The Taiwan Monthly

Oct. 2021

Trading Policies

TWSE updated the Q&A for Overseas Chinese and Foreign Investors for the amendment of the definition of Chinese investment

The Taiwan Stock Exchange (“TWSE”) has updated the Q&A for Overseas Chinese and Foreign Investors on September 11, 2021, to respond the amendment on the definition of a “third-area invested company” by the Investment Commission, Ministry of Economic Affairs (“MOEAIC”).

 

MOEAIC has published the amendments to applicable requirements under the “Regulations Governing the Permission of Investment by the People of the Mainland Area” and the interpretation on December 30, 2020 and updated the “FAQ section of Investment From Mainland China” in January, 2021.

 

A third-area invested company means a company in a third area invested by an individual, juristic person, organization or any other institution of the Mainland Area which meet any of conditions as below:

  1. Chinese Investment directly or indirectly owns more than 30% of the shares in or contributed more than 30% of the capital of the third-area company; and
  2. Chinese Investment has control power over such third-area company.

 

There are three main points on the updated regulations, interpretation and FAQ:

  1. The calculation of a third-area invested company’s shareholding is changed from “total capital contribution” to “Tiered Recognition Calculation Method.”
  2. The scope of control power is expanded.
  3. If a foreign company becomes a third-area invested company by new definition, it is not considered as a violation if it doesn’t change its investment plan.

 

To respond the above amendments from MOEAIC, the TWSE updated the Q&A for Overseas Chinese and Foreign Investors, and added Question 8 for foreign investors’ reference:

  1. If a registered foreign investor is deemed as a Mainland Area investor by the amended interpretation, it may directly report to the TWSE by written registered letter format, promptly sell the securities they hold, and proceed with cancellation of the identity registration and securities trading account after the account balance has been settled in full. Failure to send such a notice and take these actions is not deemed as a violation.
  2. When a registered foreign investor is applying for amendment of registration, the custodian and investor should further review the shareholding of the investor by the amended interpretation. If it is determined as Mainland Area investors, it should cancel its registration.

 

For the updated Q&A for Overseas Chinese and Foreign Investors, please refer to the following URL:

Chinese:

https://www.twse.com.tw/downloads/zh/investor/foreignInvest/foreignZH.pdf

English:

https://www.twse.com.tw/downloads/en/investor/foreignInvest/foreignEN.pdf

Japanese:

https://www.twse.com.tw/downloads/jp/investor/foreignInvest/foreignJP.pdf

 

For further inquiries, please contact Chien-Ti Chang at chienti@twse.com.tw