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【Charlotte S. H. Wu, Partner, Zhong Yin Law Firm】
Taiwan Regulations on Medical Device Registration and Medical Device Merchant Incorporation (I)
Given the current pandemic, we have received frequent inquiries on Taiwan regulations regarding medical device registration and medical device merchant incorporation and relevant licensing and/or permit issues. We have summarized the frequently asked questions and provide a general overview for those who are interested in this topic. Should you have any further interests or questions, please feel free to contact Charlotte Wu at email@example.com
Ⅰ. Why does one need to incorporate a Medical Device Merchant company in Taiwan?
According to Article 14 of the Pharmaceutical Affairs Act “the term ‘pharmaceutical firms’ as used in this Act shall refer to any of the following business undertakings: 1. Dealers of drugs or medical devices[; and] 2. Manufacturers of drugs or medical devices.” Moreover, according to Paragraph 1, Article 17 of the Medical Devices Act, “the term ‘medical device dealers’, as used in this Act, shall refer to businesses which engage in thewholesale, retail, import, export, rental, or repair of medical devices.” Therefore, in order for an entity to participate in the wholesale, retail, import, export, rental, or repair of any medical devices, it shall establish a pharmaceutical device firm.
Pursuant to Paragraph 1, Article 27 of the Pharmaceutical Affairs Act, “any person with the intent to be a pharmaceutical firm shall file application to the municipal or county (city) competent health authority for approval and registration, and shall start the permit operation only after having paid the license fee and obtained the business license. In case of any changes in the particulars registered, an application for such change registration shall be completed.” To become a pharmaceutical firm, such entity shall (1) file an application to the local competent health authority for approval, (2) complete the company registration and (3) obtain the business license to operate.
With that being said, kindly note that a new Medical Devices Act has been passed and promulgated on January 15, 2020, yet it has not been implemented and the implementing date remains uncertain. In the new Medical Devices Act, it also requires the entity intending to participate in the wholesale, retail, import, export, rental, or repair of any medical devices to file an application for approval and registration and obtain the business permit to become a medical device firm. We will continue to follow up on the development of the new Act and update this article as necessary.
Ⅱ. Taiwan Regulations for Medical Device Merchant Incorporation, relevant procedures and requirements.
The main authority governing the licensing of Medical Device Merchant license is the Taiwan Food and Drug Administration (“TFDA”) and the relevant municipal or county (city) competent health authority. However, for any foreign investor who wishes to properly incorporate a company in Taiwan, one should still comply with the requirements of the Investment Commission of the Ministry of Economic Affairs (“MOEA”).
1. Obtain the foreign investment approval:
Under the assumption that the investor is a foreign investor rather than an investor of the People’s Republic of China, the procedures are as follows:
a. Apply for reservation of company name and business scope:
To incorporate an enterprise, the applicant shall prepare and file an application with the Central Region Office, MOEA to reserve the company’s Chinese name and business scope. The Central Region Office, MOEA will then issue an approval slip.
b. Apply for Foreign Investment Approval:
Further, the applicant shall prepare and file an application with the Investment Commission, MOEA (“MOEAIC”) for establishing a Foreign Investment Approved（”FIA”）company. The MOEAIC will issue an approval letter.
c. Remit capital:
At this stage, the applicant shall open a bank account in the name of the company’s preparatory office for the purpose of receiving the capital and arrange to wire-transfer the capital in foreign currency to the subsidiary’s bank account and convert it to NT dollars. The company will be required to provide the bank statements of these transactions.
d. Capital verification and approval:
After remitting the capital into the bank account, the applicant shall submit the statements of remittance of capital to the MOEAIC for verification and obtain an approval letter therefrom.
(2) Time Required
Under the assumption that the investor is a foreign investor rather than an investor from the People’s Republic of China, the estimated timeline shall be:
a. Apply for reservation of company name and business scope: approximately 3 working days.
b. Apply for Foreign Investment Approval: depending on whether the business items have to be reviewed by the competent authorities, approximately 1 to 2 months.
c. Remit capital: depending on the bank’s process, usually within 14 days.
d. Capital verification and approval: within 7 working days.
(3) Paid in Capital Required
No minimal paid-in capital required.
However, different paid-in capital amounts may trigger different average processing times for the MOEA to review. According to the official Flowchart of Procedures for Review of Application issued by the MOEAIC, for investments less than NT 5 billion, the estimated processing for each application time is 2 to 4 working days, for investments not less than NT 15 billion, the estimated processing time for each application is 3 to 5 working days, and for investments more than NT 15 billion, the estimated processing time for each application is 10 to 20 working days.
(4) Other requirements
Kindly note that according to Article 7 of the Statute for Investment by Foreign Nationals, “the investor is prohibited from investing in the following industries: 1. Those which may negatively affect national security, public order, good customs and practices, or national health; and 2. Those which are prohibited by the law.” Currently, the wholesale, retail, import, export, rental, or repair of medical devices does not fall into the prohibited industries list. However, it is still suggested to review the company’s business model to have a thorough assessment of the incorporation.
2. File application for becoming a pharmaceutical firm:
a. File application to the local competent health authority for setting up a pharmaceutical firm.
After obtaining the foreign investment approval from the MOEAIC, the applicant shall fille an application for setting up a pharmaceutical firm to the local competent health authority.
b.Complete the Company Registration with MOEA or the local city government:
After obtaining the set-up permission, the applicant shall complete the company registration regarding the business items with the Central Region Office, MOEA or the local city government.
c. File the application to the local competent health authority for the pharmaceutical firm license:
The applicant shall then return to the local competent health authority to file the application for obtaining the pharmaceutical firm license.
(2) Time Required
a. File application to the local competent health authority for setting up a pharmaceutical firm: approximately 7 working days.
b. Complete the Company Registration with MOEA or the local city government: approximately 7 working days.
c. File the application to the local competent health authority for the pharmaceutical firm license: approximately 7 working days.
(3) Paid in Capital Required:
No minimal paid-in capital required.
(4) Other requirements
For enterprises only engaging in the wholesale, retail, import, export, rental, or repair of medical devices, there are no specific requirements. However, in the new yet unimplemented Medical Devices Act, it requires the Medical Device Dealer to (1) join the trade association in accordance with the Industrial Group Act or Commercial Group Act (Paragraph 6, Article 13 of the Medical Devices Act) and (2) for those engaging in the import or repair of the medical devices, to employ qualified technicians according to the categories of medical devices. As mentioned above, since the Act has not been implemented, the Act does not apply currently.
 Kindly note that the foreign investor herein excludes investors from the People’s Republic of China.. If the investor is determined as an investor of the People’s Republic of China, different procedures will apply.