These Regulations are adopted pursuant to Article 35, paragraph 4, Article 36, paragraph 3, Article 72, paragraph 2, and Article 73, paragraph 3 of the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area (the "Act").

The term "competent authority" as used in these Regulations means the Financial Supervisory Commission (FSC).

For the purposes of these Regulations, the following terms shall have the following meanings:
1. Subsidiary: Refers to one of the following:
A. A company in which more than 50 percent of the total issued voting shares or authorized capital is directly or indirectly held by another company.
B. A company that is controlled by another company.
2. Equity investment: Refers to holdings of total issued voting shares or authorized capital in an investee company not in excess of 50 percent, where there is no ability to control the investee.
3. Mainland-area securities or futures institution: A securities company, securities investment fund management company, or futures company that is incorporated and registered in accordance with the laws of the Mainland Area and subject to the supervision of the Mainland Area's competent authorities for futures and securities, but not including what are referred to in the Mainland Area as foreign-invested securities firms, securities investment fund management companies, or futures companies.
4. Mainland-invested securities or futures institution: Refers to a securities company, securities investment fund management company, or futures company that is incorporated and registered in accordance with the laws of a third region and subject to the supervision of the third region's competent authorities for futures and securities, and that is under one of the following circumstances:
A. More than 30 percent of the total issued voting shares or authorized capital is directly or indirectly held by a natural person, juristic person, group, or other institution of the Mainland Area.
B. A natural person, juristic person, group, or other institution of the Mainland Area has the ability to control the company.

A Taiwan-area securities or futures institution shall report to the competent authority for permission in accordance with these Regulations for the following matters:
1. Business dealings between the Taiwan-area securities or futures institution or a branch unit it establishes in a third region and a natural person, juristic person, group, or other institution of the Mainland Area, or a third-region branch unit established by one of those entities.
2. Establishment of a representative office in the Mainland Area by the Taiwan-area securities or futures institution or its third-region subsidiary.
3. Investment in a Mainland-area securities company, securities investment fund management company, or futures company by the Taiwan-area securities or futures institution or its third-region subsidiary.
A Taiwan-area securities or futures institution making an application pursuant to subparagraph 3 of the preceding paragraph shall additionally apply to the Ministry of Economic Affairs for permission in accordance with the provisions of the Act .
A Mainland-area securities or futures institution or a Mainland-invested securities or futures institution applying to establish a representative office in the Taiwan Area or to invest in a securities firm, securities investment trust enterprise (SITE), or futures commission merchant (FCM) in the Taiwan Area shall report to the competent authority for permission in accordance with these Regulations, and in addition shall apply to the Ministry of Economic Affairs for permission in accordance with the provisions of the Act.
The number of the Taiwan-area securities or futures institutions in which a single Mainland-area securities or futures institution or a Mainland-invested securities or futures institution may invest shall be limited to one only, and from among the Mainland-area securities or futures institution or its Mainland-invested securities or futures institutions, one entity shall be selected to make the investment.

When a Taiwan-area securities or futures institution or its third-region subsidiary receives permission pursuant to the preceding article to invest in a Mainland-area securities company, securities investment fund management company, or futures company, the total amount invested may not exceed 40 percent of the net worth of the Taiwan-area securities or futures institution.

When, in an application by a Taiwan-area securities or futures institution, a Mainland-area securities or futures institution, or a Mainland-invested securities or futures institution pursuant to these Regulations, facts are present that indicate the likelihood of impairment to the sound management of the institution or its incapacity to meet the requirements of financial supervision, the competent authority may deny permission for the application, or if already permitted, may revoke the permission.
Following the permission of an application under the preceding paragraph, the competent authority may void the permission upon discovery of any misrepresentation contained in the application, the matters reported therein, or the attached documents.