Mainland Investment in Taiwan: Who Is the First to Take Advantage of Economic Deregulation?

Since the beginning of Ma's leadership in Taiwan in May 2008, cross-strait relations have grown considerably closer. For example, the First Cheng-Chiang Summit in June 2008 expanded direct passenger flights and facilitated mainland residents' travels to Taiwan. The Second Cheng-Chiang Summit in November 2008 explored issues relating to air transportation, shipping links, direct mail services, and food safety. In addition to establishing a consensus on jointly promoting PRC investment in Taiwan, the Third Cheng-Chiang Summit in April 2009 gave way to three agreements: Agreement on Joint Cross-Strait Crime-fighting and Mutual Judicial Assistance, Cross-Strait Financial Cooperation Agreement, and Supplementary Agreement on Cross-Strait Air Transport. As a result, Taiwan began amending and implementing laws and regulations concerning mainland investment in Taiwan.

On April 29, 2009, given the consensus on jointly promoting mainland investment in Taiwan, Taiwanese authorities promulgated the Regulations Governing Securities and Futures Transactions in Taiwan for People from the Mainland Area ("Securities and Futures Regulations").

Then, on May 26, 2009, to set concrete operational guidelines for mainland investors, the Regulations on Permit for Investment in Taiwan by People from the Mainland Area ("Investment Permit Regulations") and Regulations on Permit for Establishing Branch or Representative's Office in Taiwan by Profit-Seeking Mainland Enterprises ("Branch and Rep Office Establishment Permit Regulations") were announced. The provisions in the aforementioned regulations can be summarized as follows:

Advance permit required: mainland individuals, organizations, other institutions, or third-area companies invested in by the aforementioned entities (collectively "Mainland Investor") must obtain a permit from Taiwan's Ministry of Economic Affairs in advance before establishing a branch, representative's office, sole proprietorship, or partnership in Taiwan. Portfolio investment classified as direct investment when shareholding exceeds a certain threshold: if a Mainland Investor purchases or accumulates 10% of shares or more of a listed company, the investment shall be classified as a direct investment and shall be approved pursuant to the Investment Permit Regulations. A separate investment permit is required should the Mainland Investor provides loans for one year or longer to the company it holds shares in as described in the preceding...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT