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Amendments

Title：

Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals  CH

Amended Date： 2014.02.11 
Article Content Chapter Content Search Article No. Search Legal Basis Subordinate Legislation Amended Article Legislative History Chinese

Title： Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals(2006.03.23)
Date：
Article 4     ROC securities in which overseas Chinese and foreign nationals outside the ROC may invest shall be limited to the following:
  1. stocks, bond conversion entitlement certificates, and Taiwan depositary receipts issued or privately placed by listed, over-the-counter ("OTC"), or emerging-stock companies;
  2. securities investment trust fund beneficiary certificates;
  3. government bonds, financial bonds, ordinary corporate bonds, convertible corporate bonds, and corporate bonds with warrants;
  4. beneficial securities placed publicly or privately by trustee institutions, or asset-backed securities placed publicly or privately by special-purpose companies;
  5. call warrants and put warrants; and
  6. other securities as approved by the Financial Supervisory Commission, Executive Yuan (FSC).
    Where funds have been transferred to Taiwan for the purchase of any of the securities listed in the preceding paragraph but the funds have not yet been invested, theFSC, depending on domestic economic and financial conditions and the state of the securities market, limit the use of such funds. The percentage of any investment cap shall be determined by the FSC after consultation with the competent authority for foreign exchange business.
    Where a trust fund offered and issued overseas by a SITE invests in ROC securities, the range of securities in which it is allowed to invest shall be subject to the provisions of the Regulations Governing Securities Investment Trust Funds.
    Except as otherwise provided by law, overseas Chinese and foreign nationals located within the ROC may invest in an unrestricted range of securities.
Article 5     The FSC shall determine the issuing companies in whose securities investments may be made by the trust funds that SITEs issue and sponsor overseas, or by overseas Chinese and foreign nationals. Such investment may be exempted from the prohibitions and restrictions on investment by overseas Chinese and foreign nationals in specific industries as set forth in the Executive Yuan's negative list, except where other applicable acts or regulations prohibit investment by foreign nationals or limit the percentage of equity holdings by overseas Chinese or foreign nationals.
    Where other applicable acts or regulations limit the percentage of equity holdings by overseas Chinese or foreign nationals in a particular issuing company, and where total investments by SITE-managed offshore trust funds, overseas Chinese, and foreign nationals in any of the following instruments issued by such company amount to less than the legally specified maximum, in the amount that such total investments fall short of the legally specified maximum, the issuing company may: privately place or apply to offer and issue overseas convertible corporate bonds and Overseas Corporate Bonds with warrants; issue Overseas Stocks; and sponsor issuance of Overseas Depositary Receipts:
  1. ROC stocks;
  2. shares and bond conversion entitlement certificates that serve as the underlying instruments for conversions, swaps, or warrant exercise transactions involving ROC corporate bonds;
  3. shares and conversion entitlement certificates that can be obtained through conversions, swaps, or warrant exercise transactions carried out by the holder of ROC corporate bonds for which corporate shares serve as the underlying instruments for conversions, swaps, or warrant exercise transactions;
  4. shares that can be obtained through conversions, swaps, or warrant exercise transactions carried out by the holder of Overseas Corporate Bonds for which corporate shares serve as the underlying instruments for conversions, swaps, or warrant exercise transactions; or
  5. Overseas Stocks.
Article 7     A SITE that issues Offshore Beneficiary Certificates for subscription by overseas Chinese and foreign nationals for the purpose of establishing a [SITE-managed offshore] trust fund shall apply to the FSC for approval within one month after obtaining an approval letter from the competent authority for foreign exchange business.
    Inward remittance of the funds for subscription to the [SITE Managed Offshore] Fund shall be handled in accordance with the applicable provisions of foreign exchange acts and regulations.
Article 10     Overseas Chinese and foreign nationals outside the ROC wishing to invest in ROC securities shall apply to the TSEC for registration in accordance with TSEC operating rules and bylaws by submitting the relevant documents; provided, however, that this requirement shall not apply to overseas Chinese and foreign nationals within the ROC investing in government bonds, financial bonds that do not confer equity rights, ordinary corporate bonds, or open-ended beneficiary certificates.
    Overseas Chinese and foreign nationals outside the ROC applying to complete the registration set forth under the preceding paragraph shall submit an application form together with the following documents:
  1. a Power of Attorney for Agent or Letter of Appointment for Representative;
  2. identity documents conforming to the provisions of Article 3, paragraph 2;
  3. other documents as required by the FSC.
    Overseas Chinese and foreign nationals who have already completed registration with the Taiwan Futures Exchange Corporation (TAIFEX) and obtained qualification to engage in domestic futures trading are exempted from carrying out the registration procedures referred to in paragraph 1.
Article 11     When an overseas Chinese or foreign national carries out the registration referred to in paragraph 1 of the preceding article, the TSEC may reject the application if any one of the following situations exists:
  1. the registered documents or particulars thereof are found to be fraudulent or untrue;
  2. the registered documents are incomplete or have not been fully filled out, and the applicant has failed, upon notification, to provide the missing information within the specified time period; or
  3. the registrant has committed a major violation of these Regulations or of securities or futures trading laws or regulations.
  4. its registration has been cancelled by the TAIFEX pursuant to futures trading laws or regulations.
    After an overseas Chinese or foreign national has registered, the TSEC may cancel the registration if any one of the circumstances set forth under the preceding paragraph is discovered.
Article 12     The limits on investment in ROC securities by overseas Chinese and foreign natural persons outside the ROC shall be set by the FSC following consultation with the competent authority for foreign exchange business.
Article 17     An overseas Chinese or foreign national outside the ROC that invests in ROC securities shall designate a bank, approved by the FSC to offer custodial services, to act as its custodian institution and to handle related matters, such as custodianship of funds and certificates related to securities investments, confirmation of trades, transaction settlement, and reporting of relevant information.
Article 21     An overseas Chinese or foreign national outside the ROC shall use inwardly remitted investment capital for the purpose of investment in ROC securities in accordance with these Regulations and the provisions of other applicable acts and regulations, and shall, except as otherwise provided by the FSC, abide by the following provisions:
  1. It shall not engage in securities margin trading.
  2. It shall not sell securities it does not hold.
  3. It shall not extend loans or provide security.
  4. It shall not entrust custody of securities to any juristic person or individual other than a custodian institution or centralized securities depository.
Article 23     The FSC may, when necessary, require an overseas Chinese or foreign national outside the ROC to submit the following information:
  1. a list of beneficial owners of the investment capital, the amount of the capital, its source, and related information;
  2. information on utilization of inward-remitted investment funds, securities trading details, and inventory information (the FSC may examine the securities inventories and accounts);
  3. detailed information on derivative products issued or traded offshore for which the stock of ROC public companies serves as the underlying securities; or detailed information on ROC public company stock held on behalf of a principal engaging in derivatives trading;
  4. information on persons giving trading orders for investment in ROC securities, including their name, nationality, contact information, and other related information; and
  5. other information as specified by the FSC.
Article 24     With respect to their holdings of Overseas Corporate Bonds (issued or privately placed by a domestic issuer) to which conditions attach that allow for conversion or subscription to stock, overseas Chinese and foreign nationals may, in accordance with the terms of issuance and conversion or subscription, request to receive securities issued by a domestic issuer (either through bond conversion or the exercise of subscription rights).
    An overseas Chinese or foreign national who holds Overseas Corporate Bonds privately placed by an ROC issuer shall not request to exchange the bonds or subscribe to the stock of another listed or OTC company in accordance with the terms of issuance and conversion or subscription until at least three years from the date of delivery of such privately placed Overseas Corporate Bonds.
    Where an overseas Chinese or foreign national who holds privately placed Overseas Corporate Bonds converts the bonds (or exercises subscription rights attached thereto) to acquire securities issued by an ROC issuer, and stock dividends or new shares are subsequently distributed out of earnings or capital reserves, the shares thus received by such person shall not be sold on an ROC market until at least three years after the privately placed Overseas Corporate Bonds have been delivered and the ROC issuer has reported a supplemental public issuance to the FSC.
Article 29     Overseas Chinese and foreign nationals may request redemption of Overseas Depositary Receipts in which they have invested. When applying for redemption, they may request that the securities evidenced by the Overseas Depositary Receipts be transferred to them by the depository institution, or may request the sale of the depository institution sell the securities evidenced by the Overseas Depositary Receipts and forward payment to them of the proceeds therefrom after deduction of taxes and relevant fees.
    With respect to their holdings of privately placed Overseas Depositary Receipts and any depository receipts subsequently distributed in connection with an issue of stock dividends or new shares out of earnings or capital reserves, overseas Chinese and foreign nationals shall not, after redemption for shares issued by an ROC issuer, sell such shares on an ROC market until at least three years after the Overseas Depositary Receipts have been delivered and the ROC issuer has reported a supplemental public issuance to the FSC.
Article 32     Overseas Chinese and foreign nationals may sell on ROC markets Overseas Stocks in which they have invested.
    Where an overseas Chinese or foreign national holds privately placed overseas shares, or shares received through subsequent distributions out of earnings or capital reserves, such shares shall not be sold on an ROC market until at least three years after the privately placed overseas shares have been delivered and the ROC issuer has reported a supplemental public issuance to the FSC.