TAIWAN Law and Practice Contributed by: Derrick Yang, Judy Lo and Yu-Ting Su, Lee and Li Attorneys-at-Law
FDI approval would be required for a foreign-to-for - eign transaction only when (i) there is a change in the immediate foreign shareholder of a local company, or (ii) a PRC investor(s) will retain more than 30% of the equity interests in aggregate or control of the local company. 2.4 Relationship Between Regimes Merger control, FDI review and sector-specific approv - al processes are typically conducted in parallel. How - ever, in some cases, FDI approval is a prerequisite that must be obtained before sector-specific authorities can grant its final approval, and vice versa. Inter-agency consultation is common in the regulatory approval process. For instance, the FTC may seek comments from sector regulators regarding market definitions and the current competitive landscape, while the DIR may seek their input on sector-specific considerations. Investments involving PRC-related entities are subject to heightened scrutiny, and com - ments are often solicited from the National Security Bureau, the Mainland Affairs Council and other rel - evant industry authorities. Beyond these interactions, information sharing among different authorities is limited as competent authorities are legally obligated to keep case-specific information in strict confidence. 3. Merger Control – Jurisdiction and Filing 3.1 Transactions Subject to Merger Control Under Article 10 of the FTA, transactions that qualify as a “combination” and meet the specified market and turnover thresholds must be pre-notified to the FTC and receive clearance, unless otherwise exempted. For example, certain internal restructurings may be exempt (see 3.5 Exemptions and Simplified Proce - dures for details). A “combination” includes mergers; acquiring or hold - ing one-third or more of another enterprise’s voting shares or capital; transferring or leasing substantial business or assets; establishing ongoing joint opera - tions or management contracts; and directly or indi -
rectly controlling another enterprise’s operations or personnel. “Control” is assessed case by case, with further criteria detailed in Article 6 of the Enforcement Rules of the FTA, such as majority shareholding, over - lapping directors or shareholders, or joint business operations. Shares held by related or commonly con - trolled enterprises are aggregated when calculating thresholds. 3.2 Notification Thresholds A merger filing to the FTC is required if: (i) any party to the merger will hold at least one-third of the market share post-transaction; (ii) any party to the merger has a market share of at least one-quarter pre-merger; or (iii) the turnover thresholds established by the FTC are exceeded. Said turnover thresholds are: (i) combined global annual turnover exceeding TWD50 billion, with at least two parties each generating at least TWD3 billion in local turnover; (ii) for non-financial enterprises, one party generating at least TWD20 billion in local turno - ver and another generating at least TWD3 billion local - ly; or (iii) for financial enterprises, one party generating at least TWD40 billion in local turnover and another generating at least TWD3 billion locally. When calcu - lating these thresholds, the turnover of enterprises that control, are controlled by, or are under common control with any party to the merger is aggregated. For foreign enterprises, typically only sales within Taiwan are considered. This includes sales made in Taiwan by the foreign enterprise itself and its affiliates, as well as sales made into Taiwan through direct transactions with Taiwanese customers. 3.3 Mandatory v Voluntary Filing Merger filing in Taiwan is mandatory if any of the statu - tory filing thresholds are met. However, voluntary filing may be considered in borderline cases, such as when parties’ market shares are close to the thresholds or in extraterritorial transactions where applicability is not entirely clear. In such situations, voluntarily seeking clearance from the FTC helps avoid potential penalties or post-closing challenges. Enterprises may also use the FTC’s pre-filing consultation service to clarify filing obligations and minimise risks.
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