Company formation in Taiwan

 

  1. How many types of branches can foreign companies set up in Taiwan? What differences exist between these?

Foreign companies can set up three types of branches in Taiwan: subsidiaries, branches, and representative’s offices.

  • Subsidiary:

A subsidiary being a profit-seeking company is organized and registered according to the law of the R.O.C. First, one should submit the name chosen for the company to the Department of Commerce, Ministry of Economic Affairs (MOEA) for approval and reservation, then apply to the Investment Commission, MOEA for an investment permit (while to set up subsidiary company in export processing zone or science park, one should apply directly to the Export Processing Zone Administration, MOEA or the Science Park Administration, National Science Council (NSC) for an investment permit), and then register the company at the corresponding government agency in charge of company registration.

  • Branch:

A branch being a profit-seeking company organized and registered according to the law of a foreign country shall first be applied to the Department of Commerce, MOEA for recognition of the foreign company and registration of the establishment of a branch (while to set up a branch in an export processing zone or science park, the applicant shall, with authority from the Department of Commerce, apply to the Export Processing Zone Administration, MOEA or the Science Park Administration, NSC for registration of establishment of a branch), and then be applied to the Economic Development Bureau of the county/city government nearest to the branch for business registration.

  • Representative’s Office:

If a foreign company does not want to set up a subsidiary company or branch but just wants to designate a representative to run the relevant legal acts within the territory of Taiwan, it shall apply to the Department of Commerce, MOEA for designation of a representative in accordance with the provisions of Paragraph 1, Article 386 of the Company Act; if the representative needs to be stationed in the R.O.C., he shall establish a representative office in accordance with the provisions of Paragraph 2 of the aforesaid article.

  1. A foreigner intends to invest in a new company in Taiwan. What is the minimum capital required?

The minimum capital is NT$500,000 for a limited company and NT$1,000,000 for a company limited by shares, unless other standards are prescribed by the competent authority in charge of the target business for a specific industry or an additional branch. For enterprises established according to the Business Registration Act, there is no minimum capital required.

  1. A foreigner is prepared to invest in a domestic business and acquire the bearer stocks of domestic stockholders. Should he file an application with the Investment Commission? If so, what matters should he attend to?
  • According to the provisions of the current Statute for Investment by Foreign Nationals in force, a foreign investor who intends to acquire the shares of a domestic company (non-listed, non-OTC, or non-emerging stock company) must, no matter what the size of the investment is, submit an application to the Commission in advance.
  • Although bearer stocks have no registered holder, they do have legal holders. A domestic stockholder who is transferring the shares shall state the name of the legal holder.
  • To accept bearer stocks transferred by a domestic stockholder, the foreign investor shall submit a photocopy of a securities transaction tax receipt for examination.
  1. We are an American company and we are interested in a Taiwanese listed company. What should we do if we want to invest in this company?

You should file an application with the Securities and Futures Bureau, Taiwan Financial Supervisory Commission, Executive Yuan in accordance with the provisions of the Regulations Governing Overseas Chinese and Foreigners’ Investment in Securities. However, you may apply to the Investment Commission, MOEA under the following circumstances:

  • To apply for subscription of common stock for cash of the target business or to accept a transfer of stocks from a Taiwanese stockholder, if the size of the investment is not less than US$50 million and the investor will participate in the long-term operation of the business, an operating plan, minute of shareholder’s meeting, and in addition, other relevant documents shall be submitted to the Commission for approval.
  • If the investor acquires stocks of the target business through the securities market with the approval of the Securities and Futures Bureau and is elected director or supervisor to participate in the long-term investment and operation of the business, it shall submit a photocopy of the letter of approval produced by the Securities and Futures Bureau, proceedings of the stockholder congress, and in addition, other relevant documents to the Commission to apply for examination and recording thereof.
  1. We are a foreign-funded company, and we have decided to invest in another company in Taiwan. Should we apply to the Investment Commission?
  • If the foreign investor holds more than 1/3 of the stock rights of the foreign-funded company, it shall apply to the Investment Commission in advance by submitting an application form enclosing therewith a detailed reinvestment plan (including the amount of reinvestment, stock rights, proportion of stock, investment benefits etc.) before investing in a non-listed, non-OTC or non-emerging stock company in Taiwan.

After the reinvestment is approved, an application shall also be submitted to the Investment Commission to apply for reduction of reinvestment before selling the stocks.

  • In addition, if the amount of stocks held by the foreign-funded company changes due to capital reduction or allotment by surplus, an application form (including such items as variation of stock rights and proportion of stockholding etc.) and a photocopy of the minute of shareholders’ meeting shall be submitted to the Commission for approval.
  1. A foreigner wants to transfer the stocks he holds. What should he do?

When an overseas Chinese or foreign investor wants to transfer the stocks of an invested business he holds with the approval of the Investment Commission to another overseas Chinese or foreign investor, he should bear in mind the following:

  • No fixed format is prescribed for the application form for stock transfers (where one can refer to the Application Form for Transfer of Stocks or Contribution of Overseas Chinese or Foreigners, which is available on the website of the Investment Commission). The applicant may write the application form (other than Application Form A) on an A4 paper by himself/herself. The subject should be “”Investor applies for transfer/acceptance of the stocks of invested business””, and the foreign capital registered number of the invested business should be disclosed. The Remarks column shall be filled in with the number of shares held by the investor, number of shares to be transferred, transferee and transfer price, and both the transferor and the transferee shall seal the application form (where the application form may be sealed by an authorized attorney, but the transferor must authorize the attorney to handle the stock transfer).
  • When an overseas Chinese or foreign investor transfers his/her shares of an invested business originally approved by the Commission, he/she shall file an application with the Commission in advance, and after the application is approved, may pay the transfer price abroad without being required to remit it into Taiwan for auditing. After the procedure of transfer is finished, the transfer registration may be conducted.
  • If the transferee is a new overseas Chinese or foreign stockholder, the identity certificate (juristical person certificate or photocopy of passport or alien’s certificate), power of attorney, and attorney’s ID photocopy shall be submitted. The juristical person certificate and power of attorney shall be notarized by the representative office of the R.O.C. in the foreign country or by the local government, and a Chinese translation shall be submitted together with it. To obtain an alien’s certificate, one should apply to the Overseas Chinese Affairs Commission. If the investor is a natural citizen, he/she also may carry the original passport to the Commission personally to handle the procedure during office hours.
  • Information about application for transfer of contribution by foreigners and an application form for reference are available on the website of the Commission.
Lu-Fa Tsai

Lu-Fa Tsai

Attorney at Law at Deep & Far

Email: [email protected]
Tel: +886 2 25856688 ext. 8187
Fax: +886-2-25989900/886-2-25978989

Lu-Fa Tsai earned his LL.B and LL.M degrees from National Taiwan University (NTU). NTU is the nation’s first top university and its College of Law is also the most widely-known one in Taiwan.

He worked at Chen, Shyuu & Pun Law Offices, gaining experiences dealing with various types of legal cases. After leaving that firm, he joined Deep & Far Attorneys-at-Law. Although this firm has built its reputation as experts in the IP field, it is nevertheless still active in handling legal matters in other fields. He was encouraged to expand the legal departments of the firm.

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About Lu-Fa Tsai

Email: [email protected]
Tel: +886 2 25856688 ext. 8187
Fax: +886-2-25989900/886-2-25978989

Lu-Fa Tsai earned his LL.B and LL.M degrees from National Taiwan University (NTU). NTU is the nation’s first top university and its College of Law is also the most widely-known one in Taiwan.
He worked at Chen, Shyuu & Pun Law Offices, gaining experiences dealing with various types of legal cases. After leaving that firm, he joined Deep & Far Attorneys-at-Law. Although this firm has built its reputation as experts in the IP field, it is nevertheless still active in handling legal matters in other fields. He was encouraged to expand the legal departments of the firm.