TAIWAN Law and Practice Contributed by: Ken-Ying Tseng, Vivian Cheng, Julia Kuei-Fang Yung and Gail Chang, Lee and Li Attorneys-at-Law
Portfolio investment (FINI/FIDI) Foreign portfolio investors who are permitted under the FINI Regulations to invest in securities listed on the Taiwan Stock Exchange (TWSE) or the Taipei Exchange (TPEx) or other securities approved by the FSC are classified as foreign institutional investors (FINIs) or foreign individual investors (FIDIs). • Registration – FINIs and FIDIs must register with the TWSE or TPEx and obtain a foreign investor investment ID (FID). • Ownership limits – except in certain exceptional circumstances (including when an entity is obtain - ing 10% or more of the issued shares of a Taiwan - ese listed company in a single transaction), invest - ments in Taiwanese listed companies by FINIs or FIDIs are generally not subject to individual or aggregate foreign ownership limits. FINIs and FIDIs may make investments into the Taiwan securities markets at any time after obtaining the FID without any limitation on the amount of investment. PRC Investment The investment regime for PRC investors is governed by a distinct and more restrictive set of regulations due to the unique political relationship. Under the Act Governing Relations Between the People of the Tai - wan Area and the Mainland Area and the implemen - tation rules and relevant regulations, Chinese busi - nesses and individuals cannot invest in Taiwan unless they have obtained prior approval from the DIR. This approval is granted based on a specific “Positive List”, which is much more limited in scope compared to the general foreign investment regime. Also, Chinese businesses cannot invest in any business that might create monopolies, threaten Taiwan’s national secu - rity, or damage Taiwan’s economic development or financial stability. 2.4 Antitrust Regulations The Fair Trade Act (FTC) regulates monopolies, merg - ers, concerted actions and unfair competition. If, as a result of a share acquisition, one company holds shares or capital contributions representing one third or more of the total voting shares or capital stock of the target company, the transaction will constitute a “combination” for the purpose of the FTC. In addition to share acquisitions, combinations under the FTC
also include mergers, transfers or leases of all or a substantial part of an enterprise’s business or assets, the establishment of joint ventures, and having direct or indirect control over the operation or personnel of another enterprise. Under the FTC, prior clearance must be sought from the FTC for any combination in any of the following circumstances: • where the combination results in the combined entity having a market share in Taiwan of one third or greater; • where the combination involves a company having a market share in Taiwan of one quarter or greater; or • where: (a) all enterprises in a combination collectively have global sales for the preceding fiscal year exceeding TWD50 billion and at least two enterprises both have domestic sales for the preceding fiscal year exceeding TWD3 billion; (b) for enterprises not in the financial sector, an enterprise in a combination has domestic sales for the preceding fiscal year exceeding TWD20 billion and another enterprise in the combina - tion has domestic sales for the preceding fiscal year exceeding TWD3 billion; or (c) for enterprises in the financial sector, an enter - prise in a combination has domestic sales for the preceding fiscal year exceeding TWD40 bil - lion and another enterprise in the combination has domestic sales for the preceding fiscal year exceeding TWD3 billion. No combination can be effected during the period of 30 business days starting from the filing date (on which complete documents and information have been filed). If the FTC does not give any notice of extension of the waiting period or make a decision objecting to the transaction, the enterprises may pro - ceed with the combination upon the expiry of the 30 business day period. The waiting period can be short - ened or extended up to 60 business days if the FTC deems it necessary. When considering whether to accept or reject any applications for business combinations, the guiding
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