萬國法律事務所

On September 9, 2011, the Financial Supervisory Commission (FSC) of Taiwan’s Executive Yuan announced that financial holding corporations will be allowed to establish venture capital management corporations in China through 100% owned venture capital subsidiaries, directly or indirectly.

This is a new policy on opening investment of financial operation within China. Recently, the FSC announced the amendment of the “Regulations Governing Banking Activity and Establishment and Investment by Financial Institutions Between the Taiwan Area and the Mainland China Area”, in which restrictions on establishment of banking branches were removed if certain modes of operation were followed.

According to the FSC, a venture capital subsidiary must hold at least 25% of the total number of the outstanding voting shares issued by the venture capital management corporation and must file a request for establishment to the Ministry of Commerce of the People’s Republic of China, and the minimum capital is 1 million RMB.

However, at this time, a venture capital management corporation is only allowed to manage venture capital funds. The announced order does not allowed investing in venture capital funds directly. The FSC still maintains the policy that venture capital investment must be mainly focused on domestic Taiwanese corporations. Also, the maximum amount of investment in establishing venture capital management corporations must be calculated in sum with other investments in China made by the financial holding corporation in question, which cannot exceed 10% of its total assets.