TAIWAN Trends and Developments Contributed by: Derrick Yang, Judy Lo, Yu-Ting Su and Frances Shih, Lee and Li Attorneys-at-Law
tory framework. These major M&A activities in 2025 will likely reshape future transactions in Taiwan and help to streamline the deal process. Regulatory Approvals in M&A Transactions Regulatory approvals are often the linchpin for the successful completion of M&A deals in Taiwan, serv - ing as a prerequisite for finalising transactions. As in other countries, these approvals continue to play a pivotal role in M&A in Taiwan. These approvals typi - cally encompass: • foreign direct investment (FDI) reviews by the Department of Investment Review (DIR) of the Min - istry of Economic Affairs; • merger clearance by the Fair Trade Commission (FTC); • approvals or blessings from the competent authori - ties of the targets, such as financial institutions and energy authorities for transactions involving energy development; and • for listed companies, compliance with the Securi - ties Exchange Act and stock exchange require - ments must also be considered, including disclo - sure obligations relating to deal specifics. These regulatory hotspots are also centres for M&A disputes, as illustrated below. 1. Taiwan’s FDI review Under Taiwan law, all inbound investments are sub - ject to the DIR’s review and approval under the dual- track review scheme, which is based on the investor’s nationality, ie, foreign investors and investors from the People’s Republic of China (PRC, excluding Macau and Hong Kong). Currently, PRC investors face great - er investment restrictions and more stringent reviews. Despite the global trend of tightened investment scru - tiny due to heightened geopolitical tensions and eco - nomic uncertainties, Taiwan has largely maintained its existing regulatory framework, as the two-track FDI review scheme has been in place for several dec - ades. Nonetheless, the DIR has increased its scrutiny of investment applications involving PRC elements to prevent attempts to circumvent investment restric - tions. Disputes may arise when an investor applies for approval as a foreign investor but is effectively
controlled by PRC investors, or when a PRC investor operates in Taiwan without the required approval. The DIR’s reviews also consider the potential national security implications of any transaction. For national security reasons, Taiwan imposes stricter controls on investments in certain critical industries. These indus - tries include semiconductors, information and com - munications technology, and defence. While the DIR holds exclusive authority to approve, reject or impose conditions on transactions, outright rejections are rare and typically based on national security concerns or potential negative impacts on the local economy. Fur - thermore, in some cases, the DIR may require inves - tors to make specific commitments or impose condi - tions on approved investments, often in response to requests from other competent authorities. 2. Merger clearance To prevent monopolies and keep markets competitive, transactions that qualify as a “combination” and meet certain turnover and/or market share thresholds must apply for merger clearance with the FTC. The FTC evaluates whether a combination would substantially lessen competition or create dominant market posi - tions that are detrimental to Taiwan’s economy. In a recent landmark case, the FTC pointed out that the combined leading food delivery platforms would control over 90% of the market, posing a significant risk of market monopolisation and restricting compe - tition. Despite the parties’ efforts to propose reme - dial measures and seek conditional approval, the FTC concluded that the remedies were inadequate to safeguard competition or labour interests, ultimately rejecting the combination. This case underscores the necessity for parties in dominant market positions to expect stringent regulatory scrutiny and incorporate risk mitigation mechanisms, such as breakup fees, in transaction documents. Sometimes, merger clearance will be contingent upon obligations imposed on the parties. In such cases, the FTC will monitor compliance with these condi - tions even after the transaction closes. For instance, in 2022, the FTC approved the acquisition of the target supermarket chain by a market leader, but required the market leader to (i) refrain from implementing “most
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