FSC planning looser regulations for new offshore exchange

The Financial Supervisory Commission is currently studying ways to allow companies with 30 percent Chinese capital to be listed in the planned offshore bourse, a move that is still awaiting the green light from the Mainland Affairs Council (MAC), commission officials said yesterday.

The proposal to raise the ceiling of Chinese capitalization to 30 percent in defining "Chinese capitalized enterprises" was discussed in a meeting involving the commission, the MAC and the Ministry of Economic Affairs, commission spokesman Lin Chung-cheng (林忠正) said yesterday.

The original restriction was set at 20 percent, he said.

A Chinese-language newspaper reported earlier yesterday that FSC chairman Kong Jaw-sheng (龔照勝) had stated the commission is planning to let companies with 30-percent Chinese capital be listed in the planned, foreign currency-denominated offshore stock exchange, which will be inaugurated next year.

Limited group

Taiwan has strict regulations over publicly-listed firms' investment in China. Establishing an alternative offshore bourse is designed to help China-based Taiwanese companies raise funds from domestic capital markets and foreign investors. Raising the ceiling on the allowed percentage of Chinese capital to 30 percent will allow more firms to list.

The commission expects as many as 20 companies to go public in the offshore bourse as soon as it opens, the newspaper cited Kong as saying. The total number of listed companies could be controlled at less than 200, he added.

Foreign enterprises with partial Chinese capitalization that apply to be listed on the offshore stock exchange may escape the restriction, Lin said. "As no one [overseas companies] will come if we impose these restrictions on them," he said.

The commission hopes that subsidiary firms, which Tai-wanese companies set up and register in places like the Cayman Islands in order to invest in China -- but have no Chinese capital -- can also be publicly traded on the offshore bourse, Lin added.

Waiting for kong

Lin said the commission is waiting for Kong, currently on an overseas roadshow, to relay foreign investors' viewpoints in the negotiations with the involved agencies to come up with feasible measures.

The 2005 Taiwan Global Investment Forum, organized by Euromoney Institutional Investor PLC, was held in New York last week and moved to London earlier this week to try and attract foreign investors.

During the two-day forum in New York, Kong gave a speech on the latest developments in Taiwanese financial markets, attracting the participation of 250 foreign institutional investors and financial professionals who manage US$2.6 trillion worth of assets in New York and 319 British institutional investors who control US$3.29 trillion in assets in London, according to the commission.

Following New York leg, Kong and other Taiwanese delegates has proceeded to London to conduct another seminar.