萬國法律事務所

The Memorandum of Understanding on cross-strait cooperation in financial supervision signed by Taiwan and PRC took effect on 16 January 2010. PRC qualified domestic institutional investors (QDIIs) could invest in the Taiwan stock markets from 18 January 2010. However, not every type of share listed on the TWSE or Gre Tai may be purchased by QDIIs.

According to the enforcement rules published by Financial Supervisory Commission (FSC) on 18 January 2010, the number of listed shares in which PRC QDIIs are prohibited from investing totals as many as 78, which includes shares issued by highly-regulated industries, such as construction development, civil aviation and telecommunications services.

In addition to the industries in which PRC QDIIs are prohibited from investing, the FSC has set the overall ceiling for capital remitted into Taiwan by PRC QDIIs at US$ 500 million and the maximum investment capital of each individual PRC QDII at US$ 80 million. Furthermore, the shares held by each QDII in listed companies offering financial services are limited to 5% while the shares in other listed companies are capped at 10%.

FSC officials indicated that the enforcement rules were set as such after deliberation and intensive discussions with the Central Bank of PRC and the related government authorities. FSC officials further pointed out that investment by PRC QDIIs is a type of securities investment, and hence PRC QDIIs are incapable of appointing directors and supervisors to serve on the companies in which they hold shares.