Dear friend,
On 30 December 2020, the Ministry of Economic Affairs (MOEA) announced the amendments to the Regulations for Approval on Investment in Taiwan by People of Mainland Area (Regulation) and its rulings, Regulation on Investment or Technical Cooperation Permission in Mainland and Principles for Reviewing Investment or Technical Cooperation in the Mainland China. We summarize below:
1. Amendments to Measures Governing Investment Permit to the People of Mainland Area and Its Rulings.
(1) Amendment to the calculation measure for shareholding: Any person(s) of Mainland China having, individually or collectively, over than 30% of shares in any level of upper shareholders in a third area company(ies), such shareholder will be deemed a Mainland China investor.
(2) Amendment to the standard for controlling power: Expanding the company's decision-making organization from "board of directors or similar organizations" to "board of directors or other organizations that may determine on the company's operating policy" (including other decision-making organizations under the board of directors).
(3) Expanding the definition of investment to include the Mainland China investor’s shareholding or contribution in a company, a sole proprietorship, partnership, limited partnership in Taiwan area. The definition of investment further include the Mainland China investor's control in a sole proprietorship, partnership, limited partnership, non-listed, non-OTC listed or non-emerging company by agreement or other measures, and mergers and acquisitions of non-listed, non-OTC listed, or non-emerging company(ies), and merger or acquisition of business or assets of non-listed, non-OTC listed, or non-emerging company(ies) by a third area company controlled by the Mainland China investor.
(4) The competent authority shall restrict the Communist Party of China, Government of the Mainland China, Mainland China's military, the legal person, organization or institution invested by the political agent, or their third area company, from investment in Taiwan.
2. Amendment to Regulation on Investment or Technical Cooperation Permission in Mainland and Principles for Reviewing Investment or Technical Cooperation in the Mainland China.
(1) Expanding the definition of technical cooperation to include any Taiwan person's direct or indirect transfer or license of expertise technical, patent, trademark or economic rights of copyright to any person(s) of Mainland China.
(2) Providing the competent authority's review measure for application of technical cooperation in Mainland China, including review on the impact on the core competitiveness of domestic industries and infringement of other manufacturers' intellectual property rights for an application for technology license or transfer.
Mike Lu / Will Chen