TAIWAN Trends and Developments Contributed by: Lihuei Mao (Grace), Dennis Yu and Christina Chiang, Lee and Li, Attorneys-at-Law
relatively more cost-efficient fundraising mecha - nism compared to traditional approaches. Energy-related venture capital funds, together with financial institutions and alternative fundraising platforms, play important roles in financing trans - actions in the renewable energy industry in Taiwan. Expectations on Capital From Insurance Companies to Private Equity Funds, With NDC’s Review With the aim to utilise the large insurance pro - ceeds controlled by Taiwan insurance companies to invest in strategic industries via onshore pri - vate investment funds while ensuring the sound financial condition of insurance companies, the National Development Council (NDC) enacted the NDC Directives on Guiding and Managing the Promotion of Industrial Investments by Private Equity Funds in June 2021. Under the Directives, onshore private equity funds that meet the statu - tory requirements, such as having assets under management amounting to TWD1 billion or more, and aiming to invest in emerging and key strategic industries announced by the Financial Supervisory Commission (FSC), may apply with the NDC for review and qualification. The NDC will then grant a qualification letter to the onshore private invest - ment fund if it meets the necessary criteria. In other words, a qualified onshore private investment fund approved by the NDC will be permitted to solicit and receive investments from Taiwanese insurance companies; however, a qualified onshore private investment fund that receives funds from Taiwanese insurance com - panies will be subject to stringent regulations. On 28 January 2022, the FSC issued a ruling stating that if a qualified onshore private invest - ment fund is approved by the NDC to deploy 50% or more of its investment in foreign juris -
dictions, the money received by such fund from Taiwanese insurance companies can be used to invest in foreign companies. This ruling paved the way for onshore private investment funds to invest in foreign companies by using the capital contributed by Taiwanese insurance companies. It also enables Taiwanese insurance companies to indirectly invest in foreign companies through qualified onshore private investment funds. In addition, in December 2023, the FSC reduced the risk coefficient of onshore private equity funds and onshore venture capital funds that invest 100% of its capital in infrastructure pro - jects from 33.75% to 10.18%. Furthermore, as a part of the government’s Trillion Dollar Invest - ment National Development Plan and the Asian Asset Management Center Plan launched by the Taiwan government, the FSC announced in September 2024 to further reduce the risk coef - ficient of onshore private equity funds that invest 100% of its capital in infrastructure projects from 10.18% to 1.28% for the entire investment peri - od, and also further relaxed certain other invest - ment restrictions in early 2025. These measures incentivise Taiwanese insurance companies to invest more in local infrastructure project-based onshore venture capital funds. Given all the above, it is expected that onshore PE/ VC funds would have more opportunities to solicit funds from Taiwanese insurance companies. Furthermore, the following developments in the Taiwan market are also noteworthy. Scrutiny on PRC Investment Into Taiwan and Other Mechanisms to Prohibit Illegal PRC Investment in Taiwan Besides continuing scrutiny on applications from PRC investors to invest in Taiwan, several law amendments were enacted to strengthen
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