The Supreme Administrative Court rendered the 108-Pan-328 Decision of July 5, 2019 (hereinafter, the “Decision”), holding that when an insurance company is taken over by personnel assigned by the competent authority due to its inability to have a sound operation, the law allows the authority to take preservation measures against its representative such as prohibition against property transfer or delivery, and this is not preconditioned by the representative’s breach of any administrative law duty.
According to the facts underlying this Decision, the Appellee (the Financial Supervisory Commission) took over Life Insurance Company A in accordance with Article 149, Paragraph 3, Subparagraph 1 and Paragraph 5 of the Insurance Law on the ground that its capital adequacy ratio was seriously deficient and that it had failed to complete its capital injection, finance or business improvement plan within the required period. In addition, since the Applicant was the company’s chairman in the past three years, a disposition was rendered in accordance with Article 149-6 of the Insurance Law to restrict transfer, delivery or creation of other rights of his property and to impose exit restriction. Dissatisfied, the Appellant brought an administrative action, but since the original trial court ruled against him, the Appellant appealed out of dissatisfaction.
According to the Decision, the legislative reasons for Article 149-6 of the Insurance Law indicate: “To prevent the representative of an insurance company or an employee suspected of legal violations from transferring property or escaping, Article 25-1 of the Customs Law and Article 24 of the Tax Collection Law are referenced to stipulate that the competent authority may notify relevant agencies or institutions to prohibit the transfer, delivery or creation of other rights of property by the insurance company and its representative or its employees suspected of legal violation and to request the immigration authority to restrict them from leaving this country.” Therefore, if an insurance company is taken over by the personnel assigned by the competent authority in accordance with Article 149, Paragraph 3 of the Insurance Law due to the inability of the insurance company to have a sound operation, the law allows the competent authority to take preservation measures, as a matter of necessary administrative control, such as prohibiting the representative of the insurance company from transferring, delivering and creating other rights of his/her property and imposing exit restriction in order to thoroughly implement the corporate governance system, prevent the representative of the insurance company from breaching his/her duty of loyalty and due care as a good administrator by evading his/her civil/criminal liabilities through transferring property or escaping and to protect the rights and interests of the shareholders, policyholders and interested parties. Since the nature of such disposition is not an unfavorable disposition of penal nature, the above unfavorable disposition by the competent authority is not preconditioned by such representative’s breach of any administrative law duty.
According to the Decision, the original decision holding that the preservation measures Appellee issued in the original disposition to prohibit the Appellant from transferring, delivering or creating other rights of property and to restrict him from leaving this country for a specific period of time in accordance with Article 149-6 of the Insurance Law, basing on the facts that the administrative receiver found that the Appellant allegedly had incurred legal liabilities when performing an audit on the representative and the responsible employees of Life Insurance Company A, were necessary to prevent the representative of the insurance company from transferring property or escaping in order to fulfill administrative objectives such as protecting the rights and interests of the policyholders and the company’s creditors. Therefore, there was no error under the law according to the above provisions and explanation. The Appellant’s appeal was thus dismissed.