Taiwan to ease rules on insurers' interested party deals

FSC has drafted amendments to Articles 4 and 6.

The Financial Supervisory Commission (FSC) has announced plans to position Taiwan as an asset management hub in Asia, aiming to retain capital, attract investments, and support local industries. 

To strengthen Taiwan’s asset management sector, the FSC encourages life insurers to engage domestic asset managers for discretionary fund investments.

Given that many Taiwanese insurance firms and domestic securities investment entities are affiliates within financial holding companies, they are regulated as "interested parties." 

After evaluating the risks, the FSC is considering relaxing restrictions on discretionary investment transactions involving these parties.

The FSC has drafted amendments to Articles 4 and 6 of the “Regulations Governing Transactions Other Than Loans between Insurance Enterprises and Interested Parties,” which will soon be publicly announced. 

Currently, insurance firms engaging in discretionary transactions with interested parties require board approval and cannot offer more favourable terms than those given to comparable entities. 

The amendment will allow the same approval process to cover the management of transaction fees and commissions.

Previously, if an insurer acquired or disposed of more than 10% of an ETF issued by an interested party, this amount was included in the insurer’s total transactions with such parties. 

The amendment, however, exempts these transactions from the 10% inclusion rule if done through a discretionary investment setup, aligning with existing regulations.

The draft amendments will be published in the executive Yuan Gazette and on the FSC's website, with a 30-day comment period.