In order to avoid the circumvention of censorship by cross-border multi-layered investment and the possibility that the investment by mainlanders in Taiwan may be directed by the decision of the mainland party, government and military, the Ministry of Economic Affairs of the Republic of China (MOEA) issued an amendment to the “Measures for Permitting People from Mainland China to Invest in Taiwan” on December 30. The picture shows Minister of Economic Affairs Wang Meihua, file photo.
The Ministry of Economic Affairs (MOEA) of the Republic of China (ROC) has issued amendments to the “Regulations on the Permission of People from Mainland China to Invest in Taiwan” today (Dec. 30), to adopt a tiered approach to the qualification of land-based investment, expand the review of the behavior of land-based investment, and restrict mainland party, government and military-invested enterprises from investing in Taiwan, with the amendments taking effect immediately.
In addition, the Ministry of Economic Affairs also issued amendments to Article 5 of the “Measures for Licensing Investment or Technical Cooperation in Mainland China” and the fourth point of the “Principles for Reviewing Investment or Technical Cooperation in Mainland China” to prevent the transfer of Taiwan’s expertise or intellectual property rights to people in mainland China may give rise to suspicion of technology outflow.
The Ministry of Economic Affairs said that in response to the recent increase in the complexity of foreign direct investment patterns, including the United States, Japan, Europe, Australia and other major countries have raised the threshold for foreign investment review, strengthening the review mechanism for cross-border investment transactions that may affect national security and expanding the review capacity of the competent authorities.
In order to avoid the circumvention of the review by cross-border multi-layered investment and the possibility that the investment by mainlanders in Taiwan may be directed by the decision of the Party, government and military in mainland China, the Ministry of Economic Affairs (MOEA) issued an amendment to Articles 3, 4 and 6 of the “Measures for the Permission of People from Mainland China to Invest in Taiwan” and the related interpretation order on the 30th.
The key points of the amendments are as follows.
- Amend the definition of third-area investment companies: Issue the explanation of the calculation method of “30 percent” and amend the criteria of “having the ability to control”, in order to strictly identify the definition of third-area land-based investment.
The Commission said that the calculation method of “30 percent” was changed from the current “comprehensive shareholding calculation method” to the “stratified determination calculation method”. For example, if mainlanders apply for investment in Taiwan through Company A, which holds 40% of the shares in the first tier of the third place, and then invest in Company B, which holds 40% of the shares in the second tier of the third place, then.
(1) According to the current “Integrated Shareholding Calculation Method”, the shareholding behind Company B is only 16% (40% X 40%), which is less than 30% and is subject to foreign investment regulations.
(2) If calculated according to the “stratification method”, since the mainland people hold 40% of the equity of Company A, which is more than 30%, Company A is deemed to be qualified as a land-based company; Company A (a land-based company) holds 40% of the equity of Company B, which is more than 30%, Company B is also deemed to be qualified as a land-based company, and the land-based regulations apply to Company B’s investment in Taiwan.
(2) Expand the review of land-based investment behavior: add the mainland investors to contract or other ways to control Taiwan sole proprietorship, partnership, limited partnership or non-listed, listed or emerging companies and the third region of land-based companies to merge the business or property of non-listed, listed or emerging companies in Taiwan, are investment behavior that should be applied for permission.
Third, the amendment of the mainland party, government and military invested enterprises, the competent authorities shall restrict their investment in Taiwan: the mainland party, military, administrative or political organs (institutions), organizations invested in legal persons, groups, other institutions or their investment in the third region of the company, the competent authorities shall restrict their investment in Taiwan.
The Commission said that this amendment is mainly for the past review experience to do a general review, because the investment case is a case-by-case review, or will consider the case situation to make a determination.
The Ministry of Economic Affairs (MOEA) amends the licensing scheme and review principles for investment or technical cooperation in mainland China
In addition, the Ministry of Economic Affairs (MOEA) today issued amendments to Article 5 of the “Regulations on Permission to Engage in Investment or Technical Cooperation in Mainland China” to include the sale of specific technologies in the form of technical cooperation, which should be applied for in advance so as not to damage the development of Taiwan’s industries.
The key points of the amendment are as follows.
I. Expanding the type of technical cooperation: Specify that the transfer or licensing of specialized technology or intellectual property rights is a form of technical cooperation.
(2) Direct and indirect technical cooperation acts are subject to regulation: In order to avoid the people in Taiwan to first transfer or authorize the expertise or intellectual property rights to third-party companies and then indirectly transfer or authorize them to mainland companies through third-party companies, after taking into account the opinions during the preview period, it is specified that the direct or indirect transfer or authorization acts are subject to regulation.
The Ministry of Economic Affairs (MOEA) planned to include the “Semiconductor Circuit Layout Right” in the management, but considering that the emerging intellectual property rights in the industry are changing rapidly and that the “Semiconductor Circuit Layout Right” can be covered by the “Specialized Technology”, the Executive Yuan approved, after review, that technical cooperation with mainland companies engaged in “Specialized Technology, Patent Right, Trademark Right or Copyright” should be included in the management.
In addition, considering that technical cooperation cases require prior application in practice, and the examination procedure is different from that of investment, in order to differentiate from investment cases, the Ministry of Economic Affairs has simultaneously amended the fourth point of “Principles for Examination of Investment or Technical Cooperation in Mainland China”, and added in the second item the examination mechanism of the competent authorities when people in Taiwan apply for technical cooperation in Mainland China.
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