TAIWAN Law and Practice Contributed by: Lihuei Mao (Grace), Dennis Yu and Christina Chiang, Lee and Li, Attorneys-at-Law
and venture capital funds, including green and renewable energy technology, projects under the “Asia’s Silicon Valley” programme, biotechnol - ogy and pharmaceuticals, the defence indus - try, smart machinery, new agriculture, circular economy industries, the information and digital industry, the cybersecurity industry, the preci - sion health industry, and the military industry, as well as additional industries announced under the Trillion Dollar Investment National Develop - ment Plan and the Asian Asset Management Center Plan in 2024 and early 2025. According to a StartupBlink 2024 report, the most notable industries among Taiwanese start- ups were software and data (29.7%), healthcare (18.8%) and hardware, and the internet of things (IoT) (14.4%). 2. Venture Capital Funds 2.1 Fund Structure Venture capital funds are typically organised in the following forms. • A company limited by shares under the Com - pany Act: (a) decision-making body – the board of directors’ meeting and the shareholders’ meeting (some companies will also estab - lish an investment committee, which shall report to the board); and (b) standard corporate governing documen - tation: (i) articles of incorporation of the fund; and (ii) shareholders’ agreement among the shareholders. • A limited partnership under the Limited Part - nership Act:
(a) decision-making body – general partner and fund manager; and (b) standard corporate governing documen - tation: (i) partnership agreement among the general partner and limited partners; and (ii) management agreement between the general partner, the fund and the fund manager. 2.2 Fund Economics Venture capital funds in Taiwan generally follow global market practice in terms of fund econom - ics. Fund Principals (initiators, managers, etc) are usually entitled to the following management fees and carried interest: • the management fee is charged at a certain percentage, usually 1.5% to 2.5%, of the total fund managed/invested; and • the carried interest is charged at a certain percentage, usually 20%, of the profits of the fund, subject to certain limitations in the event the fund has suffered losses, such as claw-back of the carried interest paid to the general partner in previous years to ensure that the general partner would not receive more than the agreed percentage of carried interest over the life of the fund. 2.3 Fund Regulation In terms of corporate governance, venture capi - tal funds are not regulated by any laws specific to them. Venture capital funds in the form of a company limited by shares are regulated by the Company Act, while venture capital funds in the form of a limited partnership are regulated by the Limited Partnership Act. Some CVCs estab - lished by financial holding companies would be subject to laws and regulations related to such companies.
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