Important Measure August 2021
2021-10-15
1. Securities Firms Now Permitted to Accept Orders from High Net Worth Juristic Person Investors and High-Asset Customers to Trade Offshore Funds Not in the Nature of Securities Investment Trust Funds
To meet demand by high-asset customer groups for wealth management services and to expand the business scope of securities firms, the Financial Supervisory Commission (FSC) issued an order on 13 August 2021 allowing securities firms meeting the requirements of Article 6-1 of the Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities to accept orders from high net worth juristic person investors and high-asset customers to trade offshore funds not in the nature of securities investment trust funds.
2. FSC Releases Audit Quality Indicators (AQI) Disclosure Framework and Template to Enhance Audit Quality and Transparency in Taiwan
The FSC released the AQIs Disclosure Framework on 19 August 2021, which provides a comprehensive and comparable set of quantitative audit quality indicators. The AQIs have 13 indicators, which cover five dimensions－professionalism, independence, quality control, monitoring, and creativity. They serve as a useful toolkit to assist companies and audit committees (ACs) in assessing the quality of audit firms and auditors more effectively and objectively, and will bring audit quality and commitment to a new level. Additionally, to improve the consistency and comparability of the AQIs among firms, the FSC released the AQIs Disclosure Template, which uniformly specifies the content and form of AQIs. The template also provides companies with industry average and range data for some indicators for comparisons, which enables companies to gain further insight into the dynamics of the overall audit quality of audit firms and to detect the differences among them.
The FSC will promote the AQIs initiative in Taiwan by a two-stage approach:
(1) Stage one: TWSE and TPEx listed companies can obtain AQIs information from CPAs for reference in evaluating whether to engage, or to re-engage a CPA firm starting from the audit of 2023 financial reporting. In the early stage, this initiative will apply to Big Four CPA firms. The FSC has reached a consensus with the Big Four that they will voluntarily provide the AQIs information to listed companies’ audit committees for reference annually.
(2) Stage two: from 2023 the FSC will review the results of implementation of the AQIs initiative by the Big Four and TWSE and TPEx listed companies and will assess the feasibility of extending its application to non-Big Four CPA firms and to unlisted public companies.
3. The FSC Issued Orders Relating to Articles 13 and 16 of the Regulations Governing Securities Firms and Article 5 of the Regulations Governing the Preparation of Financial Reports by Securities Firms
In response to changes in the financial environment and the advent of the digital age, the FSC has been carrying out review to identify obsolete or redundant industry regulations and enforcement letters, and to cease, simplify or integrate them. As part of this initiative, on 26 August 2021, the FSC issued fresh administrative orders relating to Articles 13 and 16 of the Regulations Governing Securities Firms and Article 5 of the Regulations Governing the Preparation of Financial Reports by Securities Firms, and ceased the application of the following enforcement letters issued by the former Securities and Exchange Commission, Ministry of Finance: Letter No. (77)-Taiwan-Finance-Securities-(II)-09596 of 16 December 1988, -Letter No. (78)-Taiwan-Finance-Securities-(II)-24240 of 17 January 1989, and Letter No. (80)-Taiwan-Finance-Securities-(II)-25108 of 4 October 1991.
4. The FSC Issued Order Regarding the Checklists for Public Announcement and Filing of Securities Firms’ Financial Reports
In response to recent amendments to an FSC order regarding the trading of unlisted securities by securities firms and to the Regulations Governing the Preparation of Financial Reports by Securities Firms, and to promote TWSE and TPEx listed securities firms to publish unaudited self-assessed financial information under the “Corporate Governance 3.0- Sustainable Development Roadmap”, the FSC, on 16 August 2021, issued amendments to the checklist for the public announcement and filing of securities firms’ annual (semi-annual) and quartely financial reports, and repealed Order No. Financial-Supervisory-Securities-Firms-1080313068 issued on 3 May 2019.
5. The FSC Issued Order Regarding the Checklists for Public Announcement and Filing of Futures Commission Merchants’ Financial Reports
In response to recent amendments to the Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants and to the format of attachments to the financial reports, and to promote TWSE and TPEx listed futures commission merchants (FCMs) to publish unaudited self-assessed financial information under the “Corporate Governance 3.0- Sustainable Development Roadmap,” the FSC, on 18 August 2021, the FSC issued amendments to the checklist for the public announcement and filing of financial reports of exclusively operated FCMs, concurrently operated FCMs, and foreign FCMs and to the format of the monthly statement of financial ratios of FCMs, and repealed Order No. Financial-Supervisory-Securities-Firms-1080314206 issued on 8 May 2019.
To meet demand by high-asset customer groups for wealth management services and to expand the business scope of securities firms, the Financial Supervisory Commission (FSC) issued an order on 13 August 2021 allowing securities firms meeting the requirements of Article 6-1 of the Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities to accept orders from high net worth juristic person investors and high-asset customers to trade offshore funds not in the nature of securities investment trust funds.
2. FSC Releases Audit Quality Indicators (AQI) Disclosure Framework and Template to Enhance Audit Quality and Transparency in Taiwan
The FSC released the AQIs Disclosure Framework on 19 August 2021, which provides a comprehensive and comparable set of quantitative audit quality indicators. The AQIs have 13 indicators, which cover five dimensions－professionalism, independence, quality control, monitoring, and creativity. They serve as a useful toolkit to assist companies and audit committees (ACs) in assessing the quality of audit firms and auditors more effectively and objectively, and will bring audit quality and commitment to a new level. Additionally, to improve the consistency and comparability of the AQIs among firms, the FSC released the AQIs Disclosure Template, which uniformly specifies the content and form of AQIs. The template also provides companies with industry average and range data for some indicators for comparisons, which enables companies to gain further insight into the dynamics of the overall audit quality of audit firms and to detect the differences among them.
The FSC will promote the AQIs initiative in Taiwan by a two-stage approach:
(1) Stage one: TWSE and TPEx listed companies can obtain AQIs information from CPAs for reference in evaluating whether to engage, or to re-engage a CPA firm starting from the audit of 2023 financial reporting. In the early stage, this initiative will apply to Big Four CPA firms. The FSC has reached a consensus with the Big Four that they will voluntarily provide the AQIs information to listed companies’ audit committees for reference annually.
(2) Stage two: from 2023 the FSC will review the results of implementation of the AQIs initiative by the Big Four and TWSE and TPEx listed companies and will assess the feasibility of extending its application to non-Big Four CPA firms and to unlisted public companies.
3. The FSC Issued Orders Relating to Articles 13 and 16 of the Regulations Governing Securities Firms and Article 5 of the Regulations Governing the Preparation of Financial Reports by Securities Firms
In response to changes in the financial environment and the advent of the digital age, the FSC has been carrying out review to identify obsolete or redundant industry regulations and enforcement letters, and to cease, simplify or integrate them. As part of this initiative, on 26 August 2021, the FSC issued fresh administrative orders relating to Articles 13 and 16 of the Regulations Governing Securities Firms and Article 5 of the Regulations Governing the Preparation of Financial Reports by Securities Firms, and ceased the application of the following enforcement letters issued by the former Securities and Exchange Commission, Ministry of Finance: Letter No. (77)-Taiwan-Finance-Securities-(II)-09596 of 16 December 1988, -Letter No. (78)-Taiwan-Finance-Securities-(II)-24240 of 17 January 1989, and Letter No. (80)-Taiwan-Finance-Securities-(II)-25108 of 4 October 1991.
4. The FSC Issued Order Regarding the Checklists for Public Announcement and Filing of Securities Firms’ Financial Reports
In response to recent amendments to an FSC order regarding the trading of unlisted securities by securities firms and to the Regulations Governing the Preparation of Financial Reports by Securities Firms, and to promote TWSE and TPEx listed securities firms to publish unaudited self-assessed financial information under the “Corporate Governance 3.0- Sustainable Development Roadmap”, the FSC, on 16 August 2021, issued amendments to the checklist for the public announcement and filing of securities firms’ annual (semi-annual) and quartely financial reports, and repealed Order No. Financial-Supervisory-Securities-Firms-1080313068 issued on 3 May 2019.
5. The FSC Issued Order Regarding the Checklists for Public Announcement and Filing of Futures Commission Merchants’ Financial Reports
In response to recent amendments to the Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants and to the format of attachments to the financial reports, and to promote TWSE and TPEx listed futures commission merchants (FCMs) to publish unaudited self-assessed financial information under the “Corporate Governance 3.0- Sustainable Development Roadmap,” the FSC, on 18 August 2021, the FSC issued amendments to the checklist for the public announcement and filing of financial reports of exclusively operated FCMs, concurrently operated FCMs, and foreign FCMs and to the format of the monthly statement of financial ratios of FCMs, and repealed Order No. Financial-Supervisory-Securities-Firms-1080314206 issued on 8 May 2019.
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Update：
2021-10-15