Taiwan’s Ministry of Economic Affairs (MOEA) announced amendments to Articles 3, 4, and 6 of the Regulations for Investment Permits to People of the Mainland Area (大陸地區人民來臺投資許可辦法) on 30 December 2020. These amendments add new restrictions on Chinese investments in Taiwan. The following are the key points of the amendments:
- Under the old Article 3, any company with more than 30 percent Chinese ownership was considered a Chinese company, but, if a 40 percent Chinese-owned firm acquired a 40 percent stake in a second company, the second company would be considered a non-Chinese company with 16 percent Chinese ownership. Now, under the new Article 3, the second company, may also be considered a Chinese company, as it is 40 percent owned by a Chinese firm. This amendment applies to more layers of investment from China.
- Another amendment to Article 3 addresses “material control” (控制能力). Under the new Article 3, where any organization that has material control over a company, in addition to a board of directors, said company may be deemed a Chinese company.
- The new Article 4 expands the definition of Chinese investment. Now, the acts of establishing a Taiwanese limited partnership with investment of Chinese capital, having material control over a Taiwanese company through agreements or any other means, and acquiring, in the absence of a stock deal, listed companies and their assets at an emerging stock market (興櫃公司) and or non-listed companies and their assets at a stock exchange market and or an over-the-counter market (非上市櫃公司) may be deemed to be forms of Chinese investment.
- The new Article 6 is expanded to prohibit Chinese Communist Party-owned companies from investing in Taiwan, in addition to Chinese People’s Liberation Army-owned companies.
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