Newsletter
Amendments to Articles 3, 4 and 6 of the Regulations Governing Transactions Other than Loans Between Insurance Enterprises and Interested Parties
The Financial Supervisory Commission (the "FSC") has issued an interpretation letter to elaborate on the types of transactions under Article 45 of the Financial Holding Company Act. To be consistent with the content of such letter, the FSC amended Articles 3, 4 and 6 of the Regulations Governing Transactions Other than Loans Between Insurance Enterprises and Interested Parties ("the Regulations"), per the letter Ref. No. Jin-Guan-Bao-Cai-Zi No. 1062503031 dated June 30, 2017. The main points are as follows:
1. Article 3 amended：
Given that when an insurance company purchases securities-linked structured products issued by a linked interested party from a counterparty who is not an interested party, it might also have an impact on the securities issued by the interested party (e.g. if an insurance company makes such transaction with the counterparty who is not an interested party, the counterparty then purchases securities issued by the interested party of such insurance company for hedging and afterwards, the counterparty sells the aforesaid securities due to no hedging needs resulting from transaction expiration or early cancellation by the insurance company, it may impact on share price of the interested party), the insurance company purchasing derivative securities or structured products issued by linked interested parties shall comply with the provisions on non-loan transactions with an interested party under the Regulations.
2. Articles 4 and 6 amended：
Transactions which may be authorized by the board of directors and the calculation of transaction limits are as follows:
(1) Additional three types of transactions with interested parties, which may be authorized by the board of directors are as follows:
a. acquisition and disposal of beneficiary certificates of futures trust funds and exchange-traded futures trust funds issued by interested parties,
b. transactions involving allocation of discretionary assets made by an interested party (which is a securities investment trust enterprise or securities investment consulting enterprise), and
c. public-interest donation of disaster relief for a major natural disaster by an insurance company or its interested party.
(2) Investment limit on a transaction, except for equity-type securities transaction, between an insurance company and the parent financial holding company or its directly or indirectly wholly owned subsidiaries is raised to NT$50 million.
(3) "Amounts of losses, claim recovered and claim recovered from reinsurer" in transactions related to insurance products or business are not transactions. Therefore, such items are removed from the Regulations.
(4) When an insurance company engages in acquisition and disposal of exchange traded funds issued by interested parties, it may be exempt from the investment limits on the fund which has issued less than 10% of the value of the issued beneficiary certificates. However, transactionsexceeding the investment limits shall still be included in the calculation of investment limits.