TAIWAN Law and Practice Contributed by: Derrick Yang, Judy Lo and Yu-Ting Su, Lee and Li Attorneys-at-Law
For example, in the financial sector, the FSC evalu - ates factors such as market competition, operational efficiency, financial soundness and public interest considerations. In the telecommunications sector, the NCC assesses resource allocation, industry develop - ment, user rights, market competition and national security. In the energy sector, regulatory oversight focuses on the stability and security of energy supply, compliance with technical and operational standards, the financial capacity to sustain licensed operations, and other undertakings attached to the previously granted approvals. 6.4 Interaction With Merger Control and FDI/ National Security Reviews In practice, sector-specific approvals are co-ordinated alongside merger control and FDI/national security reviews through parallel but independent procedures, each governed by its own legal framework. When the FTC reviews merger filings and the DIR evaluates FDI applications, they may seek input from the relevant sectoral regulators. As to sector-specific approvals, the regulators typically (though not always, depending on the sector) issue their final approval only after merger clearance and FDI clearance have been obtained. This sequencing ensures that sector-specif - ic concerns are addressed only after the transaction has met broader competition and national security requirements. 6.5 Practical Issues and Common Pitfalls A common practical issue in co-ordinating sector-spe - cific approvals with merger control and FDI reviews is the alignment in review timelines and requirements, given that each process is governed by different set of rules and overseen by different authorities. While the processes are typically conducted in parallel, the sectoral regulators are usually the final gatekeeper and tend to withhold their final approval until after the parties have received both the merger clearance and the FDI approval. One pitfall is failing to engage with the competent authorities at an early stage, particularly in highly regulated sectors. Early informal consultations, even before signing, are crucial to identify potential regula - tory concerns and to secure a preliminary indication
of support (informal blessing). This step is essential to avoid unexpected obstacles that could delay or derail the transaction at a later stage. 7. Deal Structuring, Risk Allocation and Conduct Pending Closing 7.1 Conditions Precedent and Long-Stop Dates Regulatory approvals, including but not limited to foreign investment approval, merger clearance, and approvals by the competent authorities as required for deals involving regulated sectors (such as financial, telecoms, energy or healthcare deals), are typically included as conditions precedent. Litigation-related conditions precedent typically include the absence of outstanding or threatened litigation that could impact the deal, court orders preventing the closing, or any material adverse effects resulting from litigation. The longstop date is typically set based on the antici - pated time required to satisfy the conditions prec - edent, as agreed upon by the parties. This includes the time needed to obtain the necessary regulatory approvals for the transaction, along with a reasonable buffer to account for potential delays or alignment on the conditions attached to regulatory approvals. 7.2 Efforts Standards and “Hell or High Water” Clauses The efforts standards for obligations to fulfil closing conditions are usually determined on a case-by-case basis, subject to negotiation between the parties in each case. Generally, buyers tend to avoid “hell or high water” commitments due to the significant bur - den they impose on the buyer to complete the deal; instead, buyers may try to negotiate for standards such as “reasonable best efforts” or “commercially reasonable efforts”. Such tendency has grown strong - er in recent years amid increasing regulatory uncer - tainty. That said, in practice, it is not uncommon to adopt “hell or high water” commitments for the fulfilment of closing conditions involving obtaining more predict - able regulatory approvals such as foreign investment approval, merger clearance and ad hoc approval from
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