The contents of Tsar & Tsai Lex News are not legal opinions and shall not be taken as legal advice on any particular issue or case. If the reader has any suggestions or questions, please do not hesitate to contact us.

Tsar & Tsai Lex News is aimed at providing the readers and clients

(1) important recent changes in IP related laws and regulations in Taiwan,

(2) practical views and interpretations on IP related laws,

(3) important IP legal news and case developments, and

(4) information on recent IP related activities of Tsar & Tsai Law Firm. If you have any comments or questions, please feel free to contact us
(Tel: 886-2-2781-4111; e-mail:; ).
Editors: Jennifer Lin / Howard Chen

New Limited Partnership Act allows a New Business Model – On June 5, 2015, the Legislative Yuan passed the Limited Partnership Act, which introduces the limited partnership scheme. Highlights include: (1) a limited partnership is composed of general partner(s) and limited partner(s), whose rights and obligations are primarily governed by a partnership agreement; (2) the general partner is responsible for management and bears joint and several liability with the limited partners; the limited partner contributes property or other consideration required by the limited partnership and enjoys limited liability to the extent of the limited partner’s contribution; (3) contribution in limited partnership may include cash, other property, credit, service, or other consideration; (4) voting rights in the limited partnership may be allocated based on the number of partners or amount of contribution, as provided in the partnership agreement; and (5) frequency of distribution of profit or recognition of loss may be contractually determined by the partnership agreement, such distribution or recognition need not occurr annually. (Leo Chen)

Amendment to the Company Act imposes the requirement to distribute surplus profits to employees and establishes the closely-held corporation.— Amendments to the Company Act were announced by the President on May 20, 2015. Companies are now required to specifically set forth in the Articles of Incorporation the amount of surplus profits to be distributed to employees as compensation, such distribution to be a set amount or a percentage of the profits of a given year. The compensation may be distributed in the form of new shares to be issued by the company or paid in cash. If there are accumulated losses by the company, the losses shall be covered first. Other amendments include the establishment of the closely-held corporation ias a new type of corporation. The main provisions include (1) a closely-held corporation is a privately owned company with 50 or less shareholders, (2) share transfer restrictions shall be specified in the Articles of Incorporation, (3) in addition to cash, a promoter’s contribution to equity capital may be in the form of assets, technical know-how, labor service or good-will required by the company, (4) stocks with or without par value may be issued, (5) classified stocks with multiple voting rights or with veto right over specific matters may be issued. (Jones Sun)

The Legislative Yuan approved major amendments to the Business Mergers and Acquisitions Act on June 15, 2015. — the major amendments to the Business Mergers and Acquisitions Act include: (a) a company is now allowed to use shares, cash or other assets as the consideration in exchange for another company’s shares or to spin off the company; (b) approval for transactions such as a merger between sister companies, asymmetric share swap, asymmetric division, and share swap between parent and subsidiary corporations, may be provided by a special resolution of the board of directors; (c) if a company and dissenting shareholders cannot reach an agreement on the buying price, such dispute shall be determined by the court. However, the company is required to pay these shareholders the price deemed reasonable by the company within 90 days after the adoption of the resolution; (d) the special committee or audit committee of the company whose shares are issued to the public (“Public Company”) shall review in advance if the merger and/or acquisition plan is fair and reasonable, and submit its report to the board of directors and at the shareholders’ meeting; (e) if the publicly traded shares of a public company will be delisteddue to merger and/or acquisition, then the resolution approving such a transaction shall be adopted by shareholders who represent two-thirds or more of the total number of the issued shares; and (f) one who acquires, either individually or jointly with other persons, more than 10% of the total issued shares of a public company shall file a statement with the competent authority in charge of securities within ten days after such acquisition. (Judy Liu)

The Legislative Yuan passed an amendment to the Securities and Exchange Act concerning false financial statements, continuous trading of shares, and FSC’s power to suspend trading of certain securities. — On June 15, 16, 2015, the Legislative Yuan passed an amendment to the Securities and Transaction Act by the third reading procedure; major contents include: (1) a company’s chairman and general manager may be exempt from liability for the company’s issuance of false financial reports if they can prove that they have complied with the duty of due care and had legitimate basis to believe the truth of the financial reports; (2) attempting to manipulate share prices by continuous trading may be deemed illegal only when such trading affects market prices or market order; (3) where a company is involved in major public hazardous incidents or food or drug safety incidents,, the FSC may suspend trading of the company’s securities listed on the TWSE. (Ben Cheng)

Amended Labor Standard Act shortens the statutory normal working hours to 40 hours per week. — The Legislative Yuan passed an amendment to the Labor Standard Act on May 15, 2015 (“Amendment”). The content of the Amendment includes: (1) The statutory working hours will be reduced to 40 hours per week; (2) Employers must preserve attendance records for 5 years, an increase over the current number. The Amendment will be in force as of January 1, 2016. (Karl Chang)

The Legislative Yuan passed an amendment to the Labor Pension Act, providing that deposits in labor pension accounts shall not be subject to mortgage or compulsory execution. — To protect workers’ livelihood after retirement, the Legislative Yuan passed an amendment to the Labor Pension Act on June 15, 2015, providing that deposits in accounts opened for receiving labor pension payments shall not subject to offset, mortgage, security interests or compulsory execution. (Karl Chang)

The Consumer Protection Law (“CPL”) was amended in respect of provisions relating to standard form contracts, online order/door-to-door transactions, class actions, and punitive damages. — The Legislative Yuan amended the CPL on June 2, 2015. Highlights of the amendments are summarized as follows. (1) Enterprises shall not, by standard terms and conditions, make consumers waive his/her rights to review standard form contracts. (2) Enterprises shall show to consumers the content of standard form contracts and provide consumers copies of such contracts. (3) If the mandatory terms promulgated by competent authorites were not incorporated into a standard form contract, such terms shall still be deemed part of such contract. (4) Enterprises shall bear the burden of proof if they contend that their standard form contracts are in compliance with the CPL. (5) Mandatory terms for online order/door-to-door transactions were added to CPL. (6) The qualifications for Consumer Protection Groups entitled to bring class actions were lowered. (7) The punitive damages for willful misconducts of an enterprise may be up to five times the amount of actual damages, and the punitive damages for gross negligence may be up to three times the amount of actual damages. (Sonia Chen)

The Taiwan Fair Trade Act (“TFTA”) was amended to allow the TFTC to establish an Anti-trust Fund. — The Legislative Yuan passed an amendment to the TFTA on June 9, 2015, allowing the TFTC to establish an Anti-trust Fund which may be utilized as a source of funds for, among other things, (1) reward for reporting illegal cartel activities; (2) promotion of international cooperation and communication among national competition authorities; (3) payment of litigation fees; (4) establishment and maintenance of competition law-related database, so as to strengthen the enforcement against cartel activities. The TFTA also authorized the TFTC to stipulate regulations in respect of the reward for reporting said illegal activities. (Sonia Chen)

A new real estate tax was adopted to consolidate tax on land and housing constructions thereon. — The Legislative Yuan passed on June 5, 2015 amendments to the Income Tax Act and The Specifically Selected Goods and Services Tax Act. Both land and buildings are now included in the income tax scheme, replacing the current bilateral tax scheme whereby the land incremental value tax is assessed on land, and the income tax is assessed on buildings. The “specifically selected goods tax” on real estate is removed as a corresponding measure. The above amendments will take effect on January 1, 2016. (Leo Chen)

The Legislative Yuan passed a new amendment to the Code of Civil Procedure, amending regulations relating to issuance of payment orders to creditors — The Legislative Yuan passed a new amendment to the Code of Civil Procedure on June 15, 2015. Based on the new law, a payment order no longer has the same binding effect as a final judgment. If a debtor disagrees with the confirmed payment order in issue, Debtor may file a lawsuit disputing the existence of the debt recorded in said payment order, and the court may stay the enforcement procedure after the debtor provides sufficient security. (Anthony Hsieh)

The FSC amended the “Offshore Banking Act Enforcement Rules”. — To launch the Offshore Insurance Units (OIU) business in Taiwan, the FSC published a ruling on May 21, 2015, amending the Offshore Banking Act Enforcement Rules. Major amendments include: (1) providing the required qualifications of an OIU, including the required capital adequacy ratio, and the requirement that an applicant shall not be subject to disciplinary actions for any material regulatory violation during the 3 years before the application; (2) requiring that an OIU shall allocate working capital for its operations at the minimum amount of US$2 million; (3) providing the required documents and procedure to establish an OIU; (4) providing the definition of a natural person or a juristic person outside the territory of the ROC. (Scarlett Tang)

The FSC promulgated the “Rules Governing Offshore Insurance Branches”. — To launch the Offshore Insurance Units (OIU) business in Taiwan, FSC promulgated the Rules Governing Offshore Insurance Branches on May 21, 2015, the highlights of which are summarized as follows: (1) To provide the requirements regarding the financial and operational control of an OIU, including the internal control and audit system, the risk-based capital ratio, the net worth, and restrictions on funds usage. (2) To provide the qualifications of the designated offshore banking branch manager. (3) To provide the filing requirements, compliance matters and the required reserve funds of OIU products. (4) To provide for the required approval of the FSC when an OIU seeks to remit profits overseas. (Scarlett Tang)

The FSC announced “The Regulations on the Conduct of Domestic Institutions in Cooperating with or Assisting Offshore Institutions to Carry on Electronic Payment Business.” — On April 30, 2015, the FSC announced the regulation abovementioned. Major contents include: (1) Unless approved, an institution is forbidden to cooperate with or assist offshore institutions to carry out acts relating to electronic payment business; (2) the following may apply for approval to engage in acts cooperating with or assisting offshore institutions in carrying on the electronic payment business: electronic payment institutions, banks which do not carry on electronic payment business alongside other businesses, financial information services enterprises and data processing service enterprises. (Ben Cheng)

The FSC exempted the application of the registration obligation imposed on the offering or issuance of common shares, as set forth in the “Taipei Exchange Regulation on the Security Firms engaging in the operation of the platform for equity crowd funding”. ― On April 30, 2015, the FSC decreed an administrative ordinance explaining that common shares offered or issued by issuers pursuant to the abovementioned TPEx regulation are the “other securities” approved by the competent authority according to Paragraph 1, Art. 22 of the Securities and Exchange Act, therefore, the registration obligation imposed on the offering or issuance of such common shares was exempted from the registration obligation. (Ben Cheng)

The Ministry of Labor (MoL) published a ruling concerning whether time spent attending legally-mandated meetings should be deemed as working hours under the Labor Standard Act (LSA). ― The MoL published a ruling on May 14, 2015, stating that where shift employees attend legally-mandated meetings(such as board of directors meetings, labor-management conferences and meetings of employee welfare committees, etc.) during periods outside of agreed work hours, the time spent for such meetings shall not be deemed working hours as provided in the LSA, because The attendance of such meetings is not directed by the employer, and the employees are not directed or supervised by employers during such meetings (unless otherwise provided in relevant regulations). (Karl Chang)

The Ministry of Economic Affairs promulgated the “Examination Guidelines on Trademarks Contrary To Public Order or Good Morals.” — On May 11, 2015 the Intellectual Property Office promulgated the “Examination Guidelines on Trademarks Contrary To Public Order or Good Morals”, stipulating the relevant factors to be considered in determining whether a trademark is contrary to public policy or to accepted principles of morality, and specifically listing ten examples which will be deemed contrary to public order or good morals. (Kevin Wei)

The Supreme Administrative Court confirmed that the statute of limitations for imposing penalties on cartel activities should begin when such activities end. ― In respect of the TFTC’s decision determining that a foreign company’s engagement in bid-rigging in the ODD procurement events held by Dell and HP constituted cartel activities, the Supreme Court upheld the lower court’s judgment which vacated the TFTC’s decion on April 30, 2015, for the reason that the then 3-year statute of limitations (applicable prior to the amendment of the TFTA) should be deemed to begin at the time when the alleged activities ended, and that such period in the instant case had already expired at the time the TFTC made its decision. (Sonia Chen)

The Limited Partnership Act Gives Entrepreneurs a New Option in the Choice of a Business Model

Leo Chen

The Limited Partnership Act was passed by the Legislative Yuan on June 5, 2015. This marks an important milestone in the types of business entities available under Taiwan law. The Act introduces a new business entity,the Limited Partnership, in addition to the traditional unlimited company, unlimited company with limited liability shareholders, limited company, corporation, sole proprietorship, and partnership, as provided by the Company Act and under the Civil Code.

A limited partnership is composed of at least 1 general partner and at least 1 limited partner. The general partner is responsible for the operation of the limited partnership and is jointly and severally liable for partnership debts when the partnership’s assets are insufficient to repay partnership debts. The limited partner cannot participate in the operation of the partnership, but is liable for partnership debts up to the amount of the limited partner’s contribution.

The limited partnership has been in operation for many years in other jurisdictions. The enactment of the Limited Partnership Act is intended to provide integration with the international business community and to introduce a more flexible business entity. A limited partnership has several characteristics: it is an entity emphasizing on collection of individuals; it is a distinct legal entity separated from its partners; it focuses on arrangements among the partners and allows parnters the flexibility to overwrite default rules with their partnership agreement. In comparison to the traditional corporation, the limited partnership’s advantages include flexibility in, among other things, the types of capital contribution allowed, voting rights arrangement, and profit distribution, making the limited partnership suitable for entrepreneurs in start up situations.

Among the advantages, flexibility in the types of capital contribution allowed and in voting rights arrangements are two important departures from the traditional Company Act provisions. Not only can cash and other property be contributed, credit, service, and other considerations are also allowed. This allows entrepreneurs with innovative ideas and technologies but who lacks capital to participate in a limited partnership by contributing non-property contributions. In addition, the flexible voting right arrangement can prevent management from losing control subsequent to raising new capital that dilutes management shareholding.

However, the Limited Partnership Act does not specify the taxation scheme applicable to the limited parnterhsip. News articles had reported that the Ministry considers limited partnership as a separate legal entity, and thus is leaning toward requiring the limited partnership to pay the 17% corporate income tax. The Ministry of Finance itself has yet to respond clearly on the tax scheme applicable to the limited partnership. As investors’ willingness to utilize the limited partnership may depend in large part on the Ministry’s plan for taxing limited partnerships, new development shall be watched closely.

Firm News

Edgar Chen’s engagement as an outsider committee member of the Judicial Yuan’s Government Ethics Committee has been extended, from January 1, 2015 to December 31, 2016.



Tsar & Tsai Law Firm was awarded the Law Firm of the Year for Banking & Finance, Corporate and Antitrust Law, by the Acquisition International Magazine.


Tsar & Tsai Law Firm was ranked a Tier 1 firm as for prosecution and contentious works by the 2015 Asia IP Trademark Survey.


Tsar & Tsai Law Firm was selected as the best law firm in 2015 for cross-border transactions by Global Law Experts.


Tsar & Tsai Law Firm was selected as the 2015 Full Service Law Firm of the Year in Taiwan by Global Law Experts.


Successful Transactions

Tsar & Tsai represented Hitachi Chemical Company Ltd. (“HCC”) in a transaction to sell 80% of the shares in the wiring board business division of its 100% subsidiary Hitachi Chemical Co., (Taiwan) Ltd. (“HCT”) to a listing company Taiwan PCB Techvest Co., Ltd. (“TPT”). (I-Chen Wu / Yichu Chen / Yvonne Liu / Jennifer Lin)


Tsar & Tsai acted as legal counsel to CTBC Financial Holding Co., Ltd. in the proposed acquisition of 100% of Taiwan Life Insurance Co. through a share swap. The parties executed a Share Swap Agreement in May 2015. (Lynn Lin / Jackie Lin)


Tsar & Tsai acted as legal counsel to CTBC Financial Holding Co., Ltd. in the proposed privately placed investment by China CITIC Group in CTBC Financial Holding Co. as a strategic investor. The parties executed the transaction agreement in June 2015. (Lynn Lin / Jackie Lin)


Tsar & Tsai acted as legal counsel to CTBC Bank Co., Ltd. in its proposed acquisition of 100% of CITIC Bank International (China) Limited. (Lynn Lin / Jackie Lin)


Tsar & Tsai acted as legal counsel to CTBC Bank Co., Ltd. in its proposed investment in a China joint-venture company with Chinese companies including Huishang Bank for consumer financing business. The joint-venture company is expected to be the first joint-venture consumer financing company across the Taiwan strait. (Lynn Lin / Jackie Lin)



Jennifer Lin acted as the moderator for the conference held on July 10 in Seoul titled “IBA Law Firm Management – Managing Change in Challenging Times”.


Vincent Wang will attend the “FDCC 2015 annual meeting in Banff”, held by the FDCC in Canada, from July 25 to August 1, 2015.


Randy Tsai will attend the “2015 Lex Mundi Institute Programs Cross-Border Transaction”, held in Monterey by Lex Mundi from August 1 to 7, 2015.


Connie Huang will attend the “2015 Lex Mundi Institute Cross-Border Dispute Resolution Program”, held in Monterey by Lex Mundi from August 2 to 7, 2015.


Jimmy Wu will attend the “2015 Patent Laws Seminar” on August 3, 2015, held by the Intellectual Property Office of the Ministry of Economic Affairs.

C.Y. Huang will travel to Sweden, Finland and Norway from September 18 to 28, 2015, as part of the “Economic and Trade Delegation” sponsored by the Chinese International Economic Cooperation Association.