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Appendix I Company Establishment

Taiwan has always sought to attract investment from foreign nationals. Along with changes in the domestic
development and international trade situations, it has adjusted its laws and regulations. It has eliminated
investment barriers to establish an excellent investment climate and to assist foreign investors.
Investment Laws and Regulations: Statute for Investment by Foreign
Nationals, Statute for Investment by Overseas Chinese
These two statutes are virtually identical, apart from a few items in which investment is permitted for overseas
Chinese but forbidden or restricted for other foreigners

Definition of Investment
• Holding shares issued by a Taiwanese company or contributing to the capital of a Taiwanese company.
• Establishing a branch office, proprietary business, or partnership in Taiwan.
• Providing loan(s) to an invested business as referred to in the preceding two items for a period of at
least one year.
Kinds of Investment
• Cash.
• Machinery and equipment or raw materials for own use.
• Patent rights, trademark rights, copyrights, technical knowledge, or other intellectual property rights.
• Other property which may be invested under the competent authority' approval (such as credit through
s
reorganizations, mergers and acquisitions, procurement or stock splits).
Prohibited or Restricted Areas of Investment
• Investment is forbidden in enterprises that may negatively affect national security, public order, good
customs and practices, or national health, and those that are prohibited by law.
• Investors who apply to invest in an industry in which investment is restricted by law or by an order given
under the applicable law shall obtain approval thereof or consent thereto from the competent authority
in charge of the industry in question.
• In line with the previous two paragraphs, the Executive Yuan has adopted the "Negative List for
Investment by Foreign Nationals."

Guarantee of Exchange Settlement
• An investor may apply for exchange settlement against the interest accrued on his/her annual
income, or against the profit surplus distributed to him/her from his/her investment.
• An investor transferring his/her shares or withdrawing or decreasing his/her investment may apply
for exchange settlement, in a lump sum, of the total amount of his/her investment as approved. The
foregoing clause is also applicable to the capital gains realized from the investor's investment.
• An investor's application for exchange settlement against the payment of principal and interest on his/
her loan investment shall be governed by the agreed terms and conditions.

Protection Against Expropriation
• When foreign investment accounts for 45% or more of the total capital amount of an enterprise,
the invested enterprise shall not be subject to requisition or expropriation for a period of 20
years after the commencement of business of the invested enterprise as long as the said capital
contribution rate of the investor remains unchanged.
• In case the government expropriates or acquires an invested enterprise for national defense
reasons, a foreign investor whose investment is less than 45% of the total capital amount of the
invested enterprise shall be entitled to a reasonable compensation.

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