Below is a general overview of the laws and regulations affecting the Taiwan venture capital industry. For more specific information (Chinese only), click here.

From 1984 until May 2001, establishing a venture fund required a minimum of NT$200 million in paid-in capital and approval from the Ministry of Finance (MOF). In general, the approvals were based on an assessment of the capabilities of the fund's management teams and their experience in managing high technology investments.

On May 23, 2001, the government announced the taking effect of "The Scope and Guidelines for Venture Capital Investment Enterprises," replacing the "Regulations Governing Venture Capital Investment Enterprises." Furthermore, the establishment of new venture funds would no longer go through the Ministry of Finance. Applications for the establishment of new funds are now to be handled by the Ministry of Economic Affairs (MOEA)'s Department of Commerce, Civil Services. However, if a prospective venture fund's paid-in capital includes commitments from banks, insurance companies, or securities firms, it will need to take the additional step of applying for a recommendation from the Taiwan Venture Capital Association. If the application is approved by the Taiwan Venture Capital Association's Internal Committee and a recommendation is granted, the recommendation is then submitted to the Ministry of Finance. Finally, with the Ministry of Finance's approval, said banks, insurance companies, and securities firms can invest in the venture fund.

Previously, in order to encourage the development of the venture capital industry, the government provided a 20% income tax deduction to individuals and corporations holding shares in venture capital funds (after a mandatory two year vesting period). However, this measure was repealed in December 1999 by the 8th amendment of the "Statute for Upgrading Industries," which eliminated the investment tax credit for venture funds. As a direct result of the change in this amendment, the "Regulations Governing Venture Capital Investment Enterprises" was also eliminated and replaced in May 2001 with "The Scope and Guidelines for Venture Capital Investment Enterprises," which governs the formation and operation of venture capital funds.
Approved venture funds commencing investment activities are limited to investing in manufacturing-based industries. Previously, under the "Regulations Governing Venture Capital Investment Enterprises," capital invested by a fund in non-high technology manufacturing industries could not exceed 30% of the paid-in capital of the fund. However, under "The Scope and Guidelines for Venture Capital Investment Enterprises," this measure has been eliminated. The government has also set limits on which industries constitute high technology.