Articles from April 2009
New Financial Reporting Requirements for Taiwan Insurers
The Financial Supervisory Commission has released amendments to two parallel sets of directives regulating financial reporting requirements for life insurers and asset insurers. A publicly report insurer may now rely on the professional judgment of its accountant to determine whether companies in which the insurer has invested must also be audited by the insurer's accountant.
Previously, a relatively rigid set of criteria such as capitalization or revenue of the invested company triggered the auditing requirement. Winkler Partners believes that this new requirement may actually cause greater caution and concomitant scrutiny of financial records by Taiwanese CPAs because the emphasis on professional judgment opens up an increased risk of malpractice or administrative liability for accountants.
In addition, insurers are now required to report precise figures for compensation of all directors, supervisors, and CEOs (general manager in Taiwan nomenclature) under certain circumstances. These circumstances include a capital adequacy rate of less than 200%, after-tax losses for two consecutive years, or failure to increase capital after being ordered to do so by the Commission. The insurer must also report exact compensation of individual director, supervisor, or CEO if the individual pledges more than 50% of the shares she holds or does not hold a minimum number of shares over a three-month period. These new requirements take effect retrospectively as of 1 January 2008.
Previously, all insurers were required to disclose compensation ranges for directors, supervisors, and CEOs by class rather than individual. If the circumstances listed in the preceding paragraph do not apply to an insurer, the insurer may continue to report compensation ranges, rather than exact figures. The new requirements are part of a general trend by the Commission to regulate the activities and qualifications of the directors, supervisors, and officers of financial institutions and listed companies.
The new amendments are to the Directions Governing the Preparation of Financial and Business Reports by Non-life Insurance Industry and the Directions Governing the Preparation of Financial and Business Reports by Life Insurance Industry.
For more information on the new directives or the Winkler Partners insurance practice, please contact Chen Hui-ling.
Categorised in Update. Tagged: Chen Hui-ling , insurance
Christine Chen Featured in 'Managing Intellectual Property' Article on Record Trademark Case
Winkler Partners lawyer Christine Chen was featured in a Managing Intellectual Property magazine article on the recent Hermès case, which resulted in the largest award ever (NT$256 million, or c. US$7.7 million) for trademark infringement in Taiwan. More information about this case can be found in the post "Winkler Partners Lawyer Wins Taiwan's Largest Trademark Award".
Categorised in WP In the News.
Partner Peter J. Dernbach Featured in INTA Bulletin
Partner Peter J. Dernbach was recently featured in the International Trademark Association's (INTA) Bulletin. Peter has served on INTA's Design Rights Subcommittee of the Emerging Issues Committee for two terms and is now serving on the Nontraditional Marks Committee’s Asia-Pacific Subcommittee. The nontraditional marks subcommittee looks at the status of protection for non-traditional marks (e.g., sounds, scents) in East Asia and the Pacific.
Categorised in WP In the News. Tagged: INTA , Peter Dernbach , trademark
Local Governments to Administer Company Registration
The United Daily News reports that Taiwan's Ministry of Economic Affairs will propose amendments to the Company Act that will shift responsibility for forming and regulating companies to local governments.
Currently, companies capitalized with NT$500 million or more (c. US$15.5 million) must register with the Department of Commerce under the Ministry. Companies capitalized with less than NT$500 million also register with the Department of Commerce unless they are domiciled in Taipei or Kaohsiung City.
The proposed amendments will transfer administration of the company registration system to city and county governments, which will be able to collect a fee equivalent to 0.025% of the registering company's capital.
The Department of Commerce meanwhile will gradually become an agency that drafts legislation and provides guidance to businesses as its regulatory functions are transferred to local governments.
The report quoted the acting director of the Department as saying that these changes will require major structural changes to the Company Act. The Department plans to hold public hearings on its proposed amendments at the end of April and to send its draft amendments to the Executive Yuan for review within three months. If approved by the Executuve Yuan, the proposed amendments will need to be accepted by the Legislative Yuan before they become law.
For more information on business setups and corporate governance, please contact Shan Lee.
Categorised in Update. Tagged: corporate , Shan Lee
Minimum Capital Requirement for Companies Abolished
Chinese-language media sources reported today that the Legislative Yuan has abolished minimum capital requirements for companies established under Taiwan's Company Act. Previously, limited companies and companies limited by shares established under the Act were required to be funded with NT$250,000 and NT$500,000 respectively at start up.
It is important to note that companies wishing to obtain work authorization for foreign nationals must in general have start up capital of at least NT$5 million (c. US$150K). If the company has been in existence for more than one year, it is required to have average annual revenue of NT$10 million (c. US$300K) to employ foreign professionals. Average annual exports of US$1 million or commisions of US$400,000 can also qualify.
In practice, a company may employ one foreign technical or professional specialist for each NT$5 million in capitalization or NT$10 million in sales in the previous year. This is not black letter law, and there is some administrative flexibility on the threshold amounts.
Foreign-invested companies that have received approval from the Investment Commission or have been recognized by the Ministry in the case of branch companies are treated somewhat differently. These companies can currently obtain work permits for the registered manger(s) of the company without any minimum capitalization requirement in the first year of the company's operation. In addition, work permits are sometimes issued for as many as three years to such managers.
Upon renewal however, these foreign-invested companies will be subject to a minimum average annual revenue requirement of NT$5 million or five times the company's capital to obtain subsequent work permits. Work permit renewals can also be obtained if the foreign-invested company has exports and imports of at least US$500,000 or commission income of at least US$200,000. Winkler Partners expects these regulations to be updated soon in view of the removal of minimum capitalization requirements.
The distinction between minimum capitalization requirements for company establishment and the rules for work authorization often causes some confusion among prospective foreign investors. It may help to note that the establishment of companies is regulated by the Ministry of Economic Affairs under the Company Act whereas work authorization requirements are administered by the Council of Labor Affairs under the Employment Services Act. While the Ministry of Economic Affairs is generally concerned with the promotion of business and trade in Taiwan, the Council of Labor Affairs works to protect labor rights and job security.
A feature article in today's Taipei Times also provided some interesting personal perspectives and advice on starting a business in Taiwan from foreign entrepreneurs.
For more information on starting a new business in Taiwan, please contact Shan Lee. Shan is a contributor to the World Bank's Doing Business 2008, which provides a great deal of useful information on the practicalities of doing business in Taiwan.
Categorised in Update. Tagged: corporate , Shan Lee
Winkler Partners Lawyer Wins Taiwan's Largest Trademark Award
Winkler Partners lawyer Christine Chen represented the Hermès Group before Taiwan's new Intellectual Property Court in a successful trademark infringement action against a former saleswoman who sold fake Hermès bags to consumers in Taiwan. The Intellectual Property Court awarded Hermès NT$256 million (c. US$7.7 million) in damages, the largest award ever for trademark infringement in Taiwan.
The award was calculated by a provision in Taiwan's Trademark Act that allows a trademark holder to sue for 500 to 1500 times the amount for which infringing products are sold. In the Hermès case, the former saleswoman sold fake bags for an average price of NT$512,500. The court imposed the minimum multiple of 500 times.
The award suggests the vigor with which the Intellectual Property Court, which began hearing cases in July of 2007, will protect the intellectual property rights of foreign rights holders and an increased willingness to make significant awards of damages.
Significant awards of damages by Taiwanese courts in recent years have included awards of NT$740 million and NT$240 million in separate cases against copyright infringers who sold pirated computer software. Music copyright holders led by a local record company were also successful in forcing a Taiwanese online music service to settle allegations of copyright infringement for NT$350 million. Nonetheless, the Hermès case establishes that foreign litigants in trademark infringements involving luxury goods can also receive significant awards.
The award was today's front page story in Apple Daily, Taiwan's largest circulation Chinese-language daily. It also received extensive coverage in the island's electronic media due to strong consumer interest in luxury brands and the widespread problem of fakes.
For more information on the Hermès case or Winkler Partners' IP practice, please contact Peter Dernbach.
Categorised in WP In the News. Tagged: Christine Chen , Peter Dernbach , trademark
Taiwan Chapter on International Licensing
Winkler Partners recently contributed to the Taiwan chapter for the Center for International Legal Studies and BNA Internationals' International Licensing publication ("International Licensing", BNA International Inc, London England, Supplement 23, March 2009.) The electronic version of the chapter can be found here.
For further information regarding international licensing in Taiwan, please contact Peter Dernbach at +886-2-2311-2345 ext. 222.
Categorised in Feature. Tagged: copyright , IP , patent , trademark
Rules on Business Delegations from China Relaxed
Taiwan’s Ministry of Economic Affairs has recently amended regulations governing visits by Chinese business professionals. The changes will allow larger business delegations from China and permit Taiwanese-invested companies to sponsor business associates for visits. The Economic Ministry’s Investment Commission, which is responsible for administering visits by Chinese business professionals, has characterized these changes as part of the “normalization of trade” with China.
Article 5 of the “Principles for Review of Applications by Trade Professionals of the Mainland China Region for Entry into Taiwan for Trade Related Activities” was amended so that Chinese business delegations of up to 200 members may visit the island each year, up from the previous 30. Business delegations of more than 200 may apply to come to Taiwan for certain specific activities, such as taking part in international trade conferences in Taiwan.
Article 4 of the “Principles for Determining Whether Numbers of Person Invited Annually Exceed the Limit Set by Article 6, paragraph 1 of the Regulations Governing Approval for Entry into Taiwan by People of the Mainland China Region for Commercial Activities” was amended to allow a larger scope of employees associated with China-based subsidiaries of Taiwan companies. In addition to the employees of these subsidiaries, associated suppliers, distributors and authorized outlet owners may now also visit Taiwan. All applications from Chinese business delegations to visit Taiwan, however, must still be approved by the Ministry of Economic Affairs.
For legal guidance on employment law in Taiwan, please contact Christine Chen.
For help obtaining work permits and resident status for foreigners and PRC nationals, please contact Lloyd Roberts.
