Direct Investment in Taiwan
1. Selecting the investment method
Investors looking to invest in Taiwan directly have a range of methods to choose from, including incorporating a joint venture with a Taiwanese company and incorporating a solely owned company (a company funded only with foreign capital). When choosing from among these methods, the first issue to consider is whether the desired field for investment is subject to restrictions or prohibitions on investment by foreign companies. In Taiwan, investment is permitted, restricted or prohibited according to the investment field. Even if there are no problems with the classification of the field, investors must select the most suitable investment method for their unique case.
2. Acquisition of Taiwanese companies
Another possible method of direct investment in Taiwan is by acquiring an existing Taiwanese company. Using this method allows investors to make use of the operational structure already established by the target Taiwanese company, increasing the investors’ chances of expanding the business according to their vision straight away after investing. Nevertheless, to expand the business according to the investors’ vision, it is essential to perform appropriate investigations (such as legal and financial due diligence) of the target Taiwanese company to check whether the target company has not been conducting its business in breach of laws and confirm the financial standing and other aspects of the target company. Further, when a foreign company acquires a Taiwanese company, limitations apply according to the investment field and procedures are necessary, in the same way as if the foreign company had established a new Taiwanese company.
3. Operation, reorganization, dissolution, liquidation and bankruptcy of Taiwanese subsidiaries
Even if investors incorporate a joint venture or other company in Taiwan, if the company is not properly operated after its incorporation, the investment will be meaningless. For example, for the successful operation of a joint venture company, it is necessary to operate the company to maximize the investors’ profits while maintaining a cooperative relationship with the partner Taiwanese company, and if the Taiwanese company is responsible for the day-to-day management and administration of the joint venture, proper supervision of the Taiwanese company’s management and administration is required.
Further, mergers, divisions and other reorganizations of companies established in Taiwan may become necessary.
In addition, if the company incorporated in Taiwan does not create revenue as initially expected or in other similar circumstances, the investors may be forced to dissolve or liquidate the company that they established in Taiwan and downscale or withdraw from their business in Taiwan, in accordance with Taiwanese laws. Alternatively, if the incorporated company falls into the circumstances set forth in Taiwan’s Bankruptcy Law (it is unable to repay its debts that have fallen due and its assets are insufficient to repay all of the debts, or its capacity to repay is clearly lacking), the company may be required to liquidate due to bankruptcy following the procedures set out in the Bankruptcy Law.
4. Services provided by Kuroda Law Offices
We have worked on a large number of direct investment cases involving Taiwan and can provide services for all aspects, including advancing into Taiwan, operation of subsidiaries in Taiwan and withdrawal from Taiwan. Further, we can handle all or part of the procedures required by Taiwanese authorities on our clients’ behalf, from drafting the necessary documents to submitting them to the authorities.
The major services we provide in relation to direct investment in Taiwan include:
- Incorporation of joint ventures with Taiwanese companies
- Incorporation of solely owned companies in Taiwan
- Acquisition of Taiwanese companies
- Operation and reorganization of Taiwanese subsidiaries
- Dissolution, liquidation and bankruptcy of Taiwanese subsidiaries