萬國法律事務所

Taiwan’s Investment Commission of the Ministry of Economic Affairs (IC) recently amended its Regulations Governing the Approval of Investments or Technical Cooperation in China (Regulations). The newly amended Regulations require a shareholder holding 10% or more of an initial public offer (IPO) issued by a Taiwan-funded enterprise in China to report its investment in advance for the IC’s approval. On the other hand, directors, supervisors and managers of such Taiwan-funded enterprises in China are also required to report their share-holdings, regardless of their percentages.

The Regulations before this amendment required advance reporting from investors who hold whatever percentage of the shares, even as little as 1%. Such requirement was criticized as overly harsh; in particular, due to the possibility of stock-dilution and dispersed ownership structure caused by IPOs, minority shareholders had complained about the inconvenience caused by the advance reporting requirement, specially to the individual investors who were not aware of the requirement and only owned a minimal percentage of the shareholding.

This amendment aims instead at only the major shareholders. The amendment is expected to save substantial administrative costs due to the decrease in the number of reports from shareholders that will need to be reviewed and processed by the IC.