Chapter 1 General Principles |
| Article 1 | These Regulations are adopted pursuant to Article 8, paragraph 4 of the Act Governing Investment in Taiwan by Overseas Chinese and Article 8, paragraph 4 of the Act Governing Investment by Foreign Nationals.
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| Article 2 | Overseas Chinese and foreign nationals may invest in securities by any of the following methods:
- Investment in securities investment trust fund beneficial certificates issued by a domestic securities investment trust enterprise (SITE) and sold overseas ("overseas beneficial certificates").
- Investment in domestic securities.
- Investment in corporate bonds issued or privately placed overseas by an issuing company ("overseas corporate bonds").
- Investment in depositary receipts, sponsored by an issuing company, that are issued or privately placed overseas ("overseas depositary receipts").
- Investment in stocks issued, privately placed, or traded overseas by an issuing company ("overseas stocks").
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| Article 3 | The term "onshore overseas Chinese and foreign nationals" as used in these Regulations means natural persons residing in the territory of the Republic of China (ROC) with an Overseas Compatriot Identity Certificate, or holding an ROC passport with an Overseas Compatriot Identity Endorsement, or holding an Alien Resident Certificate, and foreign institutional investors.
The term "offshore overseas Chinese and foreign nationals" as used in these Regulations means overseas Chinese and foreign nationals, including natural persons and foreign institutional investors, outside the territory of the ROC.
The term "foreign institutional investor" as used in these Regulations means either an institutional investor established outside the ROC in accordance with local law, or a branch company established in the ROC by an overseas juristic person.
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| Article 4 | The domestic securities in which offshore overseas Chinese and foreign nationals may invest shall be limited to the following:
- Stocks, bond conversion entitlement certificates, and Taiwan depositary receipts issued or privately placed by an exchange-listed, over-the-counter ("OTC"), or emerging-stock company.
- Securities investment trust fund beneficial certificates.
- Government bonds, financial bonds, straight corporate bonds, convertible corporate bonds, and corporate bonds with warrants.
- Beneficial securities placed publicly or privately by trustee institutions, or asset-backed securities placed publicly or privately by special-purpose companies.
- Call warrants and put warrants.
- Other securities as approved by the Financial Supervisory Commission (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, the FSC, 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 securities investment trust fund offered and issued overseas by a SITE invests in domestic securities, the scope of the 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 in another law or regulation, the scope of the domestic securities in which onshore overseas Chinese and foreign nationals may invest is unrestricted.
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| Article 4-1 | When offshore overseas Chinese and foreign nationals invest in foreign currency denominated straight corporate bonds or non-equity-type financial bonds issued in the ROC by a foreign issuer, these Regulations shall not apply if their inwardly remitted funds do not involve foreign exchange settlements against the New Taiwan dollar.
When offshore overseas Chinese and foreign nationals invest in foreign currency denominated straight corporate bonds or non-equity-type financial bonds issued in the ROC by a domestic issuer, Articles 10 to 22 shall not apply if their inwardly remitted funds do not involve foreign exchange settlements against the New Taiwan dollar. Additionally, Article 6 shall not apply if any of the following circumstances applies to the investment:
- After purchase the bonds are continuously held to the coupon date.
- The bonds are sold to a domestic bond dealer, and the bond dealer will serve as agent for the declaration and payment of interest income tax.
- The bonds are traded outside the ROC with other offshore overseas Chinese and foreign nationals.
When offshore overseas Chinese and foreign nationals invest in foreign currency denominated securities investment trust fund beneficial certificates offered and issued in the ROC by a domestic SITE, Articles 10 to 22 shall not apply if their inwardly remitted funds do not involve foreign exchange settlements against the New Taiwan dollar.
The foreign currency denominated securities investment trust fund referred to in the preceding paragraph shall be limited to the following:
- Foreign currency denominated funds provided for in Article 21 of the Regulations Governing Securities Investment Trust Funds.
- The foreign currency classes of multi-currency funds other than money market funds.
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| Article 5 | The domestic issuing companies whose securities may be invested in by overseas Chinese and foreign nationals 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 a law prohibits investment by foreign nationals or other laws or regulations impose a ceiling on the percentage of investment by overseas Chinese or foreign nationals.
Where other laws or regulations impose a ceiling on the percentage of investment by overseas Chinese or foreign nationals in a domestic issuing company, if the total amount of investments by overseas Chinese and foreign nationals in any of the following instruments issued by the issuing company does not reach the maximum amount required by law, the issuing company may, with respect to the difference between the total amount and the maximum amount above, privately place or register to offer and issue overseas convertible corporate bonds and overseas corporate bonds with warrants, issue overseas stocks, or sponsor issuance of overseas depositary receipts:
- Domestic stocks.
- Convertible, exchangeable, or subscribable shares and bond conversion entitlement certificates of domestic corporate bonds whose underlying instruments for conversion, exchange, or subscription are company stocks.
- Convertible, exchangeable, or subscribable shares of overseas corporate bonds whose underlying instruments for conversion, exchange, or subscription are company stocks.
- Shares represented by overseas depositary receipts.
- Overseas stocks.
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| Article 6 | An overseas Chinese or foreign national investing in securities shall file and pay taxes under the provisions of the Income Tax Act and other applicable laws. With the exception of a foreign institutional investor with a fixed place of business or business agent within the territory of the ROC, the overseas Chinese or foreign national investing in securities shall appoint an agent within the territory of the ROC to file and pay taxes on the investor's behalf. Documents evidencing such appointment shall be completed and submitted to the competent tax authority for approval. In case of a change of agent, the successor agent shall prepare another set of such documents evidencing its appointment to file and pay taxes on behalf of the client, and shall submit such documents to the competent tax authority for approval.
When an overseas Chinese or foreign national applies for exchange settlement of earnings from securities investments, the investor's agent or representative appointed pursuant to Article 16 shall carry out exchange settlement in accordance with the provisions of the applicable foreign exchange-related laws and regulations, by submitting either the documents set forth under the preceding paragraph evidencing the filing of a tax return and payment of taxes by an agent/representative approved by the tax authorities, or a tax payment certificate issued by the competent tax authority; provided, however, that an overseas Chinese or foreign national that satisfies the following provisions and for whom an agent or representative appointed pursuant to Article 16 has submitted evidentiary documents, may proceed forthwith to carry out exchange settlement in accordance with the provisions of the applicable foreign exchange-related laws and regulations:
- Has not acquired income from transfer of registered shares as set forth in Article 16 or 17 of the Act for Upgrading Industries prior to the 31 December 1999 amendment and promulgation , Article 13 of the former Statute for Encouragement of Investment, or Article 7 of the Biopharmaceutical Industry Development Act.
- Has no income from securities transactions that is subject to taxation under the Income Tax Act and the Income Basic Tax Act.
- Has duly paid the taxes on income from any other transactions.
The format of the documents evidencing the appointment of the agent or representative for tax return filing and tax payment under paragraph 1 shall be prescribed by the Ministry of Finance.
Where the evidentiary documents submitted by an agent or representative appointed in accordance with the provisions of paragraph 2 contain false information, the matter shall be handled in accordance with the applicable provisions of the Income Tax Act and the Tax Collection Act.
The fixed place of business or business agent referred to in paragraph 1 shall be determined under the provisions of the Income Tax Act.
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