Financial Crime World

Taiwan’s Financial Compliance Regulations: Moral Character and Fitness Requirements for Financial Holding Company Executive Officers

The Taiwan Financial Supervisory Commission (FSC) has announced new regulations concerning the moral character and fitness requirements for the promoters and responsible persons of financial holding companies in Taiwan. Below, we outline the key articles and their content.

Articles

Article 1

  • Effective date: The regulations are enacted under Paragraph 1, Article 17 of the Financial Holding Company Act.
  • Implementation: The regulations come into force upon promulgation.

Article 2

  • Definition: A responsible person refers to a director, supervisor, general manager, assistant general manager, deputy assistant general manager, manager, or an individual with equivalent positions.

Article 3: Eligibility Requirements for Promoter or Responsible Person

Financial holding company promoters and responsible persons must meet the following eligibility requirements:

  1. Good moral character
  2. No limited legal capacity or assisted living orders
  3. No convictions under the Organized Crime Act
  4. No sentencing for financial crimes (counterfeiting, misappropriation, fraud, breach of trust, forging instruments, industrial/commercial law violations) unless at least 5 to 10 years have passed since the completion of the sentence or pardon
  5. No convictions for violating the Anti-Corruption Act unless at least 5 years have elapsed since sentence completion, or probation/pardon granted
  6. No convictions or sentencing for violating financial regulations under specified laws
  7. No bankruptcy or liquidation process ongoing or creditworthiness-damaging events within the past 5 years
  8. No replacement, dismissal, or violation of duties within the past 5 years without approval
  9. No involvement in dishonest or improper activities

Articles 4 and 4-1: Concurrent Positions

  1. Restriction: The chairperson and general manager are prohibited from holding both titles.
  2. Competent authority approval: Other concurrent positions require approval from the competent authority due to resignation, replacement, or other issues.
  3. Duration: Concurrent positions are limited to 3 months for each financial holding company.
  4. Prohibition: Chairperson and general manager may not act as chairperson, general manager, or equivalent titles in non-financial enterprises.
  5. Conflict of interest: Promoter or responsible person may not act as a responsible person in other financial holding companies.

Article 5: General Manager Qualifications

  • Requirements: The general manager must have at least 9 years of experience in a financial institution or holding company, with 5 years as a manager or equivalent position.
  • Proven expertise: They must demonstrate leadership and professional financial expertise.
  • Approval: The competent authority must approve the required qualification documents.

Article 6: Assistant General Manager, Deputy Assistant General Manager, Manager, or Equivalent Positions

  • Experience: The individual must have at least 5 years of experience in a financial institution or holding company, with 3 years as an assistant manager or equivalent position.
  • Skills: They must have at least 10 years of experience in information science, technology, law, e-commerce, digital economy, finance and accounting, marketing, or human resources.
  • Ability: The individual must prove their ability to operate the business of the financial holding company.

Article 7: Family Members Prohibited from Directorship or Management

Spouses, blood relatives within the second degree, or first-degree relatives by marriage may not act as directors or managers within the same financial holding company.

Article 8: Board of Directors’ Responsibilities

  1. Duties: The board of directors is responsible for electing managers, realistically reviewing manager qualifications, and ensuring managers maintain their required qualifications and are suitable for the office.

Article 9: Director Qualifications

  • Requirements: A director must have at least 5 years of experience in a financial institution or holding company, with 3 years as an assistant manager or equivalent position. They must also have 5 years of experience in financial administration, management, or civil service.
  • Ability: The director must prove their ability to manage the financial holding company.

Article 10: Competent Authority Information Requests

Financial holding companies must submit necessary documents and information within a prescribed period to the competent authority for determining responsible person eligibility.

Article 11: Ipso Facto Dismissal

  • Notification: Responsible persons must promptly notify the financial holding company upon the occurrence of ipso facto dismissal causes.
  • Consequences: Financial holding companies must report, revoke, or void the relevant registration upon learning of such causes.

Articles 12 and 13: Concurrent Positions and Bank Subsidiaries

  1. Concurrent positions allowable: Responsible persons may hold concurrent positions due to investment relationships, but they must effectively perform duties.
  2. Subsidiaries: At least one director of a bank subsidiary must possess the qualifications set forth in paragraph 1 or have 5 years of auditing experience in a financial institution or holding company.

Articles 14 and 15: Positions in Subsidiaries and Multiple Business Types

  1. Subsidiaries: A responsible person of a financial holding company may not hold a position in its subsidiary in their own capacity or as a representative of another juristic person without approval from a resolution of at least three-fourths of directors present in a board meeting attended by at least two-thirds of all directors.
  2. Multiple business types: A responsible person of a financial holding company may not hold a position in another company operating the same business type as its subsidiary unless approved by a resolution of at least three-fourths of directors present in a board meeting attended by at least two-thirds of all directors.