I. The "Regulations Governing Qualification Requirements for the Founder or Responsible Persons of Financial Holding Companies and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of a Financial Holding Company" (hereinafter the "Regulations") was amended on October 12, 2018, to add Article 4-1 and modify Article 9. This amendment is scheduled to be effective on July 1, 2019. The details are as follows.

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II. With respect to "conflicts of interest":

(I)  Paragraph 1 of Article 4-1 of the Regulations provides, "The director or supervisor, or its related person, of a financial holding company who act concurrently as the director or supervisor of another financial holding company will be deemed to have a conflict of interest unless such concurrent appointment is allowed under the Act or The Banking Act of The Republic of China and its regulations."  Paragraph 2 of the same defines "director or supervisor" as: 1) a juristic person, or natural person designated by such juristic person to exercise the duties, 2) a juristic person or the elected natural person who represents such juristic person, and/or 3) an elected natural person who does not represent the government, any juristic person or the representative of a juristic person or the government. As an aside, paragraph 3 defines the term "related person."

(II)  The aforesaid provisions do not apply to the government or a financial holding companies which are 100% owned directly by the government. However, the proviso of Article 4 still provides that "the representative or the natural person act as the director and supervisor of the juristic person designated by the government and the financial holding company, shall not serve any concurrent position in another financial holding company absent approval of the competent authority."

(III)  The consequences of violating the aforesaid provisions are stated in Paragraph 5: "When the director or supervisor of a financial holding company, or their related person, has a conflict of interest set out in Paragraphs 1 or 4, the competent authority shall order the financial holding company to make adjustment within a prescribed period of time; the person shall be dismissed when the financial holding company fails to adjust within the time period and without justifiable reason." Given the serious consequences of dismissal, this is deserving of much attention.

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III. With respect to the "ratio of directors with professional qualifications":

(I) Paragraph 2 was added to Article 9 of the Regulations to provide that, if the total assets of a financial holding company, in its previous year as audited by a CPA, have exceeded NTD one trillion, the ratio of directors with professional qualifications shall be increased.

(II) Moreover, since the stability and professionalism of a board of directors might be negatively affected if the representatives from a juristic person could be changed at any time, Paragraph 3 was added to Article 9 to provide that a director with professional qualifications cannot be a director representing a government agency, juristic person or the representative thereof. However, with respect to a board with more than 13 directors or a financial holding company which is 100% owned by the government, the restriction provided in the proviso of Paragraph 3 and Paragraph 4 are loosened.

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