TAIWAN Law and Practice Contributed by: Stephen Wu, Yvonne Hsieh, Wei-Han Wu and Erica Chiu, Lee and Li, Attorneys-at-Law
transfer of shares or assets (eg, shareholders’ agreements, contractual arrangements on joint business operation) will constitute a combina - tion only if it falls under the combination defined under one of the last two points set forth above. 2.4 Definition of “Control” Whether “control” exists is not defined under the TFTA, and thus should be evaluated on a case- by-case basis. The acquisition of a minority shareholding or other interests amounting to less than control will constitute a combination only if it falls under the combination defined under the second, fourth or fifth points set forth in 2.3 Types of Transactions . 2.5 Jurisdictional Thresholds Under Article 11 of the TFTA, a notification would be required if: • the combination would result in any of the enterprises acquiring at least one-third of the market share; • any of the enterprises participating in the combination holds a market share of at least one-quarter before the combination; or • the preceding fiscal year’s turnover of a par - ticipating enterprise exceeded the amount set forth by the TFTC – ie: (a) the aggregate global turnover of all the participating enterprises in the preceding fiscal year exceeded TWD40 billion, and at least two of the participating enter - prises had a turnover in Taiwan of at least TWD2 billion in the preceding fiscal year; (b) for a combination among non-financial enterprises, one of the participating en - terprises generated a turnover in Taiwan of at least TWD15 billion in the preceding fiscal year, while the other participating
enterprise generated a turnover in Taiwan of at least TWD2 billion in the preceding fiscal year; or (c) for a combination between financial enterprises, one of the participating enter - prises generated an annual turnover of at least TWD30 billion, while the other par - ticipating enterprise generated an annual turnover of at least TWD2 billion. Article 11, Paragraph 2 of the TFTA specifically stipulates that the turnover should be calculated on a “group/consolidated” basis by including the sales revenues of an enterprise that is controlled by, controlling or affiliated with the enterprise in the combination, and of an enterprise where both itself and the enterprise in the combination are under common control of the same enter - prise or enterprises. The “control/subordinate” relation under Article 11, Paragraph 2 of the TFTA is further explained in Article 6 of the Enforcement Rules, as follows. • When enterprise X holds more than half of the shares in enterprise Y, or if enterprise X directly/indirectly controls the business oper - ation or the appointment or discharge of the personnel of enterprise Y, enterprise X can be viewed as having control over enterprise Y. Furthermore, in the event that the whole or the substantial part of the business or assets of enterprise Y is assigned or leased to enter - prise X, or where enterprise X jointly operates with enterprise Y on a regular basis, or is entrusted by enterprise Y to operate enter - prise Y’s business that results in enterprise X having control over enterprise Y, this situation can also be deemed to be a type of “control/ subordinate” relation. • If a person or an organisation and/or its related persons hold a majority of the total
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