Taiwanese move to allow DR programs to boost foreign investor interest

Taiwanese companies will become more accessible to foreign investors and foreign investment into the country will likely rise after regulators eased access to overseas markets for local companies aiming to broaden their shareholder base, according to BNY Mellon.

The decision by Taiwan’s Financial Supervisory Commission (FSC) to allow locally listed companies to carry out over-the-counter non-capital-raising depositary receipt (DR) programs will also ease the regulatory burden on companies by ensuring they only have to follow a single set of reporting requirements, BNY Mellon says.

‘Taiwan has long been a popular destination for international investors, known as FINIs in Taiwan,’ Neil Atkinson, head of Asia-Pacific for BNY Mellon’s Depositary Receipts business, says in a news release. ‘We are often asked, particularly by US investors, to establish DR programmes for Taiwanese companies but have been restricted from doing so by regulation.’

The FSC’s decision to change its ‘regulations governing the offering and issuance of overseas securities by issuers’ comes amid an apparent increase in foreign investment in Taiwan-listed companies. According to the FSC, foreigners and mainland Chinese investors placed a net NT$315 bn ($10 bn) in companies listed on the Taiwan Stock Exchange in the first half of the year.

The move also comes amid a series of amendments to ease regulatory constraints on Taiwanese companies. Last month, the FSC eased requirements on offshore branches of securities firms in the country, ensuring they only have to comply with one set of regulations.

At the same time, it expanded the number of companies required to adopt electronic voting systems to improve corporate governance, the FSC said in a press release on October 21. Companies with more than 10,000 shareholders and more than NT$2 bn in paid-in capital will now be required to offer shareholders the option of electronic voting.