FSC eases rules on firms seeking foreign partnerships

Taipei--The Financial Supervisory Commission (FSC), the top financial regulator in Taiwan, has eased rules allowing local enterprises to gain easier access to foreign funds, in a bid to encourage more strategic partnerships with foreign investors.

Under the revised regulations, the FSC said, foreign investors will now be permitted to remit 100 percent of the funds to be used in a private placement made by a local enterprise to buy the Taiwanese firm's convertible corporate bonds.

In the past, foreign investors involved in such private placements were required to move sufficient funds so that 30 percent was assigned to the private placement and 70 percent invested in the local equity market.

For example, a foreign investor looking to invest NT$3 billion in a private placement was previously required to remit a total of NT$10 billion (US$322.58 million) to Taiwan and instructed to invest the additional NT$7 billion in the local equity market.

The revised rules enable investors to move exactly NT$3 billion for the private placement. The FSC said the rule change is expected to help local enterprises gain easier access to foreign investors and establish strategic alliances.

According to the FSC, the old rules deterred many investors from participating in local private placements on corporate bond sales.

Under such circumstances, many local investors found it difficult to forge strategic partnerships to extend their reach in foreign markets, the FSC said.

In 2016, the number of private placements to sell corporate bonds in Taiwan fell from 93 in 2015 to 83, while the amount of funds in such placements also fell from NT$194.86 billion to NT$81.22 billion.

After securing approval from the local central bank, which had previously expressed fears foreign investors could move large funds into the local market and engage in speculation on the local foreign exchange market, the FSC decided to ease the rules.

The FSC said that since foreign investors who participate in private placements to buy convertible corporate bonds in Taiwan face a three-year lock-in period, in which they are not allowed to sell the bonds for three years after the purchase, there are few concerns they will use the money to speculate in the currency market.

Source: Focus Taiwan News Channel