Important Measure October 2020
2021-01-07
1.Intraday Odd-Lot Trading Launched
To encourage young people and people with limited funds to invest in Taiwan stock market, (ie. to buy shares in quantities of less than 1,000 during regular trading hours) and to enliven odd-lot trading market, Taiwan’s securities markets launched the odd-lot intraday trading system on 26 October 2020. The odd-lot intraday trading has significantly contributed to the diversified development of the securities market.
2.Amendments to Form 8-7 of Article 23 of “Regulations Governing the Preparation of Financial Reports by Securities Issuers”to mandate TWSE/TPEx listed companies to disclose their remuneration policy, and the remuneration of the directors and supervisors in the annual financial reports (Amendment Date: 21 October 2020)
In response to the Securities and Exchange Act on 19 May 2020 introducing the new provision to mandate TWSE/TPEx listed companies to disclose their remuneration policy, and the remuneration of the directors and supervisors in the annual financial reports, the FSC amended the Form 8-7 of Article 23 of Regulations Governing the Preparation of Financial Reports by Securities Issuers on 21 October 2020. The main amendments are as follows:
(1)TWSE/TPEx listed companies should additionally disclose the remuneration of the supervisors (the current statement has already asked the companies to disclose the remuneration of the directors) and the company’s remuneration policy (including the directors, supervisors, managers and employees) in the “Summary statement of current period employee benefits, depreciation, depletion and amortization expenses by function”.
(2)The amendment shall be applicable for the financial reports covering periods ending December 2020 and after.
3.Regulations Governing Approval of Certified Public Accountants to Audit and Attest to the Financial Reports of Public Companies Amended to Strengthen the Quality Control Duties of CPA Firms and Raise the Quality of Auditing and Attestation by CPAs (Amendment Issued 26 October 2020)
To strengthen the quality control duties of certified public accountant (CPA) firms, raise the quality of auditing and attestation by CPAs, and meet needs encountered in practice and supervision, the FSC has amended the Regulations Governing Approval of Certified Public Accountants to Audit and Attest to the Financial Reports of Public Companies. Key points of the amendment include requiring CPAs who apply to conduct the business of auditing and attesting financial reports of public companies to have 5 years (increased from 3 years) of work experience in conducting or assisting in the conduct of attestation to the financial reports, and to have participated in 40 or more hours (increased from 20 hours) of continuing education in the most recent year. The amendment also requires CPA firms to adopt a quality control system in accordance with Taiwan Statement of Auditing Standards No. 46 "Quality Control for Firms."
4.Relaxation of the Scope of Customers of Securities Investment Trust Funds Investing Primarily in Domestic Securities
The FSC issued a ruling on 21 October 2020 that allows share classes of securities investment trust funds denominated in foreign currencies and mainly investing in domestic securities (i.e. Taiwan equity funds) to be invested in by foreign currency investment-linked insurance policies for which the insurer has arranged for allocation and management through a discretionary investment account with a securities investment trust enterprise or securities investment consulting enterprise. This development will promote the diversification of Taiwan's financial products and services, and expand the scale of Taiwan's asset management market.
5.FSC Eases Restrictions on Opposite Trades in Overseas Investment Business Outsourced by Securities Investment Trust Enterprises to Third Parties
On 7 October 2020 the FSC issued an order relating to the Regulations Governing Securities Investment Trust Funds. The order relaxes restrictions on the operations of third parties authorized by Taiwan securities investment trust enterprises to utilize securities investment trust funds in overseas investment. Specifically, it eases restrictions on such an authorized third party utilizing different funds to make opposite trades of the same stock or equity-type bond on the same day, while still requiring that measures be taken to avoid conflicts of interest.
6.To Broadly Recruit Cross-Disciplinary Talent for Director and Senior Management Positions, the FSC has Amended the Scope of Work Experience Satisfying Eligibility Requirements for Responsible Persons of Securities Firms, Securities Investment Trust and Consulting Enterprises, and Futures Enterprises
In response to the diversified development of the financial market and the international trend of digital finance, securities and futures enterprises need to recruit cross-disciplinary talent to aid their business transformation and enhance their competitiveness. To assist the industry to recruit diversified talent, the FSC on 26 October 2020 relaxed the requirements of a number of regulations to make persons with certain work experience and a good performance record in fields of information, technology, law, e-commerce, or digital economy eligible to serve as department heads and assistant general managers, deputy assistant general managers, and managers of business departments of securities and futures enterprises or as responsible persons of enterprise branches. The specific provisions amended include Article 10 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms, Articles 4 and 4-1 of the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Trust Enterprises, Article 3-1 and 4 of the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises, Article 3 of the Regulations Governing Responsible Persons and Associated Persons of Futures Commission Merchants, Articles 44 and 45 of the Regulations Governing Futures Trust Enterprises, Article 51 of the Regulations Governing Managed Futures Enterprises, and Article 21 of the Regulations Governing Futures Advisory Enterprises.
7.Amendment to the Regulations Governing Securities Firms
The FSC issued a partial amendment to the Regulations Governing Securities Firms on 29 October 2020. To harmonize with new Article 228-1 of the Company Act, the amended Regulations require a securities firm, when it carries out an earnings distribution or covers a loss, to do so on the basis of a financial report that has been audited and attested by a certified public accountant. To harmonize with amended Article 36, Paragraph 1, Subparagraph 1 of the Securities and Exchange Act, the amended Regulations provide that a financial report that a securities firm submits to its board of directors must be signed or sealed by the board chairperson and relevant company officers. To afford securities firms greater hedging flexibility with respect to the issuance of exchange traded notes (ETNs), the amended Regulations expressly provide that securities firms may borrow or short-sell the underlying securities for the purpose of hedging ETN issues, without being subject to relevant selling price restrictions. To enhance the quality of securities firms in customer credit investigations and credit extension operations, the amended Regulations provide that the Taiwan Stock Exchange may collect, process, and use all kinds of credit information of customers, and may request securities firms and FSC-approved institutions to provide information. The amended Regulations also provide that in the case of a securities firm that is a Taiwan branch of a foreign company, the matters required under the Regulations to be handled by the board of directors or supervisors shall, in principle, be handled by the responsible persons of the Taiwan branch who are authorized by the foreign company.
To encourage young people and people with limited funds to invest in Taiwan stock market, (ie. to buy shares in quantities of less than 1,000 during regular trading hours) and to enliven odd-lot trading market, Taiwan’s securities markets launched the odd-lot intraday trading system on 26 October 2020. The odd-lot intraday trading has significantly contributed to the diversified development of the securities market.
2.Amendments to Form 8-7 of Article 23 of “Regulations Governing the Preparation of Financial Reports by Securities Issuers”to mandate TWSE/TPEx listed companies to disclose their remuneration policy, and the remuneration of the directors and supervisors in the annual financial reports (Amendment Date: 21 October 2020)
In response to the Securities and Exchange Act on 19 May 2020 introducing the new provision to mandate TWSE/TPEx listed companies to disclose their remuneration policy, and the remuneration of the directors and supervisors in the annual financial reports, the FSC amended the Form 8-7 of Article 23 of Regulations Governing the Preparation of Financial Reports by Securities Issuers on 21 October 2020. The main amendments are as follows:
(1)TWSE/TPEx listed companies should additionally disclose the remuneration of the supervisors (the current statement has already asked the companies to disclose the remuneration of the directors) and the company’s remuneration policy (including the directors, supervisors, managers and employees) in the “Summary statement of current period employee benefits, depreciation, depletion and amortization expenses by function”.
(2)The amendment shall be applicable for the financial reports covering periods ending December 2020 and after.
3.Regulations Governing Approval of Certified Public Accountants to Audit and Attest to the Financial Reports of Public Companies Amended to Strengthen the Quality Control Duties of CPA Firms and Raise the Quality of Auditing and Attestation by CPAs (Amendment Issued 26 October 2020)
To strengthen the quality control duties of certified public accountant (CPA) firms, raise the quality of auditing and attestation by CPAs, and meet needs encountered in practice and supervision, the FSC has amended the Regulations Governing Approval of Certified Public Accountants to Audit and Attest to the Financial Reports of Public Companies. Key points of the amendment include requiring CPAs who apply to conduct the business of auditing and attesting financial reports of public companies to have 5 years (increased from 3 years) of work experience in conducting or assisting in the conduct of attestation to the financial reports, and to have participated in 40 or more hours (increased from 20 hours) of continuing education in the most recent year. The amendment also requires CPA firms to adopt a quality control system in accordance with Taiwan Statement of Auditing Standards No. 46 "Quality Control for Firms."
4.Relaxation of the Scope of Customers of Securities Investment Trust Funds Investing Primarily in Domestic Securities
The FSC issued a ruling on 21 October 2020 that allows share classes of securities investment trust funds denominated in foreign currencies and mainly investing in domestic securities (i.e. Taiwan equity funds) to be invested in by foreign currency investment-linked insurance policies for which the insurer has arranged for allocation and management through a discretionary investment account with a securities investment trust enterprise or securities investment consulting enterprise. This development will promote the diversification of Taiwan's financial products and services, and expand the scale of Taiwan's asset management market.
5.FSC Eases Restrictions on Opposite Trades in Overseas Investment Business Outsourced by Securities Investment Trust Enterprises to Third Parties
On 7 October 2020 the FSC issued an order relating to the Regulations Governing Securities Investment Trust Funds. The order relaxes restrictions on the operations of third parties authorized by Taiwan securities investment trust enterprises to utilize securities investment trust funds in overseas investment. Specifically, it eases restrictions on such an authorized third party utilizing different funds to make opposite trades of the same stock or equity-type bond on the same day, while still requiring that measures be taken to avoid conflicts of interest.
6.To Broadly Recruit Cross-Disciplinary Talent for Director and Senior Management Positions, the FSC has Amended the Scope of Work Experience Satisfying Eligibility Requirements for Responsible Persons of Securities Firms, Securities Investment Trust and Consulting Enterprises, and Futures Enterprises
In response to the diversified development of the financial market and the international trend of digital finance, securities and futures enterprises need to recruit cross-disciplinary talent to aid their business transformation and enhance their competitiveness. To assist the industry to recruit diversified talent, the FSC on 26 October 2020 relaxed the requirements of a number of regulations to make persons with certain work experience and a good performance record in fields of information, technology, law, e-commerce, or digital economy eligible to serve as department heads and assistant general managers, deputy assistant general managers, and managers of business departments of securities and futures enterprises or as responsible persons of enterprise branches. The specific provisions amended include Article 10 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms, Articles 4 and 4-1 of the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Trust Enterprises, Article 3-1 and 4 of the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises, Article 3 of the Regulations Governing Responsible Persons and Associated Persons of Futures Commission Merchants, Articles 44 and 45 of the Regulations Governing Futures Trust Enterprises, Article 51 of the Regulations Governing Managed Futures Enterprises, and Article 21 of the Regulations Governing Futures Advisory Enterprises.
7.Amendment to the Regulations Governing Securities Firms
The FSC issued a partial amendment to the Regulations Governing Securities Firms on 29 October 2020. To harmonize with new Article 228-1 of the Company Act, the amended Regulations require a securities firm, when it carries out an earnings distribution or covers a loss, to do so on the basis of a financial report that has been audited and attested by a certified public accountant. To harmonize with amended Article 36, Paragraph 1, Subparagraph 1 of the Securities and Exchange Act, the amended Regulations provide that a financial report that a securities firm submits to its board of directors must be signed or sealed by the board chairperson and relevant company officers. To afford securities firms greater hedging flexibility with respect to the issuance of exchange traded notes (ETNs), the amended Regulations expressly provide that securities firms may borrow or short-sell the underlying securities for the purpose of hedging ETN issues, without being subject to relevant selling price restrictions. To enhance the quality of securities firms in customer credit investigations and credit extension operations, the amended Regulations provide that the Taiwan Stock Exchange may collect, process, and use all kinds of credit information of customers, and may request securities firms and FSC-approved institutions to provide information. The amended Regulations also provide that in the case of a securities firm that is a Taiwan branch of a foreign company, the matters required under the Regulations to be handled by the board of directors or supervisors shall, in principle, be handled by the responsible persons of the Taiwan branch who are authorized by the foreign company.
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Update：
2021-01-07