TAIWAN Law and Practice Contributed by: Ken-Ying Tseng, Vivian Cheng, Julia Kuei-Fang Yung and Gail Chang, Lee and Li Attorneys-at-Law
principle of the FTC is whether “the overall economic benefit of the combination outweighs the disadvan - tages resulting from restraint of competition”. As such, the FTC has full discretion to set special conditions to the approval of a combination. Failure to notify the authorities of (i) a combination; (ii) the implementation of a combination despite a prohibition decision or prior to receiving clearance; or (iii) a breach of conditions imposed in a condi - tional clearance decision, may attract fines ranging from TWD200,000 to TWD50 million. In addition to these administrative fines, the FTC can order parties to unwind the combination or make specified divest - ments. 2.5 Labour Law Regulations Should the parties seek to terminate any employ - ees in connection with a transaction structured as a share transfer or share swap, unless the termination cause complies with those specified under the Labour Standards Act to qualify as a unilateral termination by the employer, the explicit consent of the relevant employees must be obtained, typically through a mutual termination or settlement agreement. For statutory mergers and acquisitions conducted in accordance with the Business Mergers and Acquisi - tion Act (the “M&A Act”), the M&A Act provides a more streamlined mechanism for the employee transfer pro - cess. Under this framework, the acquiring company is legally obligated to recognise the seniority of the transferred employees at the transferor company. To effect this transition, the acquirer is required to notify the affected employees to be retained at least 30 days prior to the closing date. Each employee receiving such a retention notice must then notify the acquirer of their decision to accept or reject the offer within ten days of receipt. Failure to reply by the employee will be deemed as consent to the transfer. As explained above, the employees’ seniority at the target company must be recognised by the acquirer. For those employees who are not retained or who reject the offer to retain (including those employees who have accepted the offer but later refuse to be retained before the closing date), the target com -
pany must terminate their employment by providing advance notice and paying the requisite pension or severance. Finally, should the scale of such terminations trigger the relevant legal thresholds, the parties must ensure compliance with the Act for Worker Protection of Mass Redundancy. 2.6 National Security Review Chinese businesses are not allowed to invest in Tai - wan unless they have obtained prior approval from the DIR. Meanwhile, foreign companies with Chinese elements (having Chinese shareholders on the owner - ship chain or Chinese directors) may also be subject to strict scrutiny when investing in Taiwan. National security has been the primary concern of the Taiwan regulator when reviewing foreign or Chinese invest - ment applications. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments The latest amendments to the M&A Act were prom - ulgated by the President on 15 June 2022 and came into force on 15 December 2022 (the “Amended M&A Act”). The key changes under the Amended M&A Act aim to strengthen the protection of sharehold - ers’ rights and interests, expand the defined scope of whale-minnow mergers, and increase the flexibility of the relevant tax arrangements, as detailed below. Also, in order to fulfil the supervisory function of the audit committee, to protect the rights and interests of minority shareholders, and to stabilise the operation of a company, relevant amendments to the Securi - ties and Exchange Act were passed by the Legisla - tive Yuan on 16 July 2024 and promulgated by the President on 7 August 2024. Under the Securities and Exchange Act since 28 June 2023, among others, an independent director can no longer initiate a lawsuit against the director, convene a shareholders’ meeting or represent the company in a director’s self-dealing matter. Such matters shall be resolved by the meet - ing of the audit committee after thorough discussions. In addition, pursuant to the latest amendment to the Securities and Exchange Act, a listed company must
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