1. Forms of Capital Contribution
The Statute for Investment by Foreign Nationals provides regulations relating to the protection and administration of investments by foreign investors, individuals or enterprises within the ROC. It recognizes four forms of putting up capital:
(1) Cash in the form of foreign exchange that is remitted or brought in.
(2) Machinery, equipment, or raw materials imported for own use against self-provided foreign exchange.
(3) Technical know-how or patent rights.
(4) Investment principal, capital gains, net profits, interest or any other income generated as a result of transfer of investment, education of capital, or dissolution/liquidation as approved by the government.
2. Types of Investments
There are three types of investment:
(1) Investments for establishing a new business or expanding the capital base of an existing business, made individually or in association with other foreign nationals, the ROC government, Chinese nationals, or juridical persons.
(2) Purchases of the stocks or bonds of existing enterprises, or loans of cash, machinery, equipment, or raw materials.
(3) The provision of technical know-how or patent rights as capital stock.
Cooperation in the form of providing technical know-how or patent rights not as capital stock is governed by another law. As for foreign companies intending to set up a branch office within ROC territory for production or manufacturing operations, the protection and disposition of their investments are governed by the provisions of the Statute for Investment by Foreign Nationals.
3. Prohibited or Restricted Investment Areas
The Statute prohibits investment by four kinds of businesses:
(1) Those that violate public safety.
(2) Those that violate public morals.
(3) Those producing a large amount of pollution.
(4)Those that by law are given monopoly privileges or are closed to foreign investment.
Industries in categories (1) to (4) above which are excluded from or restricted to investment from foreign investors are specified by the Executive Yuan.
Investors are prohibited from investing in industries 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, need to obtain approval or consent from the competent authority in charge of the industry in question. Restricted and prohibited investment areas are stipulated in the Negative List for Investment by Overseas Chinese and Foreign Nationals, which was drafted by the Executive Yuan based on the principles in the above two categories. Some examples of the prohibited industries are chemical material manufacturing, land transportation, radio and television broadcasting, and recreational services. Restricted industries include agriculture and animal husbandry, fishing, electric power supply, gas supply, water supply, telecommunications, financing and auxiliary financing, legal and accounting services, and educational services.
4. Industries Required Special Approval
Investors who invest in the following categories of industries must comply with the relevant provisions as stipulated by the authorities in charge of those industries and obtain their approvals:
(1) Public utility industries.
(2) Financial and insurance industries.
(3) News media and publishing industries.
(4) Any other industries restricted by other laws or regulations.
The Ministry of Economic Affairs (MOEA) is the authority in charge of matters relating to investment under the Statute for Investment by Foreign Nationals.
If the investor has not implemented the investment by paying the capital within the prescribed time limit after the approval of the investment, the approval will be revoked upon expiration of the prescribed time limit.
Further reading: Full text of Statute for Investment by Foreign Nationals