TAIWAN Law and Practice Contributed by: Stephen Wu, Yvonne Hsieh, Wei-Han Wu and Erica Chiu, Lee and Li, Attorneys-at-Law
these amendments, a notification must be reported to the TFTC if any of the following conditions applies: • the combination would result in any of the enter - prises acquiring at least one-third of the market share; • any of the enterprises participating in the combina - tion holds a market share of at least one-quarter before the combination; or • the preceding fiscal year’s turnover of a participat - ing enterprise exceeded the amount set forth by the TFTC – ie: (a) the aggregate global turnover of all the partici - pating enterprises in the preceding fiscal year exceeded TWD50 billion (previously TWD40 billion), and at least two of the participating enterprises had a turnover in Taiwan of at least TWD3 billion (previously TWD2 billion) in the preceding fiscal year; (b) for a combination among non-financial en - terprises, one of the participating enterprises generated a turnover in Taiwan of at least TWD20 billion (previously TWD15 billion) in the preceding fiscal year, while the other participat - ing enterprise generated a turnover in Taiwan of at least TWD3 billion (previously TWD2 billion) in the preceding fiscal year; or (c) for a combination between financial enterpris - es, one of the participating enterprises gener - ated an annual turnover of at least TWD40 bil - lion (previously TWD30 billion), while the other participating enterprise generated an annual turnover of at least TWD3 billion (previously TWD2 billion). Article 11, Paragraph 2 of the TFTA specifically stip - ulates that the turnover should be calculated on a “group/consolidated” basis by including the sales rev - enues of an enterprise that is controlled by, controlling or affiliated with the enterprise in the combination, and of an enterprise where both itself and the enterprise in the combination are under common control of the same enterprise or enterprises. The “control/subordinate” relation under Article 11, Paragraph 2 of the TFTA is further explained in Article 6 of the Enforcement Rules, as follows.
• When enterprise X holds more than half of the shares in enterprise Y, or if enterprise X directly/ indirectly controls the business operation or the appointment or discharge of the personnel of enterprise Y, enterprise X can be viewed as having control over enterprise Y. Furthermore, if the whole or the substantial part of the business or assets of enterprise Y is assigned or leased to enterprise X, or where enterprise X jointly operates with enterprise Y on a regular basis or is entrusted by enterprise Y to operate enterprise Y’s business that results in enterprise X having control over enter - prise Y, this situation can also be deemed to be a type of “control/subordinate” relation. • If a person or an organisation and/or its related persons hold a majority of the total number of outstanding voting shares or the total capital of another enterprise, it should be concluded that the “control/subordinate” relation exists among these entities. • The “control/subordinate” relation is presumed to exist if a majority of the executive shareholders or directors in a company are simultaneously acting as the executive shareholders or directors in anoth - er company, or if a majority of the total number of outstanding voting shares or the total amount of the capital interest of a company and another com - pany is held by the same shareholders. Please note that only the Taiwanese sales are relevant when calculating the turnover threshold for foreign entities, which shall include: • sales generated “in” Taiwan by the parties’ affili - ates, branch offices or any other entities defined by Article 11, Paragraph 2 of the TFTA; and • direct sales “into” Taiwan by selling to Taiwanese customers. 2.6 Calculations of Jurisdictional Thresholds For more details on the calculation of the jurisdictional thresholds, please see 2.5 Jurisdictional Thresholds . The TFTA is silent on the conversion of sales booked in a foreign currency. In practice, using the annual aver - age exchange rate published by the Central Bank of Taiwan for the conversion is acceptable to the TFTC.
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