On April 12, 2020, the Financial Supervisory Commission of the R.O.C. (Taiwan) ("FSC") issued an interpretation letter, Ref. No. Jin-Guan-Yin-Fa-Zhi 10802009320 (the "Letter"), of Article 45 of the Financial Holding Company Act to loosen restrictions on transactions other than credit extension made between a financial holding company ("FHC") or its subsidiaries and its stakeholders, allowing such transactions to be conducted under general authorization. The Letter also specified the particular forms of transactions involving stakeholders made between an FHC or its subsidiaries and third parties that are not subject to Article 45 of the Financial Holding Company Act. In addition, the FSC on October 21, 2019 issued another interpretation letter, Ref. No. Jin-Guan-Yin-FaZhi 10802119790 (the "October Letter") that transactions involving exchange traded notes between subsidiaries of FHC and stakeholders may be conducted under general authorization.
Considering that the financial operations of financial institutions supervised by FSC share similar objectives and reasons of supervision, the relevant supervision measures should be consistent and standardized. Articles 3 and 4 of the Regulations Governing Transactions Other Than Loans between Insurance Enterprises and Interested Parties (the "Regulations") are amended accordingly. Main points of the amendments are as follows:
1. Amendments to Article 3
The definition of the term "Person" is added to Paragraph 2 of Article 3 of the Regulations according to FSC's interpretation letter, Ref. No. Jin-Guan-Yin-Fa-Zhi 09800084260, dated July 16, 2009. The term "Person" hereof shall mean both juristic person and natural person. In addition, considering the many forms of transactions involving stakeholders with third parties as mentioned in the latter part of Subparagraph 10 of Paragraph 1 of Article 3 of the Regulations and in order to clarify the relevant rules, amendment was made according to Point 9 of FSC's interpretation letter, Ref. No. Jin-Guan-Yin-Fa-Zhi 10802009320, dated April 12, 2020. The amendment specified particular forms of transactions made between an insurer and a third party where the stakeholder of the insurer is not directly involved and the two transactions are two different contracts that are not subject to the Regulations.
2. Amendments to Article 4
The acquisition and disposal of exchange traded notes issued by stakeholders may be conducted under general authorization, as newly provided in accordance with the October Letter. Separately, considering the transactions made using trust assets according to the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises by an interested party (stakeholder) of an insurance enterprise while concurrently operating as a securities investment trust enterprise or a securities investment consulting enterprise are similar to transactions made by securities investment trust enterprises or securities investment consulting enterprises in terms of sources of fund and form of transaction, the provision which allows such transaction to be made under general authorization is added according to Paragraph 4 of Point 1 of the Letter.