一、Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the Regulations Governing the Preparation of Financial Reports by Securities Firms, the Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants and the Regulations Governing the Preparation of Financial Reports by Insurance Enterprises
In line with the adoption of International Financial Reporting Standards No. 16 “Leases” (IFRS 16) in 2019, the FSC announced partial amendments to the aforementioned regulations on July 13 and July 30, 2018 to enhance the transparency of financial information. The amendments include addition of accounting items including “right-of-use asset” and “lease liability” and stipulation that information relevant to leases should be disclosed in line with the requirements of IFRS 16. Besides, the amendments take into account external suggestions and regulatory needs, revise the regulations on measuring trade receivables (notes), stipulate that age of receivables should be disclosed and also adjust related appendices to employee benefits expenses.
二、Amendments to the Regulations Governing Offshore Funds
On July 13, 2018, the FSC introduced amendments to certain articles of the Regulations to be in line with the amendments of Securities Investment Trust and Consulting Act, and to enhance operation flexibility of investment consulting services relating to offshore funds conducted by securities investment consulting enterprises (“SICEs”). A total of three articles are amended this time:
1. Introducing a new regulation that lays down the criteria that a SICE has to meet for approval for its application of offshore funds consulting business.
2. Introducing a new regulation that in the case of an offshore fund represented by the master agent, the resumption of transactions of the classes that are offered and sold in Taiwan, the master agent shall submit to the Securities Investment Trust and Consulting Association in advance for review and approval, and publicly announce the matter within 3 days after the approval.
3. When an offshore fund institution conducts private placements of offshore funds with natural persons, juristic persons, or funds that meet the conditions set by the competent authority, the total number of counterparties may not exceed 99 persons.
三、Amendments to the Regulations Governing Securities Investment Trust Funds
On July 23, 2018, the FSC introduced amendments to certain articles of the Regulations to be in line with the Securities Investment Trust and Consulting Act, and to enhance the competitiveness of securities investment trust enterprises (“SITEs”) and operation flexibility of securities investment trust funds. A total of ten articles are amended this time, and the key points are:
1. In managing a securities investment trust fund to invest or trade, the SITE shall include the process of analysis, decisions, execution, and review in the internal control system and faithfully implement the system. The records of control activities shall be kept for at least 5 years.
2. The restriction on the investment by funds in structured interest rate products does not apply to the investments in floating rate bonds; bond funds that mainly invest in floating rate bonds (accounting for up to 60% of the fund’s net asset value) are not subject to the requirement that the weighted average duration of the fund portfolio shall exceed one year.
3. In order to increase competitiveness of SITEs and encourage these enterprises to provide diversified and innovative fund products to investors, SITEs that comply with the conditions set in the “Plan to Advance Excellence for SITEs” are allowed to specify the types, scope and percentages of investment in domestic and foreign securities in the securities investment trust agreement, and such terms and conditions are not subject to current regulations governing the investments.
4. When the SITE conducts private placements of beneficiary certificates with natural persons, juristic persons, or funds that meet the conditions set by the competent authority, the total number of counterparties may not exceed 99 persons.
四、Amendments to the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises
On July 30, 2018, the FSC introduced amendments to certain articles of the Regulations for alignment with the Securities Investment Trust and Consulting Act (hereinafter referred to as the Act) in order to provide incentives to offshore professional institutional investors for the engagement of domestic institutions to make discretionary investments and to help increase the assets managed by these institutions. A total of eight articles are amended this time, and the key points are:
1. For alignment with Paragraph 7, Article 62 of the Act, several regulatory requirements do not apply to professional institutional investors who are defined in Paragraph 2, Article 4 of the Financial Consumer Protection Act and have designated the custodian for the assets of discretionary investments. These requirements include placing the assets in the full fiduciary custody of the custodian institution by the client, signing a contract with the custodian institution, regulatory preparations before signing a discretionary investment contract, using transaction fees returned or other benefits to offset the customer''s transaction costs, fulfilling the monthly reporting obligation and notifying impairments of net asset value.
2. When a SITE or SICE that obtained business license for less than one fiscal year applies for the approval of its discretionary investment business, the stipulation that its net asset value of each share shall not be lower than the par value no longer applies to.
3. SITEs and SICEs shall create and implement the internal control system for their analysis, decisions, execution and review investments and transactions with the assets of discretionary investments. The records of control activities shall be kept for at least 5 years.