TAIWAN Law and Practice Contributed by: Susan Lo, Chi Lee and Evelyn Shih, Lee and Li Attorneys-at-Law
In addition, to ensure the development and competi - tiveness of Taiwan’s hi-tech industries, the National Science and Technology Council (NSTC) released the Regulations on the Designation of National Core Critical Technologies on 26 April 2023, which were updated on 31 December 2024, to specify the scope of national core critical technologies. The NSTC also set up the Review Committee of National Core Critical Technologies (the “Review Committee”), which is in charge of designation, alternation and other matters regarding critical national technologies, and the Office of National Core Critical Technologies to track the development and research of relevant technologies and put forward associated proposals. The Review Committee looks at the critical technologies under its jurisdiction annually, and assists the relevant indus - tries in clarifying the scope and application thereof. FDI Regime and PRC Investment According to the Statute for Investment by Foreign Nationals, all direct investments by foreign entities/ nationals require approval from the DIR (except for certain investments in listed securities). Furthermore, any investment in Taiwan by a Taiwan entity in which a foreign investor holds over one third of the shares or capital requires the approval of the DIR. Without such approval, the investor may be prohib - ited from expatriating profits out of Taiwan or may be requested to divest. In practice, without the approval of the DIR, an investor will not be able to complete the incorporation registration nor convert its investment fund into New Taiwan dollars after the fund is wired to Taiwan. The DIR will review the proposed investment to assess whether it is against national security, pub - lic order, good customs and practices, and national health, and whether it contravenes any of the relevant laws and regulations. Specifically, the Executive Yuan has issued a “nega - tive list” of prohibited and restricted industries for for - eign investors (other than PRC investors) to invest in, due to national security concerns. Furthermore, as the geo-national tension between China and Taiwan rises, PRC investments in Taiwan are subject to greater scrutiny. “PRC investor” refers to a PRC entity/national and any non-PRC entity in
which a PRC entity/national holds more than 30% of the shares or capital, directly or indirectly, or is con - trolled by a PRC entity/national. PRC investors are only allowed to invest in certain limited sectors listed on the “positive list” issued by the DIR. To prevent and deter PRC investors from illegal invest - ment in Taiwan via nominee or other similar arrange - ments, the Act Governing Relations between the Peo - ple of the Taiwan Area and the Mainland Area prohibits Taiwanese individuals from offering their names to, or allowing the use thereof by, PRC investors to cir - cumvent the relevant restriction on PRC investments. Both the PRC investor and the Taiwanese nominee would be subject to a fine of between TWD120,000 and TWD25 million for violation of this rule. In addition, the DIR may order the investor to cease or withdraw such investment, or to rectify it within a specified time limit, and it may suspend the investor’s shareholder rights if necessary. 3.4 Competition Law and Antitrust The Fair Trade Act (FTA) is the primary regulation for antitrust and merger control in Taiwan. If the forma - tion of a JV constitutes a “combination” with a certain market share (as a result of the combination, the par - ties will jointly acquire a market share of at least one third, or one of the parties will hold a market share of at least one quarter before the combination) or turno - ver thresholds in the preceding fiscal year under the FTA, clearance from the Fair Trade Commission (FTC) must be obtained before its formation. In this respect, “combination” refers to the following, among other things: • the holding or acquisition of at least one third of the voting shares of or interest in another enter - prise; • having an arrangement with another enterprise for joint operation on a regular, ongoing basis, or the management of another enterprise’s business based on a contract of entrustment; or • having direct or indirect control over the operation or personnel of another enterprise. Prior to June 2023, the FTC would exercise jurisdic - tion over foreign-to-foreign combinations only if the
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