TAIWAN Law and Practice Contributed by: Ken-Ying Tseng, Vivian Cheng, Julia Kuei-Fang Yung and Gail Chang, Lee and Li Attorneys-at-Law
directors will be the members of the review commit - tee. A competing tender offer can be launched no later than five business days before the first tender offer’s expiry period. In addition, the target company can introduce friendly new shareholder(s) by private place - ment transactions and/or a share exchange deal to dilute the hostile bidder’s shareholding in the target company. Therefore, to defend a hostile bid, it is per - missible for the target company’s directors to find a white knight to make a competing tender offer and/ or subscribe for new (common or preferred) shares of the target company. 9.3 Common Defensive Measures Defensive measures commonly seen in practice include (i) issuing new shares to dilute the hostile bidder’s shareholding in the target company and (ii) launching a competing bid. In addition, if the hostile bidder has not acquired a majority shareholding in the target company, the tar - get company’s management can try to solicit as many proxies as possible to get support from the sharehold - ers and solidify their control over the target company. However, as Taiwan law provides limited flexibility in respect of the constitutional document of a company, the approach of “poison pill” may not be a feasible defence strategy. 9.4 Directors’ Duties If the board of directors of the target company adopts defensive measures to resist a tender offer, the board of directors still needs to fulfil its duty of care in the best interest of the target company when carrying out the relevant transactions, including the determination of the terms and conditions thereof. 9.5 Directors’ Ability to “Just Say No” While the law does not prohibit directors from “just saying no” (except for the review and response pro - cess in respect of a tender offer required under the TO Regulations) and taking action that prevents a
business combination, the directors are required to make such decision in compliance with their fiduci - ary duties. In particular, if the chairman of the board of directors receives a formal offer from the bidder, as part of their duty, the chairman cannot just ignore such offer and shall at least submit such offer to the board of directors for their consideration.
10. Litigation 10.1 Frequency of Litigation
Litigation is not common in connection with M&A deals in Taiwan. Disputes are usually related to conflict of interest issues. Please see 8.5 Conflicts of Interest . 10.2 Stage of Deal Litigation is usually brought following the approval of the M&A transaction at the shareholders’ meeting of the target company. 10.3 “Broken-Deal” Disputes To the authors’ knowledge, there is no material litiga - tion regarding pending M&A transactions in 2025.
11. Activism 11.1 Shareholder Activism
Shareholder activism is not an important force in M&A transactions in Taiwan. If a shareholder would like to use their equity interest to bring change within a com - pany, investor relations is often used as the channel for two-way communications. 11.2 Aims of Activists It is not common for shareholder activists to seek to encourage companies to enter into M&A transactions,
spin-offs or major divestitures in Taiwan. 11.3 Interference With Completion
It is not common for shareholder activists to seek to interfere with the completion of announced M&A transactions in Taiwan.
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