Tsar & Tsai Lex News is aimed at providing the readers and clients
- important recent changes in the laws and regulations in Taiwan,
- practical views and interpretations on the laws,
- important legal news and case developments, and
- information on recent 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: Law@TsarTsai.com.tw ).
Editors: Edgar Chen / Howard Chen
Amendments to the Labor Standards Act — On December 6, 2016, the Legislative Yuan passed amendments to the Labor Standards Act, which amendments were promulgated on December 21, 2016. Highlights include the following: (1) employees are now entitled to one “mandatory day off” and one “flexible rest day” every 7 days. Employers shall pay higher overtime payment to employees for overtime work on flexible rest days; (2) the number of national holidays has been reduced by seven; (4) the annual paid leave available to new employees has been increased; (5) employers are now subject to higher fines for violations of the Labor Standards Act; and (6) when paying wages, employers are to provide calculation details for each item. The new amendments have been in force since December 2016, except for Article 37 (national holidays) and Article 38 (annual leave), which came into force in January 2017. (Elvin Peng)
Amendments to the Customs Act narrowed the applicability of the rule exempting taxes on small cross-border transactions below NT$3,000 — On November 9, 2016, the Legislative Yuan passed amendments to the Customs Act, which amendments were promulgated on November 11, 2016. Highlights include:
The rule exempting taxes on transactions below NT$3,000 will no longer apply to transactions involving frequent imports; this will add to the customs tax burden of cross-border e-commerce transactions. “Frequent imports” in this context means (referencing Article 12 of the “Rules on Customs Clearance of the Import and Export of Mail Packages”): the same person or same address receiving mail packages from overseas twice in one month, or six times in six months. (2) The duty-payer or his/her agent may, before importing goods, apply for pre-approval of the origin of the imported goods. (3) Provisions were added setting forth the payment sequence for respectively the delay-filing fee, interest and unpaid goods, as well as provisions providing for measures to be imposed on those failing to pay the aforementioned fees or amounts, such measures being notification by customs to the relevant competent authorities to impose restrictions on transfers, to create other rights on property or to effect registration of a reduction in capital. (Alex Cheng)
Amendments to the Insurance Act allowed an insurance enterprise investing in public utilities to serve as a director or supervisor of such invested entity － On November 9, 2016, the President announced the newly amended Articles 146-5 and 168 of the Insurance Act, providing that an insurance enterprise investing in non-publicly traded public utilities may serve as a director or supervisor of the invested company. However, the number of directors or supervisors of the invested company consisting of or being appointed by such insurance enterprise or its representive cannot exceed one third of the total number of directors or supervisors, nor may such insurance enterprise appoint the general manager of the invested company. (Leonard Chen)
The Financial Supervisory Commission (“FSC”) amended the “Regulations Governing Public Tender Offers for Securities of Public Companies” – The FSC amended the “Regulations Governing Public Tender Offers for Securities of Public Companies” on November 18, 2016. Major amendments include: (1) in principle, the time, manner and location of the payment of consideration shall not be modified; (2) irrespective of whether the consideration is to be paid in cash, an offeror shall provide proof of ability to pay the consideration; (3) the upper limit for extending the period of a tender offer is increased from 30 days to 50 days; (4) where the offeror does not pay the consideration by the time stipulated in the tender offer prospectus, those accepting the offer may withdraw their acceptance without notice, and the appointed institution shall return the deposited securities to the such persons on the following business day;(5) the reporting documents of a tender offer shall be reviewed by an attorney and be accompanied by a legal opinion. (Queenie Chen)
The Taiwan Fair Trade Commission (“TFTC”) amended the criteria for merger filing requirement. — The TFTC issued an order on December 2, 2016, adding to the monetary thresholds for the merger filing requirement. A merger filing is required where the worldwide revenues of the parties to a merger exceed NT$40 billion in the last fiscal year, and there are at least two enterprises whose total domestic revenues exceed NT$2 billion in the last fiscal year. (Alex Cheng)
The FSC amended the “Directions Governing Anti-Money Laundering and Countering Terrorism Financing of Banking Sector”, increasing the banking sector’s monitoring duty with respect to money laundering and terrorism financing – On December 2, 2016, the FSC amended “the Directions Governing Anti-Money Laundering and Countering Terrorism Financing of Banking Sector”(the “Directions”), strengthening the rules regarding know-your-customer procedures and the monitoring of suspicious transactions, including the duty to examine foreign persons with political jobs. In addition, the amended Directions require banks to establish a special unit for anti-money laundering and counter-terrorism financing, and if a bank has foreign operations, it shall assign personnel to be responsible for legal compliance of foreign laws. (Leonard Chen)
The National Communications Commission (the “NCC”) announced the “Regulations Governing Security Measures for Personal Information Files in Non-government Agencies Designated by NCC”, requiring private telecommunications enterprises to establish a mechanism for the protection and disposition of personal information – On November 9, 2016, the NCC announced “the Regulations Governing Security Measures for Personal Information Files in Non-government Agencies Designated by NCC”, requiring private telecommunications enterprises to establish a plan for the protection of personal information files, a mechanism to handle security breaches, and a mechanism for the preservation of relevant records and evidence. (Leonard Chen)
The Investment Commission of the Ministry of Economic Affairs (“MOEAIC”) now requires foreign investor applicants to disclose the source of funding – The MOEAIC modified the information required to be included in the application form for foreign investors investing in domestic enterprises, now requiring the investor to disclose the funding source at the time of application. If the investor is not the ultimate beneficiary, the investor is required to explain the investment structure at the time of application. (Yen Chen)
The Ministry of Economic Affairs (“MOEA”) issued a ruling regarding the modification of a board resolution authorizing the issuance of new shares — On October 25, 2016, the Ministry of Economic Affairs (MOEA) issued a ruling stating that where a company’s board of directors (“BOD”) adopted a resolution approving the issuance of new shares, the BOD may convene a second meeting under the same procedure to change the resolution adopted in the first meeting. If the result infringes upon the existing shareholders’ subscription rights or rights relating to the preparation period for the payment of the shares, the existing shareholders may seek recourse through legal proceedings. (Alex Cheng)
Those who engage in the adulteration or false representation of foods, or who add additives not approved by the central competent authority, shall be deemed to have committed a crime, irrespective of whether such act is actually harmful to humans – The eighteenth resolution (2016) issued by the Conference of Criminal Divisions of Taiwan’s Supreme Court states that those who engage in the adulteration or false representation of foods, or who add additives not approved by the central competent authority (as set forth respectively in subparagraphs 7 and 10 of Article 15 of the Act Governing Food Safety and Sanitation), such persons shall be punished with prison sentences and fines according to Article 49 of the same Act without a determination being made as to whether such conduct are in fact harmful to human health. (Chia-chi Chen)
Loosening restriction on an independent director of a publicly traded investment holding company concurrently serving as an independent director of the holding company’s publicly traded, wholly-owned subsidiary— On November 9, 2016, the FSC issued a ruling stating that where an independent director of a listed/TPEx-listed investment holding company concurrently serve as an independent director of the holding company’s publicly traded, wholly-owned subsidiary, such concurrent service shall not be counted toward the number of concurrent directorships of publicly traded companies allowed under Article 4 of the “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”; however, the said director may only serve as an independent director of one such wholly-ownedsubsidiary. (Alex Cheng)
The Grand Justices issued J.Y. Interpretation No. 740, setting forth the standard for determining whether the relationship between an insurance salesperson and the insurance company is employment — On October 21, 2016, the Grand Justices issued J.Y. Interpretation No. 740, setting forth the following standard for determining whether the relationship between an insurance salesperson and the insurance company is one of employment: 1. whether the insurance salesperson is free to decide how to provide his/her services (e.g., the number of working hours required); 2. whether the insurance salesperson takes on business risk, or whether he/she receives a base salary or is subject to sales quota requirements; and 3. the fact that the “Regulations Governing the Supervision of Insurance Salespersons” is made applicable shall not be used as the sole basis to determine that the relationship is employment. (Leonard Chen)
An Introduction to the Newly-Amended Labor Standards Act
Following the negotiations and discussions in the past few months, the Legislative Yuan finally passed a set of amendments to the Labor Standards Act (“LSA”) on December 6, 2016. The new amendments are important to both employers and employees. The key points of the amendments are:
- Employees are now entitled to two days off every week
Under the old law, employees were to be given one day off every seven days. The amendments stipulate that employees are entitled to two days off every seven days, including one “mandatory day off” and one “flexible rest day”. On the mandatory day off, an employer may request an employee to work only when a natural disaster, accident or emergency occurs and the employer thinks there is a need to continue carrying on the employee’s work. The employee will receive double pay and is entitled to a day offto compensate for working on the mandatory day off. On the flexible rest day, an employer may request an employee to work on that day after obtaining his/her consent. If the employee works on the flexible rest day, for the first 2 hours of work, the employee is entitled to receive additional wages equal to at least one and one-third times the employee’s hourly wage. For work beyond 2 hours, the employee is entitled to receive additional wages equal to one and two-thirds times the employee’s hourly wage. If the total working hours on that day do not exceed 4 hours, the employee is still entitled to receive overtime pay for 4 hours. If the total hours worked exceed 4 hours but are less than 8 hours, the employee is entitled to receive overtime pay for 8 hours. If the total hours worked exceed 8 hours and are less than 12 hours, the employee is entitled to receive overtime pay for 12 hours.
- Reduction of public holidays available to employees
Under the amendments, the number of public holidays available to employees is reduced to 12 days, according to the “Regulations Governing Memorial Days and Holidays” issued by the Ministry of the Interior.
- Adjustment on the accruement of annual paid leave
New employees are granted more days off for annual leave. The amendments stipulate that new employees will qualify for 3 days of annual leave after working for the employer for six months in the first year of employment, increasing to 7 days after working for more than one year but less than two years, to 10 days after more than two years but less than three years, and to 14 days after three years but less than five years. After working for fives years but less than ten years, the employee is entitled to have 15 days of annual leave. After working for ten years, the employee is entitled to have one additional day of annual leave for each year of employment beyond ten years, subject to a cap of 30 days of annual leave per year. In addition, the amendments stipulate that employees are entitled to decide when to take annual leave. However, if the employer has an urgent business need or if the employee has particular personal reasons, the parties may negotiate to adjust the dates for taking the annual leave.
- Employers shall maintain detailed records relating to the wages paid
The amendments require that an employer shall maintain the detailed records relating to the wages paid, consisting of information on the paid wages, details of the calculation of wages, total amount of the wages, annual leave and wages payable for unused annual leave. Moreover, employers shall provide employees with such information annually in writing.
- Employers are subject to higher fines
If an employer fails to comply with the requirements relating to working hours, salary payment and other requirements, the applicable fine has been raised to NTD1 million. In addition, depending on the scale or size of the employer, the number of employees impacted by the violation or the severity of the violation, the labor authority may impose additional fines of up to 50% of the maximum limit.
The new amendments will come into force from January 2017. Employers should review their work rules, maintain records relating to wages and pay particular attention to the wages payable for additional working hours in compliance with the new law.
- Tsar & Tsai successfully assisted Inotera Memories, Inc. to complete a share swap with Micron, pursuant to which Inotera became Micron Taiwan’s wholly owned subsidiary from December 6, 2016. The total deal size was TWD 130 billion. (Yvonne Liu/ Jackie Lin)
- From January 13 to 15, 2017, Jennifer Lin will attend the “2017 APAA ExCom/AdCom Meeting”, to be held in New Zealand by the APAA.