Banking Act Amendments: Separation of Financial Services Firms

Taiwan's Executive Yuan proposed several amendments to the Banking Act on 22 November 2018. One of the amendments requires the separation of financial services firms, by prohibiting directors, supervisors, and or major shareholders from holding control over multiple financial services firms.

The Financial Supervisory Commission (“FSC”), Taiwan's regulator in this regard, stated that the reason for requiring the separation of financial services firms is based on concerns regarding conflicts of interest. As the directors and officers run the company and have access to trade secrets of a company, multiple directorships give rise to a potential for conflicts of interest.

The amendments to the Banking Act also attempt to prevent illicit activities of banks, including the illegal issuance of shares and raising of equity funds. In addition, in order to enhance supervision, the amendments provide that banks that commit serious violations against the Act will be subject to a fine in an amount of up to NT$ 50,000,000.
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