TAIWAN Law and Practice Contributed by: Eddie Chan, Derrick Yang, Winnie Lin and Yuan-Yuan Lo, Lee and Li Attorneys-at-Law
Economic Affairs of Taiwan (DIR) under the Statute for Investment by Foreign Nationals in advance. In general, foreign investors can invest in most business sectors in Taiwan. The “negative list” promulgated by Taiwan regulators specifies prohibited and restricted investment areas for foreign nationals. No foreign investment can be made in the “prohibited industries”. For those classified as “restricted industries”, special permits or licences from relevant authorities must be obtained before investment, and additional restric- A PRC investor, under the Regulations Governing Investment from the People’s Republic of China (PRC), refers to any individual, juristic person, organisation or any other institution from Mainland China (a “Mainland Person”) that invests in Taiwan. A PRC investor also includes any company located in any third area (an area other than the PRC or Taiwan) and invested in by Mainland Person(s) whereby (i) the shares held or capital contributed directly or indirectly by Mainland Person(s) in aggregate exceed 30% of the total num- ber of shares or the total amount of capital contribu- tion of the third-area company, or (ii) any Mainland Person has control over the third-area company. A PRC investor is only permitted to invest in a Taiwanese company if prior approval from the DIR is obtained, and only if the investment is consistent with the busi- ness scope restrictions and limitations on Taiwan’s “positive list” for investment from Mainland China as promulgated by Taiwan regulators from time to time. 7.4 National Security Review/Export Control National Security Review An investor is prohibited from investing in businesses in Taiwan that could harm national security, public order, good customs and practices, or public health, as well as such activities that are prohibited by law. Certain industries and companies will undergo special scrutiny due to national security concerns. In these cases, the DIR will forward the foreign investment application to other government agencies for their comments and approval before making a final deci- sion. Industries and companies that may fall under the intra-governmental consultation process include: tions may apply. PRC Investment
• financial holding companies, banking, insurance, securities firms, securities investment trusts or consulting firms; • telecommunications; • media and broadcasting; • agriculture; • transportation; and • energy. Export Control An export of items falls under the scope of strategic high-tech commodities (SHTC) and the provision to a foreign party of the relevant technologies to develop, manufacture or use the product requires proper per- mits. The criteria to determine the strategic high-tech commodities include: • whether the items are on the export control lists for SHTC issued by the International Trade Administra- tion, Ministry of Economic Affairs (ITA); • whether the customers are included on the SHTC Export Entity List as announced by the ITA; and • whether there exists any of the red-flag situations (eg, the customers are not willing to provide the end-use or end-users of the items) or the use or end-user of the items is likely for production or development of nuclear or biochemical weapons, missiles or other military weapons. 7.5 Antitrust Regulations If a combination may lead to a combined market share or revenue exceeding the prescribed filing thresholds, the enterprises participating in such proposed com- bination must obtain prior approval from the Taiwan Fair Trade Commission (TFTC) before the combina- tion. The “combination” refers to any one of the fol- lowing conditions: • mergers; • holdings or acquisitions of at least one third of the voting shares of or interest in another enterprise; • transfers or leases of all or a substantial part of an enterprise’s business or assets; • 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.
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