TAIWAN Law and Practice Contributed by: Derrick Yang, Judy Lo and Yu-Ting Su, Lee and Li Attorneys-at-Law
5.5 Procedure and Timelines The foreign or PRC investor will initiate the FDI review process by submitting an application to the DIR. This submission usually occurs after the signing of the transaction documents and running in parallel with merger filing. This application should include infor - mation such as the investor’s identity, shareholding structure up to the ultimate beneficiary owner, invest - ment plan, source of funds, and other relevant details. The DIR will conduct an initial review and may consult with other relevant competent authorities regarding their assessment of the investment. Ad hoc reviews may also be carried out depending on the case. The scope and timeline of the DIR’s review will depend on factors such as the investor’s identity, the complex - ity and size of the investment, and the nature of the target businesses. During the review process, the DIR has the discretion to request additional information as deemed necessary. Generally, foreign investment applications are processed within six to eight weeks, whereas PRC investment applications typically require at least six to nine months. 5.6 Substantive Criteria and Risk Factors The DIR may reject or restrict an investment applica - tion if (i) a foreign investment may threaten national security, public order and/or good morals or such investment is prohibited by law; or (ii) a PRC invest - ment may result in monopolies, threaten Taiwan’s national security, or have a negative impact on Tai - wan’s economic development or financial stability. Moreover, the DIR will conduct a more rigorous review if a PRC investor is involved or the business pertains to sensitive sectors such as critical infrastructure, power supply, transportation, telecommunications and broadcasting, or other restricted industries. 5.7 Mitigation Measures, Conditions and Prohibitions The DIR may attach conditions to its approvals to address concerns raised during the review process. These conditions may include restrictions on owner - ship, limitations on certain shareholders’ management control or veto rights, constraints on permitted busi - ness activities, exclusion of specific sensitive assets, and other case-specific commitments.
tation process. The DIR will conduct a comprehen - sive assessment of applications, taking into account factors such as the nature of the business, scale of investment, investor background, national security, public welfare, impact on the industry, and stakehold - er rights to ensure alignment with policy objectives. 5.2 Scope of Transactions and Investors All inbound investments by foreign or PRC investors are subject to the DIR’s review, regardless of indus - try. Please refer to 5.3 Triggers and Thresholds for the detailed types of transactions covered by the FDI review. 5.3 Triggers and Thresholds The FDI review applies to investments in all sectors by foreign or PRC investors of the following types: • Foreign investments include (i) acquiring stock or capital contributions in a Taiwanese company; (ii) setting up a branch office, proprietary business or partnership in Taiwan; and (iii) providing sharehold - er loans for a term of one year or longer to Taiwan - ese companies in the first two categories. • PRC investments include (i) acquiring stock or capital contributions in a Taiwanese company, proprietary business, partnership or limited part - nership (except acquiring, in a single transaction or in aggregate, less than 10% of the shares in a TWSE- or TPEX-listed company); (ii) setting up a branch office, proprietary business or partnership in Taiwan; (iii) providing shareholder loans for a term of one year or longer to Taiwanese companies referred to above; (iv) having control over a Tai - wanese proprietary business, partnership, limited partnership or private company via contractual arrangement; and (v) acquiring the business or assets of a Taiwanese private company through a third-area company controlled by the PRC investor. 5.4 Mandatory v Voluntary Filings FDI approval is mandatory for inbound investments and is often a prerequisite for closing. After imple - menting the investment, the investor should report to the DIR on the completion of the investment, ie, the injection of capital or settlement of purchase price.
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