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 / George Shih
The Legislative Yuan passed the Commercial Case Adjudication Act
The Legislative Yuan passed the Commercial Case Adjudication Act (the “Act”) on December 17, 2019. The Act provides for the establishment of a specialized commercial court to hear the “commercial cases”, which include commercial litigation matters (e.g., those concerning major commercial or financial disputes with an amount in controversy of NTD 100 million or more, validity of the resolution of the meeting of shareholders or board of directors of a publicly traded company, civil disputes between a shareholder and the company or its responsible person, etc.) and commercial non-litigation matters (e.g., share price appraisal for a publicly traded company, petition for appointment or dismissal of temporary manager or inspector pursuant to the Company Act, etc.). The highlights of the Act include: (1) Establishment of a specialty court: the new commercial court will combine the former Intellectual Property Court and be named the Intellectual Property and Commercial Court, and is at the same level as the High Court. The new court has the exclusive jurisdiction over the aforementioned commercial matters and adopts a two-level, two-instance adjudication system; (2) Mandatory representation by attorneys: attorneys shall be engaged to conduct the litigation in the new commercial court of behalf of the parties; (3) Electronic submission of legal documents: all legal briefs and documents shall be submitted via the electronic legal documents submission system; any submission of documents by other means shall be deemed invalid; (4) Mandatory mediation: the Act expressly provides that a pre-litigation commercial mediation must be conducted; (5) Expert witness: the parties may engage expert witnesses to provide professional opinions with the permission of the court; and (6) Confidentiality preservation order: either party or a third party holding trade secrets may request the court to issue a confidentiality preservation order upon spelling out the reason therefor. (Genson Hung, Esq.)
The Legislative Yuan passed the Amendment to the Code of Criminal Procedure, providing for the right to participate criminal procedure and the protection of the victim of crime, and the procedure of motion for retrial.
The Legislative Yuan passed the amendment to the Code of Criminal Procedure on December 10, 2019. The highlights of the amendment include: (1) the victim of a major crime, such as violation of the right life, body, freedom or sexual autonomy, etc., may file an application with the presiding court for participation in the criminal procedure. The victim, after being allowed to participate in the procedure, may engage an attorney as legal representative, who may examine the file documents and evidence and may transcribe, duplicate and photogragh the same on behalf of the victom. The notification of hearings and trials shall be served upon the participant and the attorney. The participant may express opinions regarding the investigation of evidence and the sentencing. (2) For protection of victims, the victim may be adequately seperated from the defendant by protective device during the investigation. In addition to the victom’s legal representative, spouse and reletives, the victom’s psychiatrist, counselor, and trusted person may also appear with the victom with the victom’s consent. (3) The movant of a motion for retrial may engage an attorney to file the motion. The court shall allow the movant an opportunity to express opinion before the court. If the court denies the motion for retrial, an application for reconsideration may be filed within 10 days. (Andy Lee, Esq.)
The Code of Criminal Procedure was further amended concerning procedural protection, specifying addition types of preventive detention and extending the prescriptive periods of remedy.
The Legislative Yuan passed further amendment to the Code of Criminal Procedure on December 17, 2019. The highlights of the amendment include: (1) In terms of the procedural protection in the investigation stage, the amendment expressly provides that the defendant to examine the investigation transcripts with the assistance of counsel, and express opinion concerning the transcripts. (2) In terms of the protection concerning the procedure of arrest, the amendment provides that the defendant or suspect shall only be arrested without summons only when “necessary”; and that the reason for the arrest shall be specify in writing to the defendant or suspect and the designated friend or family member while making the arrest. (3) The major crimes with higher rate of recidivism, the crimes that violate physical autonomy or sexual autonomy and the crime of aggravated fraud are added to the list of offenses that preventive detention is allowed; (4) The time period for an application for reconsideration is extended to 10 days, the time period for filing an appeal is extended to 20 days, and the time period for submitting supplementary reasons for appeal is extended to 20 days; (5) When an appeal is pending in the third instance court, the restriction on border or island exit shall be imposed or removed by the second instance court. (Andy Lee, Esq.)
Amendment to the State Compensation Act was passed to add new provisions, including that the state shall have no liability when people engages in dangerous activities.
The Legislative Yuan passed the amendment of the State Compensation Act (the “Act”) on December 3, 2019, which was promulgated by the President and became effective on December 18, 2019. The highlights of the amendment include: where the managing authority has placed appropriate warnings or signs regarding the use of public properties and facilities therein, the State’s shall bear no or reduced liability to those who nonetheless engage in adventurous or dangerous activities thereon; the “physical liberty” is included as one of protecting objects under the Act; and the State shall be liable for damages incurred from the use of the public facility which is commissioned for management by a private organization or individual. (C.H. Chen, Esq.)
The Financial Supervisory Commission (“FSC”) set the guidelines for the representative of a financial enterprise to serve concurrently as the director or supervisor of a bank.
On November 13, 2019, the FSC issued the letter interpretation No. Jin-Guan-Yin-Kong–Zhi-10802733981 to specify the guildlines for principal officers of a financial enterprise to serve concurrently as director or supervisor of a bank. Under the current regulations, the directors or supervisors of a bank may be concurrently served by the principal officers of a financial enterprise by virtue of the investment relationship between the bank and the financial enterprise or upon the approval by the competent authority. The FSC indicates in the letter that the aforesaid “investment relationship” shall mean: (1) the financial enterprise has directly invested in the bank, or (2) the holding company of the financial enterprise or a subsidiary of such holding company has invested in the bank.
Further, in order for the principal officer of a bank to effectively perform the duties of both positions and to avoid conflict of interest, the FSC divides the circumstances of the principal officer of a financial enterprise serving concurrently as director or supervisor of a bank into three categories: (I) No conflict of interest is presumed: This includes: the director or supervisor of a bank is concurrently served by the principal officer of its holding company, or a subsidiary of the holding company which is engaged in non-financial business, or a foreign bank whose holding company has no branch in Taiwan; or by the manager of a non-business departmet of a domestic or foreign bank (whose holding company has branch in Taiwan). It is presumed that there exists no conflict of interest in these circumstances provided that such person execuates a declaration stating that there is no conflict of interest. (II) Conflict of interest is presumed: This includes: the director or supervisor of a bank is concurrently served by the director or supervisor of a domestic or foreign bank whose holding company has branch in Taiwan, or by the manager of a department of a domestic or foreign bank (whose controlling company has branch in Taiwan) that operates a different line of business. It is presumed that a conflict of interest exists in these circumstances. The person is to serve both positions must elaberate the lack of conflict interest by a signed declaration and submit it to the FSC for determination. The FSC will approve or deny the proposed concurrent positions on a case by case basis. (III) Deemed to have a conflict of interest: The FSC specifically indicates that the chairperson or general manager of a domestic or foreign bank whose holding company has branch in Taiwan, or the manager of a department of a domestic or foreign bank (whose controlling company has branch in Taiwan) that operates the same line of business shall not concurrently serve as director or supervisor of a bank.
The FSC relaxes the control threshold over foreign futures commission merchants which conduct sub-brokerage business exclusively.
Article 22 of the Regulations Governing Futures Commission Merchants provides that (1) when shareholders’ equity of a futures commission merchant is less than 60% of minimum paid-in capital, such futures commission merchant shall immediately report to the FSC-designated institution, and when it is less than 40%, such futures commission merchant shall immediately cease accepting orders from futures traders and submit a rectification plan to the FSC designated institution; (2) when adjusted net capital of a futures commission merchant is less than 20% of the total amount of customer margins required for the open positions of futures traders, such futures commission merchant shall immediately report to the FSC or the FSC-designated institutions; and when it is less than 15%, such futures commission merchant shall immediately cease accepting orders from futures traders and submit a rectification plan to the FSC or the FSC-designated institutions. The FSC relexes the aforementioned regulation by its letter No. Jin-Guan-Kong-Chi-Zhi 1080360743, dated October 30, 2019. Now, a future commission merchant does not need to report until its shareholders’ equity is less than 50% of minimum paid-in capital, and does not need to cease accepting orders from futures traders or submit a rectification plan until the ratio is less than 30%. In addition, if the parent company of a foreign future commission merchant has included the operation risk of the Taiwan subsidiary when calculating its net capital amount or ratio pursuant to the laws and regulations of its local jurisdiction and if such amount or ratio meets the regulative standards thereof, such future commission merchant may, upon approval by the FSC, be exempt from the above-referenced regulations in connection with the adjusted net capital. (Andy Lee, Esq.)
The Ministry of Economic Affairs (“MOEA”) issued a letter interpretation to amend its previous interpretation regarding shareholder’s cumulative voting right.
The MOEA previously issued a letter interpretation on exercising voting right by shareholders of a publicly traded company under Paragraph 3, Article 181 of Company Act. In that letter dated June 5, 2019, the MOEA indicated that by virtue of the cumulative voting system set forth in Article 198 of Company Act, the number of votes that each share is entitled to cast should be the same as the number of directors to be elected, and such votes may be cast for a single candidate or be allocated among several candidates. However, there is no explicit restriction in the language of the law as to how many candidates may the votes from one share be allocated. The MOEA incidated then that the principle of cumulative voting was not violated if the votes that one share was entitled to cast were allocated to a number of candidates that is more than the number of directors to be elected. On October 25, 2019, the MOEA, by its letter interpretation No. Jing-Shan-Zhi-10800086000, amended its previous position regarding the maximum number of candidates that the votes from one share could be allocated under the cumulative voting system set forth in Article 198 of Company Act. The MOEA’s new position is that, given the number of votes that each share is entitled to cast shall be determined based on the number of directors to be elected, the maximum number of candidates that the votes from each share may be allocated shall be determined on the same basis, namely, the number of directors to be elected. (Yen Chen, Esq.)
The Ministry of the Interior amended the required items and the prohibited items in the “Confirmation of Building Status” annexed to the Standardized Contracts for the Sale of Existing Real Estate, and those in the “Description of the Real Property”
On October 31, 2019, the Ministry of the Interior announced the amendment to the the required items and the prohibited items in the “Confirmation of Building Status”, Exhibit I annexed to the Standardized Contracts for the Sale of Existing Real Estate, and those in the “Description of Real Property”, providing that the following items must be disclosed in both of the aforesaid documents: (a) whether there is a relay pump or water tank in the building, and if yes, the floor on which it is located, and (b) whether there is a mobile phone base station on the top of the building. The amended regulations will become effective May 1, 2020. (Roy Su, Esq.)
The Supreme Administrative Court held that in an action to vacate the administrative penalty, the administrative agency shall bear the burden of proof.
In its Judgement 108 No. Pan-Zhi-533, the Supreme Administrative Court held when interpreting Article 133 of the Code of Administrative Actions (concerning the court’s ex officio investigation), the court’s ex officio investigation should have a certain limit. Given that Article 277 of the Code of Civil Procedure (concerning burden of proof) is applicable mutatis mutandis to procedures of administrative actions, a party should bear the unfavorable result if it fails to fulfill its burden of proof. In addition, administrative penalties are similar to criminal penalties, therefore principles of presumption of innocence and in dubio pro reo shall be applicable. The administrative agency shall prove the facts constituting the elements of penalty to an “essentially true” extent (beyond 99.8%) so as to deem the facts to be true. If the truthfulness of the facts is unclear, the court shall deem such alleged facts as nonexistent and find against the administrative agency. (Hector Chin, Esq.)
Introduction of the Commercial Case Adjudication Act
In order to adjudicate major commercial disputes swiftly, appropriately and professionally, the Judicial Yuan invited the opinions of scholars of civil procedure law and commercial law, lawyers, judges, administrative agencies to form a committee, and gathered the comments from the general public, to draft the Commercial Case Adjudication Act (the “Act”). The Legislative Yuan passed the Act on December 17, 2019. The highlights of the Act invlude:
(1) Establishment of a professional court having exclusive jurisdiction over commercial cases: the commercial court and the former Intellectual Property Court is being merged and renamed as the Intellectual Property and Commercial Court (the “Commercial Court”), and is at the same level as the High Court. The Commercial Court has the exclusive jurisdiction of commercial cases and adopts a two-instance courts and trials system. The Intellectual Property Court Organization Act is amended to become the Intellectual Property and Commercial Court Organization Act accordingly.
(2) Define the commercial cases to which the Act applies: Divide the commercial cases into commercial litigation matters and commercial non-litigation matters. Commercial litigation matters mainly refer to the disputes over civil rights and obligations arising out of commercial laws and the amount in dispute or value of the subject matter of the litigation is more than NTD 100 million, the validity of the resolution of the meeting of shareholders or the board of directors of a publicly traded company, and the civil disputes between a shareholder and the company or its responsible person, etc. Commercial non-litigation matters include the determination of the share purchase price a publicly traded company, and the appointment or dismissal of a temporary manager or an inspector pursuant to the Company Act, etc. In addition, civil matters related to the Company Act, the Securities and Exchange Act, etc. that are under the jurisdiction of the Commercial Ccourt by virtue of the written consent of the parties are also considered commercial matters.
(3) Mandatory legal representation by counsel: attorneys shall be engaged to conduct the litigation procedure of the commercial matters on behalf of the parties. A procedural act by legal counsel has a direct effect on the party. If a party does not engage an attorney as a counsel or the engaged counsel is not present, the party is deemed to be absent.
(4) Electronic legal documents submission: all legal document by the parties, the related parties or counsel shall be submitted through the electronic legal documents submission system, otherwise it will be deemed not submitted.
(5) Mandatory mediation procedure: for commercial litigation matters, the Act requires mediation before enering the substantive litigation. The above is applicable mutatis mutandis to commercial non-litigation matters. Commercial mediation is not a public proceeding and should be concluded within 60 days of the election of commercial mediation members.
(6) Expert witness: the parties may engage expert witnesses to provide professional opinions with the permission of the court. An expert witness shall issue written expert opinions and sign a written oath, and the opinion should be submitted to the court by the parties. However, with the permission of the court, the expert witness may orally present the expert opinions. If the expert witness makes a false statement on matters which are material to the case, he/she shall be subject to criminal charges of perjury.
(7) Confidentiality preservation order: a party or any third party who holds trade secrets may request the court with reasonable explanantion to issue a confidentiality preservation order against the other party, counsel, assistant ad litem, or other relevant parties. The person subject to a confidentiality preservation order shall not use the trade secrets for purposes other than those related to the case, nor shall he/she disclose such trade secrets to those not subject to the order. One who violates a confidentiality preservation order shall be subject to criminal charges, and prosecution therefor should be instituted only upon complaint.
- On November 15, 2019, Edgar Chen, Esq. hosted “The Protection of the Personality Interest in the Internet Age” section in the “2019 Word Tort Law Conference, the Forth Biennale Conference”, which was organized by Work Tort Law Association, Fu-jen University Law School and Tsar & Tsai Foundation.
- Tsar & Tsai serves as Taiwan legal counsel for the financing parties, a consortium of 20 Taiwanese and international financial institutions, in the successful closing of the Formosa 2 (376 MW) offshore wind power project financing announced on October 29, 2019. The total facility amount of the Formosa 2 project financing reached NTD 62.4 billion (approximately USD 2 billion). (Janice Lin / Li-Chen Wang / Anthony Hsieh / Jones Sun)
- Tsar & Tsai successfully assisted Goldman Sachs, the representative of the initial purchasers, in the offering of up to US$1.15 billion Convertible Notes due 2024 by Sea Group (NYSE:SE). (Jackie Lin / Yvonne Liu / Yen Chen)
- Tsar & Tsai represented Yageo Corporation to successfully execute the Merger Agreement with Kemet Corporation, a U..S-listed company, to acquire 100% of Kemet Corporation’s issued and outstanding shares. The total transaction price is approximately USD 1.64 billion. (C.H. Chen / Lynn Lin / Jennifer Lin)
- Tsar & Tsai successfully assisted CMC Magnetics Corporation to complete the acquisition of “Verbatim” business from Mitsubishi Chemical Corporation, including the subsidiary’s shares, trademarks, patents, etc. The total acquisition price is approximately NTD1 billion. (C.H Chen / Lynn Lin / Jennifer Lin)
- Edgar Chen, Esq., Janice Lin, Esq. and Scarlett Tang, Esq. were awarded a certificate of appreciation by the World Bank Group for their contribution to “Doing Commercial 2020” report.
- Tsar & Tsai was chosen the “Competition Law Firm of the Year–Taiwan” by the Corp Today Magazine 2020 Global Commercial Awards.
- From November 11 to November 13, 2019, Matt Liu, Esq. attended “PILNET 2019 Global Forum” held by the Global Network for Public Interest Law (PILnet).
- On November 21, 2019, Lillian Chu, Esq., Edgar Chen, Esq., Lynn Lin, Esq. and Yen-Ling Liu, Esq. attended the “2019 ICC Taipei Arbitration Day” held by ICC, ICC Taiwan Commission and CIECA. Lillian Chu, Esq. hosted the “Choice of Arbitrators” section and served as the keynote speakers in the “Management of Arbitration Case” section.
- From November 19 to November 20, 2019, James Cheng, Esq. and Judie Sun, Esq. attended the “ARM Meeting” in Singapore held by the ARM 2019 Organizing Committee.
- From November 25 to November 26, 2019, Yvonne Liu, Esq. attended the “IBA M&A Conference” in Tokyo held by the IBA.
- On November 27, Josh Fan, Esq. attended the “Fifteenth Corporate Governance International Forum – To Strengthen Corporate Governance and Implement Independent Director System” held by the Taiwan Corporate Government Association.
- From November 29 to December 1, 2019, Henry Chang, Esq. and Jones Sun, Esq. attended the “2019 Taiwan-Japan Lawyer Association Seminar” in Tokyo held by the Taiwan-Japan Lawyer Association.
- On November 30, 2019, Edgar Chen, Esq. attended the “Fourteen Anniversary of Formosa Incident Seminar and Fourth-Ninth Annual Members Meeting of Taiwan Law Society” in Taipei held by the Taiwan Law Society and gave opening remark as the Chairman of the Taiwan Law Society.
- From December 4 to December 6, 2019, Yen Chen, Esq. attended the “Labor Mediators Seminar” in Taipei held by the Judicial Yuan.
- On December 21, Edgar Chen, Esq. attended “The Mechanism of Constitutional Review on Court Judgments in Constitution Litigation” in Taichung held by National Taiwan University Law School Alumni Society and National Chung Hsing University Law School.
- On December 26, 2019, Michael Hsu, Esq. attended the “2019 Second Artificial Intelligence and Law International Seminar – legal impact in new era: an international dialogue between AI and Law” in Taipei held by the International Artificial Intelligence and the Law Research Foundation.