《TAIPEI TIMES》 Council mulls ban on shell companies for Chinese firms
HIGHER PENALTIES: It is not right that Taiwanese suffer no penalties when their actions allow Chinese firms to register as a local company, an official said
By Chen Yu-fu and Jake Chung / Staff reporter, with staff writer
An amendment to the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area （臺灣地區與大陸地區人民關係條例） is being mulled to prevent local companies or individuals from acting as “shell companies” for Chinese corporations, the Mainland Affairs Council said yesterday.
The council said that Chinese attempts to infiltrate the Taiwanese semiconductor industry have been numerous, and severely affect national security.
The number of incidents in which Chinese companies are operating in Taiwan illegally has severely disrupted the Taiwanese economy and its capital markets, and the council is proposing amending articles 40-1, 93-1 and 93-2 of the act to curtail such activities, a council official said.
For example, Chinese company Bitmain Technologies Ltd circumvented an Investment Commission review and entered the Taiwanese market by founding shell companies WiseCore and IC Link Ltd Co, the council said.
The two companies hired hundreds of Taiwanese engineers with experience in the integrated chip industry over three years, which could lead to Bitmain obtaining core technologies from leading Taiwanese semiconductor firms such as Taiwan Semiconductor Manufacturing Co and MediaTek Inc, the council said.
Another example was a Shenzhen-based information technology company siphoning Taiwanese talent by pretending to be a Japanese company, but sending all the results of its research and development back to China, it said.
An amendment is being mulled to mandate a three-year prison sentence and NT$15 million （US$540,813） fine to any individual found guilty of allowing a Chinese entity to use their identity to establish a company in Taiwan.
Those conducting illegal business activities, currently punishable by a maximum of one year in prison and a NT$150,000 fine, would face up to three years in prison and a NT$15 million fine, an official said.
The mulled amendment would raise fines to between NT$120,000 and NT$25 million, and put in place the ability for regulators to order a Chinese company to stop or retract an investment, or to make changes to an investment, the official said.
“It is not right” that Taiwanese suffer no penalties when their actions allow Chinese companies to circumvent the law and become a Taiwanese company, the official said, adding that if the penalties were not increased, “these individuals would not flinch from turning their backs on national security to further their own interests.”