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As part of the government's recent active efforts to promote closer
cross-strait economic relationships, on 4 December 2008 the Executive Yuan approved
the Regulations Governing Mainland Chinese Investors' Securities Investments and
Futures Trading in
Taiwan("Regulations"), allowing mainland Chinese investors to invest in securities and
to trade futures in
Taiwan
. The government hopes that this will
boost
Taiwan
's capital market and enhance its internationalization and competitiveness. |
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The Financial Supervisory Commission (FSC) is responsible for administering
the Regulations, which are summarized as follows: |
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Mainland Chinese Investors: Three
types of mainland Chinese investors may invest in Taiwan: (1) entities that are
certified by mainland Chinese securities authorities as qualified domestic institutional
investors ("Institutional Investors");
(2) mainland Chinese who are employees of offshore subsidiaries or branch offices
of companies listed on the Taiwan Stock Exchange (TSE) or the over-the-counter (OTC)
market and who have received securities from their Taiwanese parent company(ies)
("Mainland Chinese Employees"); and (3) Mainland Chinese shareholders of foreign
enterprises that are listed in Taiwan on the TSE or the OTC market ("Mainland Chinese
Shareholders"). Mainland Chinese investors
should register with the TSE or the Taiwan Futures Exchange (TAIFEX) and obtain
a registration code specially for mainland Chinese investors, so that they can open
accounts with securities underwriters or futures merchants and appoint a custodian
bank to handle their trading transactions in
Taiwan
Taiwan . |
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1. |
Institutional Investors: Institutional
Investors will in general be subject to the same regulations governing overseas
Chinese and foreign investors. The
scope of investments is in general the same as that for overseas Chinese and foreign
investors, but Institutional Investors may not invest in securities traded on the
emerging-stock-board or in OTC-traded derivative products; neither can they lend/borrow
securities, lend/borrow securities through open bids, engage in margin trading nor
open omnibus trading accounts. |
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2. |
Mainland Chinese Employees and Mainland Chinese Shareholders: Mainland Chinese Employees
are offered securities or subscribe for securities in accordance with the law. The Mainland Chinese Employees of the
same company should jointly register with the TSE and open a joint account with
the underwriters. Mainland Chinese
Employees and Mainland Chinese Shareholders may only sell their securities and cannot
purchase securities or engage in other securities transactions. |
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Designated agents in
Taiwan
: A mainland Chinese investor should appoint an agent or representative in
Taiwan
to handle all necessary registration and reporting matters, including but not limited
to trading registration, exercise of related rights, account opening, foreign exchange
settlement, tax payments and any other related litigious and non-litigious actions. |
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Permitted securities: Mainland
Chinese investors may invest in the following types of securities: |
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1. |
Trust-fund beneficiary certificates issued by a Taiwanese securities investment
trust enterprise or futures trust enterprise and sold overseas. |
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2. |
Taiwanese securities. |
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3. |
Corporate bonds issued or privately placed offshore by a Taiwanese issuer. |
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4. |
Depositary receipts directly issued or privately placed offshore by a Taiwanese
issuer. |
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5. |
Shares issued, privately placed, or traded offshore by a Taiwanese issuer. |
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Restrictions on securities investments:
The limits on the amount of securities investment will be set by the FSC in consultation
with the Central Bank. The aggregate
amount that mainland Chinese investors, overseas Chinese, and foreign investors
may invest in the securities of a Taiwanese company may not exceed the maximum ratio
set by the regulations for the shareholdings by overseas Chinese and foreigners
in a single Taiwanese company. |
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If a mainland Chinese investor acquires 10% or more of the shares
in Taiwanese company, whether through a single transaction or cumulative transactions,
the acquisition will be regarded as direct investment and will require the prior
approval of the relevant regulatory authority. If
a mainland Chinese investor holds shares in a TSE- or OTC-listed company, he/she/it
must attend all shareholders meetings and exercise his/her/its voting rights by
way of proxy in
Taiwan
. Unless otherwise permitted by the
law, he/she/it may not have dominant control or influence over the company's management
and operations or be elected a director or supervisor. |
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Restrictions on futures trading:
Futures trading will be limited to contracts that are listed on the TAIFEX and are
permitted by the FSC to be traded by futures merchants on behalf of others. Institutional Investors must trade futures
in a foreign currency that is accepted by the TAIFEX, and the proceeds from their
sale of futures may not be converted into NT dollars unless for the purposes prescribed
under the law. Should there be any
NTD amount in an Institutional Investor's investment account, it may not exceed
the limit to be decided by the FSC. Institutional
Investors trading futures should report their trading volumes and the positions
they hold in accordance with Article 104 of the Futures Trading Act and the TAIFEX
rules. An Institutional Investor that
trades securities in accordance with the Regulations may, because of its risk hedging
needs, apply for relaxation of the restrictions on futures positions. |
