TAIWAN Trends and Developments Contributed by: Lihuei Mao, Dennis Yu and David Tien, Lee and Li, Attorneys-at-Law
The application for outbound investment can be rejected if any of the following outcomes (“adverse situations”) are found: • affecting national security; • causing a significant adverse impact on Taiwan’s economic development; • influencing compliance with international treaties or agreements; or • causing unresolved major labour disputes that violate Taiwan’s Labour Standards Act. Furthermore, the competent authority may require a company to withdraw its outbound investment if the adverse situation is significant. Amendments for Relaxation of Merger Control Rules In June 2023, the Taiwan Fair Trade Commission (TFTC) promulgated the following major amendments to the merger control rules. Additional type of combination exempted from filing Prior to June 2023, the TFTC would exercise jurisdic - tion over a foreign-to-foreign combination only if the subject transaction would have a local effect on the Taiwanese market. In June 2023, the TFTC passed the amendments to the Combination Types to Which Paragraph 1, Article 11 of the Fair Trade Act Does Not Apply, which added a non-notifiable type of com - bination “where foreign enterprises jointly establish or operate a joint venture outside the territory of Tai - wan and the joint venture is not engaged in economic activities within the territory of Taiwan”. Nevertheless, the TFTC notes that “[the joint venture] not engaging in economic activities within Taiwan” means that it is not engaging in any economic activi - ties that involve supply and demand of goods or ser - vices in Taiwan – for example, the products produced by the joint venture are sold only outside Taiwan or sold exclusively to its foreign parent company, without affecting the supply and demand in Taiwan. The so- called economic activities include the sale of goods or services, provision of quotations, bargaining and conclusion of sales, and contracts or engagement with counterparties in connection with the sale.
To correspond with such amendments, the TFTC abolished the Guidelines on Handling Extraterritorial Combinations in June 2023. Thereafter, except for the non-notifiable types of combination, an extraterritorial combination that meets any of the filing thresholds must be notified to the TFTC in accordance with Tai - wan’s Fair Trade Act and the waiver of jurisdiction will not apply. Simplified procedure applies to more types of combinations In June 2023, the TFTC promulgated the amendments to the Taiwan Fair Trade Commission Disposal Direc - tions (Guidelines) on Handling Merger Filings, specify - ing that the simplified procedure also applies to the following four types of combinations: • where the transaction value is below NTD2.5 bil - lion; • in a horizontal combination, where the combined Taiwanese revenue of the participating parties’ rel - evant products or services does not reach NTD200 million; • in a vertical combination, where none of the par - ticipating parties have generated NTD200 million or more in Taiwan for the relevant products or ser - vices; or • where the enterprise being combined generates no Taiwanese revenue. Amendments to PRC Investment Regulations In response to dynamic international geopolitical issues and tension in cross-strait relations in recent years, the government of Taiwan has gradually imposed more stringent controls over investments from the People’s Republic of China (“PRC invest - ments”) and seeks to identify PRC investments dis - guised as foreign investments. Relevant laws and regulations on PRC investments have been amended and related rulings have been promulgated by the authorities to scrutinise PRC investments, especially to distinguish PRC investments from foreign invest - ments. In general, under Article 73 of the Act Governing Rela - tions Between the People of the Taiwan Area and the Mainland Area (the “PRC Relations Act”), an invest - ment into Taiwan by a statutorily defined PRC investor
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