will be handled by a professional court, namely the Commercial Court, rather than a common one.

According to the Commercial Matter Proceeding Act, major commercial cases will be referred to the Commercial Court, which will apply special proceedings to cases ranging from disputes of over 100 million NTD between a director and his company to insider tradingfinancial statement fraud or other criminal liabilities regulated by the Securities Transaction Act of over 100 million NTD. The court will also have authority over disputes in shareholders' or board of directors’ meeting.

Negotiation by mediation is required before judicial proceedings, and attorneys are to be present before the court. During the hearings, the parties may appoint expert witnesses to submit professional opinions and may propose inquiries to the other party. If any trade secrets are involved in the court files, the party may apply for a Secret Protective Order.

Draft Amendments To The Trademark Act


In January, the Ministry of Economic Affairs (MOEA) announced draft amendments to the Trademark Act, following a thorough consultation with experts, scholars, as well as two consultation conferences and one public hearing..

In this draft, 14 articles are amended and 2 articles have been added.

Majors changes include: authorising attorneys at law or CPAs only, or anyone meeting the regulated qualifications, to be agent to practice trademark matters (1); introducing express examination for trademark application to accelerate the registration (2); removing the previous condition of refusing application for registration infringement trademark, to simplify the procedure. Instead, trademark could be examined to challenge its validity upon this ground and the interested party can be free from the 5-years statute of limitation prescribed in the current Trademark Act (3).

More Transparency and Flexibility For Copyright


Taiwan Intellectual Property Office announced draft amendments to the Copyright Act of Taiwan on January 30th to clarify the definitions of the intangible use of copyright, such as public broadcast, public performance and public transmission, as a response to the widespread use of streaming media, e-books and IPTV.

According to the current Act, the copyright shall be assigned in its whole to either the author or its employer. The assignment of the copyright ownership will be more flexible, allowing the parties to agree to allocate the copyright partly, or to assign to a third party.

The exclusion of copyright infringement will also be more specific. To clarify Article 65's authorisation of "fair use" of copyright, new amendment lists circumstances where copyrights are not infringed under Article 44 to Article 63, such as use of works for the purpose of teaching, education, public policy announcement, news report and research. 

Damages for infringement may be calculated based on the applicable royalty fees under the new amendment, which will be a relief to the copyright owner, currently burdened to prove the actual damage amount incurred by the infringement.


More Protection Of The Confidentiality of Trade Secret Cases


On December 31st, 2019,  Taiwanese legislature amended the Trade Secret Acts, by introducing aconfidentiality order for investigation system . This partial amendment aims at strengthening the confidentiality of the trade secret cases.

Beforehand, people involved in trade secret cases currently under investigation did not have the obligation to keep relevant information confidential, which increased the risk of disclosure. The amendment now allows prosecutors to issue a confidentiality order to designated parties, whom will thus be prohibited to disclose sensitive trade secret information to third parties. If the confidentiality order is violated, the person shall be liable to imprisonment of up to 3 years and/ or a fine not exceeding 1 million NTD, regardless of the location of the breach.

This amendment may increase the protection of companies’ trade secrets and is regarded as an incentive for the foreign investment.

Tax Deduction with Substantial Investment 


As soon as July 24th 2019, new amendments of the Statute for Industrial Innovation have become effective, to improve industrial environment and innovation. This January, the Ministry of Finance thus clarified these new rules, namely the Regulations on Deduction of Undistributed Earnings and Application for Tax Refund for Substantive Investment Made by a Profit-seeking Enterprise or a Limited Partnership.

A company may now deduct the amount of substantial investments from undistributed earnings of the current year, for assessment of business income tax leviable on undistributed earnings from the year 2018, if the company meets the following 4 requirements:

1. The undistributed earnings are used to construct or purchase buildings, software or hardware equipment, or technology for use in production or operation (“Substantial Investment”);
2. Undistributed earnings are derived from and after year 2018;
3. They will be used in Substantial Investment within 3 years from the year they are derived;
4. The amount of the Substantial Investment is less than 1 million NTD.

The date of investment may be defined as the date of registration of ownership, or of delivery (in purchase), the date of the Use License Approval for building or acceptance of construction. 

As for the flexibility in commercial practices, the Ministry of Finance indicated that may arrange their time schedule for delivery or construction acceptance dates in different installments to allocate the deduction of the undistributed earnings in different years.

New Regulations For Labels On Cosmetic Products


The Ministry of Health and Welfare recently announced that the administrative rules regarding the "Criteria for Proper and Improper Label, Promotion on Cosmetic Products" which took effect in 2017 shall no longer be applied as of January 7th, 2020.

Instead, the regulations "Governing Criteria for the Label, Promotion, Advertisement with Deception, Exaggeration, or Medical Efficacy of Cosmetic Products" prescribed based on the Cosmetic Hygiene and Safety Act shall prevail.

The Regulations contain new criteria on cosmetic products’ labeling, promotion or advertisement, such as (1) false or exaggerated; (2) commonly used phrases exemplified (3) the phrases of ingredients’ physiological functions exemplified (4)  the cosmetic products identified as having medical efficacy.

The Adjustment of the Table of Grades of Labor Insurance Salary


The Bureau of Labor Insurrance (BLI) recently adjusted the Table of Grades of Labor Insurance Salary, further to its objective of adjusting the Basic Wage from NTD 23,100 to NTD 23,800 per month. All adjustments will be effective on January 1st, 2020, meaning that although the Insured Units are not required to file applications for the adjustment, full-time worker’s insurance and newly insured workers or employees shall receive the minimum salary of NTD 23,800. The estimated increase in the premiums will be about up to NTD 2,500,000,000, due to the change of the calculation basis. As for the changes in content, the Table of Grades will still contain 16 grades with unchanged numbers, except for the first (wage amount raised from NTD 23,100 to NTD 23,800) and the second (wage amount raised from NTD 23,801 to NTD 24,000). Furthermore, monthly insurance salaries for employees earning less than the basic wage will be reported as the first grade (NTD 23,800). These include trainees of vocational training institutions, part-time workers and disabled insured persons under sheltered employment programs.

New Measures on Online Sales of Non-quarantined Meat Products


On December 3rd, the Taiwanese legislation passed the draft amendment to the Statute for Prevention and Control of Infectious Animal Disease. False information on infectious animal disease may indeed have a significant impact on people’s daily life and the industry's development. According to this amendment, anyone spreading rumors either rumors about infectious animal diseases or false information about epidemics will be subjected to a fine ranging from NTD 50,000 to NTD 1,000,000. Furthermore, a new provision has been added following the recent outbreak of African swine fever in Asia. E-commerce operators shall put epidemic prevention warnings in their online advertisements, or in sales of imported meat products subjected to quarantine regulations. Also the information of the advertisers, sellers or buyers shall be well preserved. If the e-commerce operators delete those website pages, they can be subjected to a fine ranging between NTD 30,000 to NTD 150,000 per violation.

New Amendment on Fake Trade Certificates and Labels of Origins


The Taiwanese legislature passed an amendment to the Foreign Trade Act on December 3rd, raising the maximum fines from NTD 300,000 to NTD 3 million for the use of fake trade certificates or fraudulent labels of origin. Such fines apply not only to import and export companies, but also to authorized organisations that issue illegal certificates of origin, industrial associations, business organizations, farmers’ associations, fishermen’s associations, provincial agricultural cooperatives and agricultural product and marketing associations. The goal of such high fines is to safeguard the reputation of Taiwan, as the country has been absent from the U.S. Special 301 Watch List for intellectual property violations since 2009.

ARC numbers to be changed to a Taiwanese-ID format


The National Development Council announced at the beginning of November that the number format on Alien Resident Certificates (ARC) would be changed by October 2020. The current format of ARC cards, namely two letters and eight digits, has indeed historically been troublesome for foreign nationals, notably as regards the access to online services. The European Chamber of Commerce Taiwan (ECCT) welcomed this announcement as it released its 2020 position paper, a document grouping suggestions and recommendations of policy change in Taiwan. Roughly a million ARC and APRC card-holders should thus receive new numbers matching the Taiwanese ID format of one letter and nine digits starting in October 2020.

New Amendments to the Patent Act


The Patent Act of Taiwan was amended for the fourteenth time on May 1st 2019. The latest amendment became effective on November 1st, 2019, introducing some of the following changes

1. Divisional patent applications:
Both invention and utility model patents are now allowed to apply for divisional patents. The time limit to apply has also been extended from 30 days to 3 months after the date on which an approval decision for the original patent application or re-examination is served.

2. Increase the efficiency of invalidation proceedings:
A requester of invalidation action shall as of now provide invalidation reasons or evidence within 3 months after the date of filing. The reason or evidence shall not be examined if the requester does not respect this deadline.

3. Post-grant amendment to utility model patents:
Prior to this amendment, any post-grant amendment to utility model patents could be done through formality examination. Now, the patentee is allowed to apply for post-grant amendment to the utility model patent under invalidation proceedingswhether under the process for technical evaluation report application, or under a litigation. In addition, amendment review will be based on substantive examination rather than formality examination for greater effectiveness during disputes.

4. Extension for the protection term of design patent
Design patent terms have been extended from 12 to 15 years following demands of the industry to align with the regulations applied by the Hague Agreement member-states.

"Fake origin labels" Draft Bill Passes review


As draft amendment to the Foreign Trade Act passed the legislature’s Economics Committee review on November 18th. The amendment aims to increases fines for the use of fake certificates of origin on imported and exported goods, especially for high-tech products transported to unrestricted regions. Currently, such fines range from NT$30,000 to NT$300,000, and will be changed, should the draft pass, to a bracket between NT$60,000 and NT$3 million. In addition, the bill introduces a « whistle-blower clause » to encourage people to denounce offenders. The draft amendment was introduced following several cases or fraudulent labelling from importers. The government had indeed identified several companies re-tagging Chinese products with false labels of origin to avoid anti-dumping tariffs, or to ship them to the United States in the context the trade dispute.

New Income Tax Act: Deduction of Necessary Expenses


The Taiwanese Ministry of Finance published on November 8th the “Regulations Governing Scope and Identification of Allowable Deductions of Necessary Expenses from Individual Salary and Wage”. These regulations aim to clarify the amendments made to Articles 14 and 126 of Income Tax Act (“the Act”) last July.

Article 14 indeed provides that the amount of income from salaries and wages shall be all salaries and wages earned for performing duties or doing works after deducting the “special deduction of income from salaries/wages”. The amount of this special deduction is now fixed to 20,000 NTD this fiscal year.

The new Regulations also specify that, if the total amount of the “necessary expenses” directly related to the work or services rendered and paid by the income taxpayer is higher than 20,000 NTD (“special deduction”), the taxpayer may choose to deduct these necessary expenses from salaries and wages alternatively, and the amount of income shall be the balance after deducting these “necessary expenses”. 

Finally, the necessary expenses provided in the new Article 14 are stated to be: vocational clothing expenses; upgrading training expenses and vocational tool expenses. According to the Regulations, the amount of deduction of each necessary expense shall not exceed 3% of the income from salaries/wages.

New Labor Law Starts From 2020



To enhance the protection of the labors and to facilitate the proceedings of labor disputes in Taiwan, the legislature has passed the Labor Incident Act on November 9th 2018. This new law will come into force from January 1st 2020. The courts of all levels shall establish Labor Professional Courts to deal with labor disputes cases under this new act.

According to this new act, upon any labor disputes submitted to a court, a mediation shall be arranged by the court before any litigation proceeding. The composition of this labor mediation committees will be one labor court judge and two committee members, who should be professionals with knowledge and experience in labor affairs. If the two parties agree, the mediation committees may determine the terms and conditions to resolve the mediation, and these terms and conditions shall be deemed as an establishment of mediation. Or, the mediation committees may present an appropriate proposal and inform the two parties. If no dissent is raised within 10 days after the receipt of the notice, this proposal shall be deemed as an establishment of mediation. If the labor dispute is settled through the mediation, the established mediation will carry the same legal weight as a final and binding judgment. If no settlement is achieved through the mediation, the litigation proceeding will go on.

This new labor law also aims at expediting the proceedings. The mediations procedure shall be completed in 3 months. The labor court shall in general conclude the oral argument within 1 session, and the first instance trial should be concluded within 6 months. Besides, other measures to enhance the rights of the labor have been included into this new act. Such as: if the labor initiates an action for the confirmation of the employment relationship, wages payment, pensions, or severance fees, 2/3 of the court fee may be temporarily waived. If the ongoing litigation has caused great hardships to the labor’s livelihood, the labor may motion for a temporary status quo injunction to receive a certain payment of his wages, workers' compensation, pension or severance pay ex ante.


Access to Corporate information Under New Company Act



For the purpose of increasing corporate transparency and anti-money laundering, in the amendment to the Company Act of Taiwan made on August 1st 2018, a new article 22-1 has been added, which regulates that the companies shall report annually the information of its key managers and shareholders to the online Information Platform. Such information includes the names, nationalities, birthdays, or the dates of its incorporation registration, identification numbers, numbers of shareholding or capital contribution of the company’s directors, supervisors, managerial officers, and shareholders holding more than 10 percent of the total shares of the company.

The authorities are now considering that whether the court, prosecutors’ office or other administrative authority may have access to such information for cases irrelevant to anti-money laundering. Generally, if necessary, the prosecutors’ office or court may ask for any document or information which is held in a government agency's custody or in a public officer's possession, as authorized by the Code of Civil Procedure and Code of Criminal Procedure of Taiwan. However, the controversy arose among the authorities during a meeting on August 5th 2019, for the issue of the application of the implement rules of this article 22-1 of the Company Act, which is Regulations Governing Reporting and Management of Information on Article 22-1 (“Regulations”). Since the above information is highly private and confidential, this Regulations provide that the Information Platform shall keep the information held by it confidential unless otherwise provided by this Regulations or other laws. And the administrative authority, prosecutors’ office or court may inquire or obtain such information if it is necessary to use or access such information, to handle, investigate or hear any litigant proceeding related to money laundering activities.

The Anti Money Laundering Office of Taiwan considers that, to increase the corporate transparency and based on the rules in the civil and criminal procedure code, even for cases irrelevant to anti-money laundering, the court and prosecutors’ office shall have access to such information. However, the regulation committee of Ministry of Economic Affairs of Taiwan and other commercial associations hold that it shall be limited to anti-money laundering cases, based on the protection of personal information concern and the original purpose of the establishment of this Information Platform. Therefore, it seems that further discussion is required in regard to this issue.


New Study On Data Protection



On October 1st, The Court of Justice of the European Union (CJEU) ruled on the validity of consent to cookies via pre-checked boxes. The Court analyzed the case in light of the General Data Protection Regulation (GDPR), finding that only a positive and active behavior would qualify as indicating the website user’s wish regarding his or her data. Hence, pre-checked boxes requiring users to deselect the box are illegal. Studies conducted at the University of Michigan had indeed demonstrated that the acceptance rate for website cookies plummets from 83% when the box is pre-checked, to merely 0.16% when it is not. Common user apathy and disinterest for terms and conditions were thus obviously relied on to collect data against user's will, especially since, in 86% of the most popular websites visited in the EU, opting-out of the use of cookies was not even an option. 


New EU standards on customer authentication



Starting September 14th 2019, Regulation 2018/289 regarding online customer authentication will be entering into force in the European Union. This Regulation establishes the requirements for payment service providers to protect the confidentiality and integrity of personalized security credentials. 

The main requirement is the implementation of monitoring mechanisms to detect unauthorized or fraudulent payments, taking into account a list of risk-based factors, among which the amount of each transaction, the list of stolen authentication elements or signs of malware infections during the procedure. 

Exemptions however apply for low-value contactless payments at points of sale, as well as for electronic payment transactions initiated at unattended terminals where operational reasons make the regulations difficult to implement.


Towards an important strengthening



On May 30th 2018, the European Parliament and European Council modified the EU Directive 2015/849 through an ordonnance implementing the new anti-money-laundering directive (Directive (UE) 2018/843). The most important change is the replacement of Article 18(2), which constitutes an obligation to declare complex transactions to relevant FIU (TRACFIN in France). 

The Article is as follows:
'Member States shall require obliged entities to examine, as far as reasonably possible, the background and purpose of all transactions that fulfills at least one of the following conditions: they are complex transactions; they are unusually large transactions; they are conducted in an unusual pattern; they do not have an apparent economic or lawful purpose. In particular, obliged entities shall increase the degree and nature of monitoring of the business relationship, in order to determine whether those transactions or activities appear suspicious'


Amendments to the Food Administration Act and the Agricultural Products Market Transaction Act


As the spread of fake news and misinformation in social media greatly impacts public tranquility, Taiwanese legislators amended both the Food Administration Act and the Agricultural Products Market Transaction Act on June 21st 2019. New articles effective since July 17th prohibit any person to deliberately disseminate rumors or false information affecting either the market food price, the competent authorities’ implementation of programs on food production and marketing, or public rice procurement. Any damage is subjected to a fine ranging from NTD 60,000 to NTD 300,000. Since August 15th, the Agricultural Products Market Transaction Act also applies this fine. 'False information' may include any information, news, data, advertisements, reports, poll, events or other forms, whether spread in verbal, writing, or video, via the press, the internet or other media

More protections on contracts, wages and accidents in the Labor Standards Act


Article 9 of the Labor Standards Act now compels dispatch agencies to replace fixed-term contracts between workers and agencies with non-fixed-term contract. Non-compliant agencies are exposed to fines ranging from NTD 20,000 to NTD 1 million in case of violation. Dispatched workers may furthermore require their dispatch agencies to pay wages 'if the dispatch agency is fined by the authority for owing the dispatched worker wages or was ordered to pay by a deadline but has failed to comply'. Should the client company be asked to pay for wages, it may either ask the agency for reimbursement or deduct these expenses from the agency's fees. Regarding occupational accidents, both the dispatch agency and the client company shall be jointly and severally liable for compensation bore by employers. To prevent dispatched worker transfers by client companies, a new article stipulates that “a client company shall not interview the dispatched worker or undertake any other conduct of appointing a specific dispatched worker before the dispatch agency and the dispatched worker sign a labor contract”. Dispatched worker has 90 days to execute a contract with the client company. The client company shall negotiate about contract within 10 days after receiving such notice.

Possible abrogation to be submitted to the Legislative Yuan for voting


Last August, the Taiwan government approved abolishing the stamp tax (up to 4% on the transaction amount). The Stamp Tax Act, passed in 1934, currenly applies to the following transactions: receipts for certain monetary payments, contracts to perform a specific job, task contracts for the sale of movable properties, as well as contracts for the sale, transfer and subdivision of real estate. In practice, the tak also applies to contracts such as Shares Purchase Agreements (statiscally more frequent than mergers). Yet, although local businesses support the move to repeal the Act, a strong opposition has emerged from local governments in Taiwan, for whom the tax is a substantial source of income. The outcome of the vote at the Parliament is therefore unclear at this stage, and will be discussed this year 2019 as a top priority matter for the government.

Increase in Penalty for Drunk Driving


On March 26, 2019, part of the amendments to the Road Traffic Management and Penalty Act in Taiwan was passed by the legislature, and is effective as from July 1, 2019.


Fines for DUI for car drivers vary from 30,000 to 120,000 NTD while penalty for motorcycle drivers remains the same , ranging from 15,000 to 90,000 NTD. For the 2nd DUI, the maximum penalty is applicable (90,000 or 120,000 NTD), to which 90,000 NTD is added for each additional DUI.

Suspension of license goes from 1 to 2 years and can be prolonged up to 4 years in specific cases.

Skipping checkpoints or rejecting the BAC (Blood Alcohol Concentration) test goes from 90,000 up to 180,000 NTD. The same amount is applicable for any other individual offense.

Drunk driving limitation: from 0,15 mg/l (through breath) - from 0,03% (in blood)

Passengers aged 18 and + will be fined as well from 600 to 3,000 NTD. Slow-vehicles are fined 600 to 1,200 NTD (drivers refusing BAC will be fined 2,400 NTD).

Breakthrough in Cryptocurrency Governance in Taiwan


The Financial Supervisory Commission (FSC) published an interpretation on July 3rd defining cryptocurrency and including it under the current legal framework in the Securities and Exchange Act.


Virtual currencies that contain a nature of securities shall belong to “Securities”. It shall mean the application of cryptography, distributed ledger technology or other similar technology that represents the value stored, exchanged and transferred in a digital way and is in circulation on the market. It shall also contain a nature of investment as follows:

- Investors contribute to the capital;

- Investment is based on a common business and plan;

- Investors expect to earn profits;

- Profits are decided by the efforts of both the issuer and a third party.


This is the first time that Taiwanese government takes official action. It is a milestone in the development and governance of cryptocurrencies. However, the government's next steps and attitude in the long run remain uncertain.

Mergers and Acquisitions in Taiwan: Conflicts of Interest


What is cash-out merger ?

After a merger, the surviving or the new company (acquiring company) may issue new shares to the shareholders of the dissolved company (target) as compensation. The acquiring company may choose to pay cash.


Policies in Taiwan

In order to facilitate the procedure for mergers and acquisitions, the Business Mergers and Acquisitions Act of Taiwan (the M&A Act) now provides that the shareholders or directors with personal interest may exercise their voting right for the merger resolution. On the other hand, to balance the right of the minority shareholders, the shareholders of the target company may request the acquiring company to buy back the shares at the fair price (appraisal right). In case no agreement is reached within 60 days since the resolution, to ensure the fair price, the dispute shall be submitted to and settled by the court upon application.


Constitutional Interpretation NO. 770


However, the Interpretation NO. 770 further indicated that information on personal interests shall be available to other shareholders within a reasonable period prior to the Board or General meeting; and measures shall be taken if there is not enough information.


Regulations of the Duty of Disclosure


For public companies, according to the article 31 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies published by the Financial Supervisory Commission, in the event of any merger, demerger, acquisition, or transfer of shares of a public listed company, the company shall publicly announce and report the relevant information on the Financial Supervisory Commission’s designated website within 2 days after the resolution of board meeting.

The Taiwan Stock Exchange has amended its guideline for the Self-Regulatory Rules on Disclosure of Merger and Acquisition Information on April 24, 2019. The directors shall disclose their names, material information, the reason for exercising voting right or not exercising voting rights and the reason for approval or dissent.

In the course of mergers and acquisitions, it will be better for the shareholders to know whether the price is fair or underestimated. However, it may thus affect a company's strategy on mergers and acquisitions. In response to the Interpretation NO.770, the decision on whether there will be more duties of disclosure remains at the discretion of the legislative policy and is now discussed by the Taiwanese authorities.

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