Taiwan’s investment regulator has asked Alibaba to exit by the end of August because its local entity is registered as Singaporean instead of mainland Chinese.

“We have asked Alibaba to leave,” Emile Chang, acting executive secretary of the economic ministry’s Investment Commission, said by phone.

“We just want mainland investors who invest in Taiwan to follow the rules.”

Alibaba breached Taiwan’s investment regulations by going through Singapore when in fact it’s a mainland-Chinese company, Chang said.

While Alibaba registered in Taiwan in 2008, the company’s filings for its US share sale last year provided the evidence of Chinese control over the company’s Singapore unit, he said.

Like many Chinese corporations, Alibaba relies on holding companies to operate and raise capital overseas, with the newly US-listed entity being a Cayman Islands company.

Mainland business investments in Taiwan, which views Communist Party-led China as its largest political and military rival, require approval from Taiwan’s Investment Commission.

“We will actively communicate with related parties to clarify the issues and, if necessary, will take proper actions to protect the legitimate interests of Alibaba.com,” the Hangzhou-based company said in a statement.

Alibaba, which was founded in Jack Ma’s apartment 15 years ago, faces increasing oversight in mainland China as it expands into everything from taxi-hailing applications to online lending.

The State Administration for Industry & Commerce issued a “white paper” in January, accusing the company’s online malls of accepting bribes and peddling knock-offs.

While the application process for a China investment takes about two months, Chang said he “cannot guarantee” that any new application by Alibaba to operate in Taiwan would be approved before the August deadline.

“Alibaba’s Singapore subsidiary didn’t get approval from my office,” Chang said.

“They can choose to sell the branch to another investor” or close it.

Bloomberg