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A Taiwanese company invests in China through a company in a third country/region. To collect working capital for the daily operations of the business in China, it is prepared to issue overseas floating-rate bonds through the company in the third country/region, and the guarantee is to be provided by the Taiwanese company. Does it meet the relevant provisions on investment in China?
According to the provisions of Paragraph 1, Article 35 of the Act Governing Relations between Peoples of the Taiwan Area and the Mainland Area (hereinafter referred to as the ""Cross Straits Act""), citizens, juridical persons, associations and other organizations in Taiwan may, with the permission of the Ministry of Economic Affairs, make investments or undertake technical cooperation in China; investment amount under certain limit, may be made after declaration. Therefore, for any investment or technical cooperation undertaken by Taiwanese citizens, juridical persons, associations and other organizations in China, shall make declaration or apply for permission to the MOEA (responsible unit: Investment Commission).
In addition, according to the provisions of Paragraph 1, Article 4 of the Regulations on Permit of Investment or Technical Cooperation in China (hereinafter referred to as the ""Regulations on Permit"") prescribed under the authorization of Paragraph 3, Article 35 of the Cross Straits Act, any of the following actions conducted by Taiwanese citizens, juridical persons, associations or other organizations in China shall be regarded as investment in China: initiating a new company or business (Subparagraph 1), increasing the capital of an existing local company or business (Subparagraph 2), acquiring the stock rights of an existing local company or business (Subparagraph 3), or expanding a branch or business (Subparagraph 4). To conduct such action in China, a Taiwanese investor shall make a declaration or submit an application for permission to the Commission in advance.
According to your question, the Taiwanese company invests in China through a company in a third country/region, and for the purpose of collecting working capital for the daily operations of the business in China, it is prepared to issue overseas floating-rate bonds through the company in the third country/region with the guarantee provided by the Taiwanese company. If the collection of the capital involves any of the above actions of investment, a declaration shall be made or an application for permission submitted to the Commission in advance.
How can an applicant apply for a project of investment in China already approved by the Commission in case of merger of domestic companies?
A letter of application, enclosed with the minute of the shareholders' meeting of the two parties agreeing the merger, minute of the board of directors' meeting, merger contract, preparatory balance sheet after the merger is approved by accountants, the latest financial report of the surviving company, and relevant documents on indirect investment by the two companies in China originally approved by the Investment Commission (investment structure, approved amount of investment, and confirmed amount of investment) shall be submitted to the Commission for approval prior to the merger in the name of the two parties.
How can an applicant apply for a merger of business invested in China with the approval of the Commission?
A letter shall be prepared to apply to the Commission in advance, and enclosed with the resolution of the highest organization that in charge of corporate mergers in China on the action of merging, the merger agreement, the original letter of approval of investment and the actual investment data. If the domestic investor is a listed or OTC company, the minute of the shareholders' meeting shall also be submitted; if it is authorized by the shareholders' meeting, the minute of the board of directors' meeting shall be submitted in addition to the above.
Should an application be filed with the Department of Investment Review, MOEA in advance for Taiwanese citizens, juridical persons, associations or other organizations to buy the bonds or convertible bonds issued by a company in China or to loan funds to a juridical person, association or other organization in China?
A Taiwanese citizen, juridical person, association or other organization buys the bonds or convertible bonds of a company in China or obtains creditor's rights against the company, if the bonds or creditor's rights are not transferred into shares and there is only a pure creditor-debtor relationship between the two parties, the case is beyond the scope of application of the Regulations on Permission for Investment or Technical Cooperation in China.
Should an application be filed to use the surplus of a business invested in China for capital increase or investment
An application Form for Investment in China shall be submitted to the Commission in advance. Upon submission, shall enclose with the minute of the board of directors' meeting, surplus appropriation statement and approval certificate of the business invested in China; if investment is made through a company in a third country/region, a stockholder list of the business invested in the third country/region shall be submitted in addition to the above.
Should a declaration be made for the capital reduction of a business in which investment has been made in China?
The enterprise may send a letter to apply for capital reduction, but the accumulated amount of investment will not be reduced until the stock capital is remitted back into Taiwan.
I am studying in the School of Oriental and Asian Affairs, University of London, for a doctor's degree, and the theme of my research is economic integration across the Strait. I would like to know what standards have been adopted for the industry-specific statistics of Taiwanese investment in Mainland Area. Are there defined English translations of industries? Is there time series data for each industry? Is there detailed investment data on individual companies (projects, amount, purpose and province of investment)?
The statistical data of Taiwanese investment in Mainland Area is classified by the Investment Commission according to the business items recorded in the application forms in accordance with the Industry Classification Standards of the R.O.C. published by the Directorate-general of Budgeting, Accounting and Statistics, Executive Yuan.
The statistical data released by the Commission every month is also compiled into the Statistical Monthly of the R.O.C. on Overseas Chinese and Foreign Investment, Overseas Investment, Foreign Technical Cooperation, Indirect Investment in Mainland Area and the Introduction of Industrial Technology from Mainland Area. The Monthly statistical data is a Chinese-English bilingual edition, including region-specific and industry-specific time series statistical data.
As to the investment data of individual companies mentioned in your letter, at present only the list of listed/OTC companies investing in Mainland Area is released to the public, including the project and target province of investments, but the amount of investment is not published. Please log onto the website of the Commission www.moeaic.gov.tw and click Publications Information to download the List of Listed/OTC Companies that have Investment in Mainland Area.
On reinvestment through business invested in China
According to the provisions of the current laws and regulations in force, investment conducted by Taiwanese citizens, juridical persons, associations or other institutions in China shall be governed by the Regulations on Permission for Investment or Technical Cooperation in China. Where the business invested in China makes any reinvestment, it is not necessary to apply to the Commission for permission unless the business in China is a stockholding company.
May a company in any industry apply to establish an office in China? Is it necessary for the company to establish a branch or another company in another country before setting up an office in Mainland Area? Is it permitted to establish a branch or subsidiary in Mainland Area?
1. The industries permitted to establish offices in China are limited to those listed in the table annexed to the Principles for Examination of Applications to Establish Offices in Mainland Area to Conduct Commercial Behavior (for the annexed table please log onto the website of the Commission).
2. You may establish offices in Mainland Area directly or through another company or business in a third region.Establishing branches or subsidiaries in Mainland Area is regards as an investment. A declaration or application for permit shall be submitted to the Commission prior to investmen
Is it necessary to obtain the approval of the Department of Investment Review, MOEA or another agency to invest in China and become a shareholder of technology stocks of the company without making a financial contribution?
According to the provisions of Article 6 of the Regulations on Permission for Investment or Technical Cooperation in China, investment may be made in any of the following ways: cash, machinery and equipment, parts, raw materials, semi-finished or finished products, know-how, patent rights, trademark rights, or intellectual property rights. Hence, to make investment in China by providing technology and become a shareholder of the company is also a form of contribution, and an Application Form for Investment in China shall be submitted to the Commission in advance to apply for permission.
Where can I find the list of Taiwanese manufacturers permitted by the Department of Investment Review, MOEA to invest in Mainland Area?
Among the Taiwanese companies permitted by the Commission to invest in Mainland Area, only the listed/OTC companies are publicized. You may log onto the website of the Commission (www.moeaic.gov.tw) and click Publications Information to download the data you need. The data of non-listed/OTC companies are not released to the public.
May an application for investment in China be submitted now? If so, will a fine be imposed?
According to the provisions of Article 35 of the Act Governing Relations between Peoples of the Taiwan Area and the Mainland Area, the deadline for an overdue submission of application is December 31, 2002. If an investor declares the facts of offense of making investment in Mainland Area without permission from the MOEA (Investment Commission) on his/her own initiative, the Ministry will impose punishment in accordance with the provisions of Article 86 of the Act Governing Relations between Peoples of the Taiwan Area and the Mainland Area as well as the Standards for Punishment for Illegal Investment or Technical Cooperation in Mainland Area.
May the accounts receivable from a subsidiary in China be transformed into stock capital of the subsidiary?
According to the provisions of Article 6 of the current Regulations on Permission for Investment or Technical Cooperation in China in force, citizens, juridical persons, associations and other organizations in Taiwan may make investment in China by "other properties recognized by the competent authority". According to current practice, the Commission will accept the applications for making investments in China by right of "accounts receivable from the business invested in China". However, examination of the aforesaid applications shall still be conducted in accordance with the provisions of the current Principles for Examination of Applications for Investment or Technical Cooperation in China in force.
How can an applicant apply for withdrawal of investment in China?
The applicant may submit a letter of application by itself to apply for withdrawal of investment in China. If the company in China has been liquidated, please submit a liquidation certificate. Within one month after the stock capital is remitted back into Taiwan, the wire transfer memo (please mark "Withdrawn stock capital" in the Nature of Remittance column) shall be submitted to the Commission for examination and the offsetting of investment in China.
Our company is engaged in the export of automobile parts, and we want to set up an office and shipping warehouse in Mainland Area for the purposes of direct exporting to foreign countries. Please advise me of the related provisions.
If you want to establish office in Mainland Area, please follow the Principles for Examination of Application to Establish Office in Mainland Area to Conduct Commercial Behavior. Relevant legal provisions and application forms will be provided on request via the voice fax system on 02-23959505, data code: 214. You may also log onto http://www.moeaic.gov.tw to obtain this information. The establishment of shipping warehouse is under the jurisdiction of the Bureau of Foreign Trade, MOEA. We have asked the Bureau to reply to you by letter. Please ensure you have received the reply.
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