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Order of the Financial Supervisory Commission
Issue date: 7 December 2023
Issue no.: Financial-Supervisory-Securities-Firms-1120148460
- Pursuant to Article 4, paragraph 1, subparagraph 6 of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals (the "Regulations"), it is approved that Overseas Chinese and foreign nationals may invest in the domestic securities listed below:
- Common stock or preferred stock issued for a cash capital increase by a TWSE or TPEx listed company or common stock issued for a cash capital increase by an Emerging Stock company which they participate in subscribing in the capacity of an original investor.
- New shares issued for a cash capital increase by a TWSE or TPEx listed company or Emerging Stock company which they participate in subscribing in the capacity of a specific person and which have not been subscribed by company employees and have not been subscribed by original shareholders.
- Receiving transfer of new share subscription rights transferred by original shareholders of a TWSE or TPEx listed company or Emerging Stock company.
- If Overseas Chinese or foreign nationals invest in securities under the preceding point, the following provisions shall be complied with:
- If a TWSE or TPEx listed company or Emerging Stock company is one on which laws or regulations impose a ceiling on the ratio of investment by Overseas Chinese and foreign nationals, the total amount of shares of the company subscribed in connection with a cash capital increase and shares for which subscription rights are acquired in any given case under any subparagraph of the preceding point by all Overseas Chinese and foreign nationals may not exceed that ceiling.
- If common stock or preferred stock is subscribed under subparagraph 1 of the preceding point:
- If common stock issued for a cash capital increase by a TWSE or TPEx listed company or Emerging Stock company is stock on which the Financial Supervisory Commission (FSC) has imposed restrictions on listing and trading as TWSE listed, TPEx listed, or Emerging Stock, then after the subscription period has ended, Overseas Chinese and foreign nationals may only sell the shares they have subscribed, and the counterparty may not be another Overseas Chinese or foreign national. If such type of stock is one on which laws or regulations impose a ceiling on the ratio of investment by Overseas Chinese and foreign nationals, the shareholder services agent furthermore shall immediately report the information on the TWSE listed company stock or the information on the TPEx listed company or Emerging Stock company stock sold by the Overseas Chinese or foreign nationals to the Taiwan Stock Exchange Corporation (TWSE) or Taipei Exchange (TPEx), respectively.
- After a TWSE or TPEx listed company has filed with the FSC for effective registration of preferred stock issued for cash capital increase and furthermore has applied and obtained approval for TWSE listing or TPEx trading of the stock in accordance with the TWSE Corporation Rules Governing Review of Securities Listings or the TPEx Rules Governing the Review of Securities for Trading on the TPEx and other relevant rules, it shall account for and control the preferred stock separately from common stock. If it fails to obtain approval or does not intend for the stock to be listed on the TWSE or traded on the TPEx, then after the end of the subscription period, Overseas Chinese and foreign nationals may only sell the shares they have subscribed, and the counterparty may not be another Overseas Chinese or foreign national.
- If shares are subscribed or new share subscription rights are acquired under subparagraph 2 or 3 of the preceding point:
- If shares issued for cash capital increase by a TWSE or TPEx listed company or Emerging Stock company cannot be, or are not intended to be, listed on the TWSE, traded on the TPEx, or traded on the Emerging Stock Market, then after the end of the subscription period, Overseas Chinese and foreign nationals may continue to hold or sell the shares they have subscribed, but the counterparties of sales may not be another Overseas Chinese or foreign national.
- If an Overseas Chinese or foreign national is an overseas subsidiary of a domestic TWSE or TPEx listed company or Emerging Stock company, it is prohibited, under Article 167, paragraph 3 of the Company Act, from participating in subscription to shares issued for cash capital increase by the parent company.
- If Overseas Chinese or foreign nationals invest in privately placed overseas corporate bonds, overseas depositary receipts, or overseas stock under Article 2, subparagraph 3 to 5 of the Regulations, or if Overseas Chinese or foreign nationals invest in domestic securities privately placed by a TWSE or TPEx listed company or Emerging Stock company under Article 4, paragraph 1, subparagraph 1 of the Regulations, the following provisions shall be complied with:
- The conditions for participation in a private placement of securities referred to above are as follows:
- With respect to Overseas Chinese or foreign nationals participating in a private placement of overseas securities, the eligibility conditions and numbers of participants shall comply with the relevant regulations of the country where the private placement is conducted.
- Overseas Chinese or foreign nationals participating in a private placement of domestic securities shall comply with the eligibility conditions for private placement participants set out in FSC Order No. Financial-Supervisory-Securities-Corporate-1120383220 of 12 September 2023.
- If a company privately placing securities is one on which laws or regulations impose a ceiling on the ratio of investment by Overseas Chinese and foreign nationals, the limit controls at the time of private placement shall be handled by the following means:
- With respect to Overseas Chinese or foreign nationals participating in a private placement of overseas securities with equity characteristics, a notification letter issued by the TWSE or TPEx must be obtained in advance stating that the shares represented by the aforesaid overseas securities have already been placed under control, to confirm that the overall Overseas Chinese and foreign national shareholding ratio does not exceed the legal limit, only after which may the company conduct the private placement overseas.
- A company conducting a private placement shall be responsible for controlling the limit on participation by Overseas Chinese and foreign nationals in domestic private placement shares and shall control that limit and the original shareholding separately.
- If a company conducting a private placement of securities is one on which laws or regulations impose a ceiling on the ratio of investment by Overseas Chinese and foreign nationals, then after the securities have been issued, when such securities with equity characteristics are to be obtained by transferees in market trading, any portion that is securities privately placed overseas does not affect the calculation of the Overseas Chinese and foreign national limit, and is not required to be controlled. For any portion that is securities privately placed domestically, the shareholder services agent of the company that conducted the private placement shall be contacted to confirm that there are no concerns about the Overseas Chinese and foreign national limit before such trading may be participated in.
- For privately placed overseas securities that are placed with Overseas Chinese or foreign nationals, the procedures for redemption or conversion into stock shall be governed mutatis mutandis by the relevant provisions of Chapters 4 to 6 of the Regulations. Any transfer of such stock shall be done in accordance with Article 43-8 of the Securities and Exchange Act.
- The contract for private placement of overseas securities shall specify the following matters:
- For any stock redeemed, converted, or subscribed from privately placed overseas securities, and any stock subsequently distributed due to a capital increase out of earnings or capital reserves, if any such stock is intended to be publicly sold on the domestic market, it is required that the TWSE listed company, TPEx listed company, or Emerging Stock company, 3 full years after the delivery date of those privately placed overseas securities, submit the relevant documents and a written attorney opinion regarding the conducting of the private placement of those overseas securities under the laws and regulations of the country of private placement, to apply to the FSC for supplemental public issuance in accordance with the Regulations Governing the Offering and Issuance of Securities by Securities Issuers or Foreign Issuers. Only after having done so may an application be submitted to the TWSE or TPEx for TWSE listing, TPEx listing, or Emerging Stock registration and sale in the domestic market.
- For any privately placed overseas exchangeable corporate bonds or overseas corporate bonds with warrants of which the underlying for conversion or subscription is holdings of the stock of another company, the exchange or subscription rights may be exercised only after 3 years have elapsed from the delivery date of those privately placed overseas securities, in accordance with Article 43-8, paragraph 1 of the Securities and Exchange Act.
- Financial bonds in Article 4, paragraph 1, subparagraph 3 of the Regulations means general bank debentures and subordinated bank debentures issued by a bank in accordance with Article 2 of the Regulations Governing Issuance of Bank Debentures by Banks.
- If an Overseas Chinese or foreign national has obtained approval for investment of the following funds in accordance with the Statute for Investment by Overseas Chinese or the Statute For Investment By Foreign Nationals, and will further invest them in domestic securities, they may by remitted directly into the custodian institution custodial account opened in accordance with Article 18 of the Regulations:
- Cash dividend distributions received.
- Funds obtained when the investor, with approval from the competent authority, withdraws investment or transfers their shareholding to domestic investors.
- Funds remitted into the custodian institution custodial account under the preceding point shall be deemed a remittance of investment capital, and the custodian institution shall report the previous day's inward and outward remittances to the competent authority for foreign exchange business in accordance with Article 22 of the Regulations. When processing a case for handling under the preceding point, the custodian institution shall verify the documentation of approval by the competent authority for withdrawal of investment or transfer of shareholding under the preceding point, and sign the original and make a notation that the funds are for use for investment in domestic securities.
- This Order is Effective from this day forward. The 11 September 2002 Order No. Taiwan-Finance-Securities-VIII-0910145148, the 1 October 2002 Order No. Taiwan-Finance-Securities-VIII-0910005032, and the 20 December 2002 Order No. Taiwan-Finance-Securities-VIII-0910162956 (see attached list) of the former Securities and Futures Commission, Ministry of Finance are repealed from this day forward; and the 22 September 1997 Letter No. (86)-Taiwan-Finance-Securities-(4)-62673, the 23 March 2000 Letter No. (89)-Taiwan-Finance-Securities-(8)-26646, the 22 August 2001 Letter No. (90)-Taiwan-Finance-Securities-(8)-004011, and the 15 February 2002 Letter No. (91)-Taiwan-Finance-Securities-(8)-104987 (see attached list) of the former Securities and Futures Commission, Ministry of Finance cease to apply from this day forward pursuant to the 7 December 2023 Letter No. Financial-Supervisory-Securities-Firms-1120148460 1 of the FSC.
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