Taiwan’s new DR rules could open door to increased foreign investment, says BNY Mellon
Amendments to the Taiwan Financial Supervisory Commission’s (FSC) regulations allowing over-the-counter (OTC) non-capital-raising Depositary Receipt (DR) programmes could make investing in Taiwanese companies more accessible for global investors and may encourage increased foreign investment into Taiwan, says BNY Mellon.
The amendment of the ‘Regulations Governing the Offering and Issuance of Overseas Securities by Issuers’ allow Taiwanese listed companies to establish sponsored Level I non-capital-raising DR programmes. This new scheme will provide global investors with more convenient access to Taiwanese companies and will benefit these companies by broadening their shareholder base internationally without the costs associated with listing on an overseas stock exchange. Qualified issuers already listed on the Taiwan Stock Exchange (TWSE) and GreTai Securities Markets will not have increased reporting requirements in order to trade on the US OTC Markets.
“Taiwan has long been a popular destination for international investors, known as FINIs in Taiwan,” says Neil Atkinson, head of Asia-Pacific for BNY Mellon’s Depositary Receipts business. “We are often asked, particularly by US investors, to establish DR programmes for Taiwanese companies but have been restricted from doing so by regulation.”
Atkinson adds: “The FSC’s ground-breaking announcement to introduce new rules around Level 1 DRs is timely as research suggests there is growing demand from Taiwanese companies to be able to increase their international ownership, and global investor sentiment toward Taiwan is buoyant. Accordingly, we may see more Taiwanese companies using DRs in 2015.”