TAIWAN Law and Practice Contributed by: Lihuei Mao (Grace), Dennis Yu and Christina Chiang, Lee and Li, Attorneys-at-Law
of limited partnerships and those in the form of corporations. However, please note that, pass-through taxa - tion for limited partnerships in Taiwan applies a different tax treatment based on the source of income, which differs from pass-through taxa - tion as commonly seen in other jurisdictions. 4.3 Government Endorsement In 2021, the TWSE launched the TIB and the Taipei Stock Exchange (TPEX) launched the Pioneer Stock Board (PSB) under the Emerg - ing Stock Market (ESM), a separate new board in addition to the Emerging Stock Board (ESB) exclusively for qualified investors at that time, aiming to facilitate fundraising by innovative businesses in the capital markets. Start-ups in the designated core and strategic industries, or in designated innovative industries, could be registered and publicly traded on the PSB without meeting certain requirements as to existence, profitability and dispersed sharehold - ing. In addition, the underwriters and the TPEX provided more assistance to – and supervision over – the start-ups registered on the PSB to address the start-ups’ lack of capital market experience, while only allowing qualified inves - tors to trade shares in companies registered on the PSB. However, as from 1 January 2024, the PSB ceased to exist, and the companies regis - tered on the PSB and ESB were integrated into a single market under the ESM. In response to this change, since 1 January 2024, companies applying to register on the ESM have been able to choose to adopt either a standard public issu - ance or a simplified public issuance procedure, and the ESM has become open to all investors.
Before 6 January 2025, stocks registered on the TIB could be traded only by qualified investors that meet one of the following criteria: • a professional institutional investor or a juris - tic person with one or more years of experi - ence in securities trading/investment; • a legally incorporated venture capital enter - prise; • a juristic person with IPO shares at TIB through negotiated sales; and • a natural person with two or more years of experience in securities investment, who has: (a) proof of TWD2 million or more on their financial statements; or (b) an average annual income of TWD1 mil - lion or more over the last two fiscal years. In order to allow more fund accessibility for start- ups, TWSE lifted the restriction regarding quali - fied investors, which allows all investors to trade stocks registered on the TIB starting from 6 Jan - uary 2025. According to a TWSE news release dated 19 February 2025, the trading volume of TIB for the period from 6 January to 14 February 2025 already exceeds 30% of the annual trading volume of 2024 and the daily trading volume has increased 253% as compared to 2024, which clearly evidences that this change in policy has significantly increased the level of interest in the TIB from the market.
5. Employment Incentives 5.1 General
VC investors would usually require founders/ key employees to commit to working full time for the target company during their mandate/ employment with the company. To incentivise the founders/key employees not to terminate their mandate/employment early, which they are
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