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Tue, Jan 18, 2000 - Page 18 News List

Banks' venture capital ceiling to stay

INVESTMENT RULES The ministry of finance fears too much control by the banks could harm development


Finance minister Paul Chiu (邱正雄) said yesterday that the ministry does not plan to raise the ceiling on bank investments in venture capital companies.

Currently, banks are only allowed to invest 5 percent of their capitalization in venture capital firms.

The ceiling would remain at the current level in order to prevent banks from taking control of venture capital companies, Chiu said.

The Council of Economic Planning and Development (經建會) had on numerous occasions suggested to the Ministry of Finance (財政部) that the ceiling be raised to 10 percent.

The banks' inordinate control over the venture capital business could harm business development, Chiu said.

Also, venture capital companies may not be able to go public on the stock market soon, given that many of them are still in their early stages and do not have complete financial reports, Chiu said.

The ministry will complete a draft bill to regulate the venture capital business before the end of June, Chiu added.

However, venture companies investing in the high-tech industry can apply for a recommendation from the Ministry of Economic Affairs (經濟部) for public sale, Chiu said.

Venture capital companies came under the spotlight on Jan. 13, when local media reported accusations that lawmakers pressured banks to invest in venture capital firms they had stakes in.

Meanwhile, Su Shih-chung (蘇拾忠), secretary-general of a national association of venture capital firms, asked legislators to avoid interfering in the business operations of venture capital firms.

Lawmakers who want to invest in venture capital firms should invest with their own money, as it is not appropriate for lawmakers to participate in fundraising, Su said.

Su also said he hoped to lobby with management firms cooperating with venture capital companies to cut out "controversial funds" and return to return the fundraising jobs to professionals.

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