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According to the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area (the "Act"), PRC investors may make any investment in Taiwan unless approved by the competent authorities. In the absence of relevant regulations to guide approval procedure, the access has long been denied.
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The Executive Yuan approved the Regulation Regarding the Taiwan Investments Made by Persons of Mainland Area (the "Investment Regulation") and the Regulation Regarding the Establishment of Branch Offices or Agencies in Taiwan by Profit Seeking Enterprises of Mainland Area (the "Establishing Regulation") both on 25 May 2009. Since the promulgation of the Regulations on 30 June 2009, access can now be granted to inbound PRC capitals for local investments.
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Mainland Capitals for Local Investments |
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As a general rule, an individual, juristic person, organization, or other institution of Mainland China Area (a "Mainland Person"), or any company a Mainland Person invests in any third area must obtain an approval pursuant to the Investment Regulation before making any investment in Taiwan.
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Permitted investment are: (i) the acquisition of shares of equity interest of Taiwanese companies or other entities, (ii) the establishment of branch offices, private or partnership, and (iii) the provision of loans for one-year or above to the above-mentioned investment target entities.
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Regarding the investment through a third-area company, such third-area company, according to the Investment Regulation, refers to any company established pursuant to the law of a jurisdiction other than Mainland and Taiwan areas with the investment from a Mainland Person, and that (i) the Mainland Person directly or indirectly holds more than 30% of the equity interests of such third-area invested company, or that (ii) the Mainland Person has control over the such company. This "indirect investment" should be made pursuant to the Investment Regulation instead of the Statute for Investments for Foreign Nationals.
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Along with the promulgation of the Regulations, the Investment Committee published a list of 192 industries of manufacturing, service and public construction sectors opened for Mainland capitals. Nevertheless, the authorities concerned will have the right to further restrict or deny applications for policy reasons.
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Domestic Appearances |
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Under the Establishment Regulation, Mainland companies may apply to establish its branch offices or agencies in Taiwan, subject to different documentation and approval requirements. It is also required that applicants set aside the operating funds specifically for their Taiwan branches to meet the mini-mum requirements stipulated by the authorities governing the industries of investments.
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