TAIWAN Law and Practice Contributed by: Ken-Ying Tseng, Vivian Cheng, Julia Kuei-Fang Yung and Gail Chang, Lee and Li Attorneys-at-Law
7.3 Producing Financial Statements If the merger consideration is the shares issued by the bidder and the bidder is required to prepare a pro - spectus, the prospectus shall include (i) the audited financial statements of the target company for the most recent two fiscal years and (ii) the audited finan - cial statements of the bidder for the most recent two fiscal years and the latest quarterly financial state - ments reviewed by the auditor. No pro forma financial statements are required. The financial statements shall be prepared in accord - ance with the International Financial Reporting Stand - ards, as adopted in Taiwan and as issued by the Inter - national Accounting Standards Board. 7.4 Transaction Documents If either party to the proposed transaction is a pub - lic company and such transaction shall be approved by the shareholders’ meeting, the definitive agree - ment (eg, the merger agreement) shall be attached to the shareholders’ meeting handbook, which shall be uploaded to the website designated by the FSC and made available to the shareholders. Further, in the case of a tender offer, all contractual arrangements between the offeror and the insiders of the target company (including major shareholders holding more than 10% of the shares and directors, etc) must be fully disclosed in the tender offer pro - spectus. Under the Company Act, a director shall perform their fiduciary duties of loyalty and due care of a good administrator in the course of conducting the com - pany’s business, and shall indemnify the company for any loss incurred or suffered by the company arising from breach of their fiduciary duties. In the M&A process, the board of directors shall, in the course of conducting the transaction, fulfil its duty of care in the best interest of the company. In addition, the directors shall also comply with the relevant laws and regulations, the company’s articles of incorpora - 8. Duties of Directors 8.1 Principal Directors’ Duties
tion and shareholders’ resolutions. If any directors fail to comply with the aforesaid and cause loss or dam - age to the company, those directors who voted for the adoption of the relevant resolution (as recorded in the meeting minutes) will be liable for compensating the company for such loss or damage. A director who is directly or indirectly interested in any matter under discussion at a board meeting or a contract or proposed contract or arrangement with the company shall declare the nature and the essential contents of such interest at the relevant board meet - ing. If the company proposes to effect any form of merger and acquisition, a director who has a personal interest in such transaction shall declare the essential contents of such personal interest and the reason why they believe that the transaction is advisable or not advisable at the relevant board meeting and the share - holders’ meeting. If the company is a public company, the company shall, in the notice of a shareholders’ meeting, disclose the essential contents of such direc - tor’s personal interest and the reason why such direc - tor believes that the transaction is advisable or not advisable. The essential contents shall be announced Under the M&A Act, before the board of directors resolves any M&A transaction, a public company shall form a special committee to review the fairness and reasonableness of the plan and transaction, and then report the review results to the board of directors and, if a resolution by the shareholders’ meeting is required, to the shareholders’ meeting. For a company that has established an audit committee consisting of three independent directors, the review shall be con - ducted by the audit committee instead of the special committee. In the case of a tender offer, the target company must set up a review committee consisting of three independent members to assess the tender offer and provide its recommendation to shareholders within 15 days of receiving the offer. If the target company has independent directors, the independent directors will be the members of the review committee. on the website designated by the FSC. 8.2 Special or Ad Hoc Committees
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