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Newly Amended Directions Governing Compliance with Paragraph 1 of Article 139-1 of Insurance Act Regarding the Reporting for Acquiring Outstanding Voting Shares
Trisha Chang/Jade Wang
In order to implement Paragraph 1 of Article 139-1 of the Insurance Act, to ensure the transparency of beneficial ownership of insurance enterprises, and to strengthen the supervision of the shareholders of insurance enterprises, the Financial Supervisory Commission ("FSC") issued the Directions Governing Compliance with Paragraph 1 of Article 139-1 of the Insurance Act Regarding the Reporting for Acquiring Outstanding Voting Shares ("Directions") on January 21, 2011. The Directions stipulate mechanism of reporting of the same person or same related party who singly, jointly or collectively acquires more than 5 percent of the total outstanding voting shares of an insurance company. Moreover, considering that measures adopted by financial institutions to prevent money laundering have been focusing on the identification of beneficial owners to ensure the transparency of beneficial ownership of insurance enterprises, such measures should also be incorporated into the supervision of ownership structures of insurance enterprises. Therefore, the Directions are amended with reference to rules governing the types of beneficial owners as stipulated in the Regulations Governing Anti-Money Laundering of Financial Institutions.
One additional point is incorporated and four other points are amended in this amendment. The main stipulations are as follows:
1.Referring to the rules related to beneficial owner stipulated in the Regulations Governing Anti-Money Laundering of Financial Institutions, the Directions include in the scope of filing the beneficial owner or ultimate controller if such person is the same person, same related party or a legal person as defined in Paragraph 3 of Article 139-1 of the Insurance Act. In addition, with reference to rules related to the exemption of identifying ultimate beneficial owner and considering FSC's needs of supervision over the ultimate beneficial shareholder and ultimate controller of a legal person, the Directions also include exemptions for reporting of ultimate beneficial shareholder and ultimate controller. (Amendment to Point 2 of the Directions)
2.Adjust the relevant reporting forms accordingly. (Amendment to Point 4 and Point 6 of the Directions)
3.The "equity or control structure" attached to the report provided by the reporting person does not need to be copied and provided to the insurance company. (Amendment to Point 10 of the Directions)
4.In order to incorporate the concept of beneficial owner into the supervision of ownership structures of insurance enterprises and to ensure the transparency of beneficial ownership, the Directions require that the same person or same related party who singly, jointly or collectively acquires more than 5 percent of the total outstanding voting shares of an insurance enterprise on the effective date of this amendment and has already filed his/her/its shareholding according to the Directions make a re-filing. However, in order for the filing person to examine his/her/its shares, this amendment will only take effect after the grace period. (Amendment to Point 12 of the Directions)
