The Executive Yuan Council today greenlighted a draft amendment to the Offshore Banking Act that would enable securities firms to expand their international business operations.
Premier Sean Chen said the amendment, proposed by the Financial Supervisory Commission (FSC) and the Central Bank of the Republic of China (CBC), would herald an array of benefits to Taiwan. It would woo back overseas investment, make better use of parent companies' capital and credit, expand international financial and securities businesses, aid economic growth and employment, and develop global financial talent.
The premier directed the FSC and CBC to work with legislators in fast-tracking the amendment process. Pointing out that international banking services cover more than securities, the premier asked the two agencies to continue monitoring global trends and to assess the possibility of allowing other non-bank institutions to engage in offshore business.
The following summarizes the amendment:
1. To expand international financial and securities businesses, securities firms may set up branches within the ROC to provide offshore securities services. (Article 1)
2. A securities firm must meet certain criteria in order to establish an offshore securities branch with a separate set of accounts. For such operations the firm must appropriate a minimum amount of working capital prescribed by the FSC. (Article 22-3)
3. Offshore securities branches may only engage in specific types of businesses. The scope of "financial institutions within the territory of the ROC" is also defined. (Article 22-4).
4. An offshore securities branch may commission its business to a CBC-approved securities branch that engages in securities-related foreign exchange operations. The latter may also handle tax matters involved in such operations. (Article 22-5)
5. The operations of offshore securities branches shall not be subject to the Foreign Exchange Control Act or the Securities and Exchange Act as the branches provide only offshore foreign currency-denominated services, and not New Taiwan dollar exchanges. (Article 22-6)
6. Offshore securities branches shall be subject to certain taxation regulations as well as a specific time limit on tax incentives. (Article 22-7)
7. Unless approved by the CBC, offshore securities branches shall not conduct exchanges or other transactions between foreign currencies and New Taiwan dollars. Provisions have also been added concerning capital use restrictions, location of institutions, disclosure of information to third parties, import of telecommunications equipment and information systems, inspection of financial reports, and matters to be submitted to the FSC for approval and CBC for notification. (Article 22-8)
8. The chairperson, supervisor or other responsible person shall face specific penalties by the competent authority if the offshore securities branch violates the scope of permitted operations, restrictions on capital use, restrictions on conducting transactions between foreign currencies and New Taiwan dollars, or other articles provided under the act. (Article 22-9)
9. An offshore securities branch shall face certain penalties if it obstructs inspections by competent authorities or judiciary agencies, or if it engages in forgery, alteration, destruction, concealment or falsification of relevant records or documents. (Article 22-10)
10. An offshore securities branch shall face certain penalties if it fails to submit information concerning its business or financial conditions to the competent authority in accordance with regulations. (Article 22-11)