1.Control Measures for Direct Investments by Mainland China Investors in Companies Listed on TWSE and TPEx
In order to establish a review mechanism and control measures for direct investments by Mainland China investors in TWSE and TPEx primary listed foreign companies (including measures for controlling both the shareholding of, and control by such investors), the Financial Supervisory Commission (FSC) issued an order on 8 June 2018, stipulating that Mainland China investors may obtain newly issued shares of foreign companies listed on TWSE and TPEx via private placements, cash capital increases (through subscription by specific persons), mergers, acquisitions, or share transfers provided that Mainland China investors do not obtain more than 30% shareholding or control power. The TWSE and TPEx are in charge of review and follow-up monitoring to ensure compliance with the limits on shareholding held by Mainland China investors.
2. Restrictions Eased to Allow the Distribution of Employee Stock Warrants and Transfer of Treasury Stocks to Non-Full Time Employees
To facilitate retention of talent at Taiwan enterprises and offer more flexibility, the FSC issued an order on 15 June 2018, stipulating the scope of employees eligible to receive distributions of stock warrants or transfers of shares when a public company issues employee stock warrants under Article 28-3 of the Securities and Exchange Act or a TWSE-listed or TPEx-traded company buys back shares for transferring to its employees under Article 28-2, paragraph 1, subparagraph 1 of the Securities and Exchange Act. The order relaxes the scope of eligible recipients of employee stock warrants and transfers of treasury stock to include non-full time employees as well as full-time employees.
3. Restrictions Relaxed on Investment by Securities Firms in Venture Capital Enterprises and Private Equity Funds
To accommodate the government’s encouragement and guidance of institutional investors to invest in domestic industries, build a strong investment environment for industrial development, promote national economic development, and assist securities firms to diversify their business and develop new profit sources, the FSC issued Orders No. Financial-Supervisory-Securities-Firms-1070320901, 10703209011, and 10703209012 on 1 June 2018. The content of the orders includes: specifying private equity funds as one of the types of enterprises that securities firms are permitted to invest in; allowing securities firms, through investment in subsidiaries, to become general partners of domestic venture capital enterprises or private equity funds organized as limited partnerships, and to take responsibility for the operation of the funds and to introduce a set of corresponding administrative provisions; allowing securities firms with a specific need to apply to the FSC for special-case approval for total investment of more than 20 percent of their net worth in enterprises that are not securities/futures-related enterprises; canceling the cap on investments by venture capital enterprises or private equity funds in any single company, and specifying that securities firms shall establish internal rules for self-monitoring. Furthermore, the amount of documentation a securities firm is required to submit when applying for FSC approval of a capital increase for investment in a domestic enterprise is reduced, from seven items to three items.
4. Regulations Governing the Issuance of Exchange-Traded Notes by Securities Firms
To introduce new financial products, meet investors’ demand for product diversification, and assist securities firms in expanding their scope of business and cultivating financial professionals, the FSC issued the Regulations Governing the Issuance of Exchange-Traded Notes by Securities Firms on 28 June 2018, paving the way for Taiwan''s securities firms to issue Exchange Trade Notes (ETN).
Securities firms with a net worth of NT$10 billion or more, possessing a capital adequacy ratio of 250% or greater, and operating in accordance with the relevant laws and regulations, may submit registration documents to the TWSE or TPEx. After reviewing the documents and issuing a listing approval letter, TWSE or TPEx shall forward the approval and the documents to the FSC for effective registration. Additionally, the issuer of each ETN linked to a foreign underlying index shall submit an application to the Central Bank for approval in advance.
5. Order Adopted Regarding Articles 36-2 and 37 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets
To enhance cyber security of service enterprises, the FSC on 8 June 2018 adopted an order regarding Articles 36-2 and 37 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets. The order stipulates that proper human resources and equipment should be arranged to carry out the planning, monitoring, and implementation of the cyber security management operations of a cybersecurity system. It also introduces appropriately tailored regulatory treatment by requiring enterprises of certain scales, operating certain businesses, or having certain organizational features to establish dedicated cyber security units with varying staffing requirements or in-charge persons.