TAIWAN Trends and Developments Contributed by: Derrick Yang, Judy Lo, Yu-Ting Su and Frances Shih, Lee and Li Attorneys-at-Law
favoured customer” policies, (ii) maintain existing sup - plier terms, and (iii) avoid unfair treatment of small and medium-sized suppliers. When the market leader failed to fully comply with these conditions, the FTC imposed a fine post-closing. This case highlights the importance of not only securing pre-merger approval, but also diligently adhering to post-merger obligations to avoid adverse consequences. In response to evolving market conditions, the FTC proposed to revise the merger filing thresholds at the end of 2025, with the amendments likely to be prom - ulgated in the near future. The proposed amendments aim to raise the turnover thresholds for mandatory merger filings, thereby reducing administrative bur - dens on small and medium-sized enterprises and allowing regulatory resources to focus on large-scale or monopolistic transactions. However, the proposed revisions are still under review. 3. Special regulatory competent authorities Highly regulated industries in Taiwan, such as finance, energy, telecommunications and artificial intelligence, may be subject to stricter oversight. Prior approval from the respective authorities may be required before closing. In particular, the financial sector has drawn heightened regulatory attention amid the recent wave of M&A, primarily due to regulators focusing on main - taining industry stability, safeguarding market integ - rity and protecting consumer interests. Consequently, companies operating in these sectors must navigate the process of obtaining the necessary approvals and ensure full compliance with evolving regulatory frame - works to successful close transactions. (1) FSC’s rejection of merger of two financial holding companies One noteworthy case is the FSC’s rejection of CTBC Financial Holdings’ (CTBC) proposed merger with Shin Kong in September 2024. After the board of Taishin approved an absorption merger with Shin Kong, the target, CTBC launched a hostile takeover bid for the same target and applied for the FSC’s approval, offer - ing a higher acquisition price through a tender offer. Subsequently, Tai Shin increased its share exchange ratio with the target to compete with CTBC’s offer. Nonetheless, the FSC rejected CTBC’s bid, empha - sising the importance of “consensual mergers” and
financial market stability. Consequently, Shin Kong was merged into Taishin in 2025. Taiwan’s financial institutions primarily operate across three major sectors: insurance, banking and securi - ties. The underlying reason for this acquisition battle is competition among financial holding companies to expand their market presence in Taiwan. As the tar - get primarily engages in the insurance business, the transaction would have allowed the buyer to offer a more comprehensive range of financial services. His - torically, the FSC has rarely rejected financial acquisi - tions on similar grounds. Denials typically occur only when there are significant shareholder disputes or the financial institutions have failed to meet the capital adequacy requirement. However, in this case, the FSC emphasised the consensual aspect of the transaction when there are competing offers in order to maintain stability in the financial market. (2) Amendments to the financial holding company investment rules In response to the turbulence caused by the compet - ing bids in 2025, the FSC amended the Regulations Governing the Investing Activities of a Financial Hold - ing Company amid the wave of financial institution integrations. To ensure a decisive, one-time acquisi - tion, among other amendments, the FSC raised the minimum shareholding threshold for financial holding companies’ acquisitions from 10% to 25%. For an ini - tial investment, a financial institution must obtain con - trol of the target financial institution by holding more than 25% of its total issued voting shares or capital. Additionally, the FSC requires that initial investments by financial holding companies in public companies be made entirely in cash to avoid unnecessary stock price fluctuations. These amendments are primar - ily intended to prevent market disruption caused by competing third-party bids, reduce uncertainty during consolidation and accelerate merger completion. Giv - en the highly regulated nature of the financial industry, the FSC appears to be more conservative regarding hostile takeovers and seeks to avoid bidding wars. Impact on Labour Rights in M&A Transactions Labour relations constitute a critical dimension of M&A transactions, especially in sectors with intensive work - force. Regulators increasingly factor labour rights into
86 CHAMBERS.COM
Powered by FlippingBook