TAIWAN Law and Practice Contributed by: Stephen Wu, Yvonne Hsieh, Wei-Han Wu and Erica Chiu, Lee and Li, Attorneys-at-Law
number of outstanding voting shares or the total capital of another enterprise, it should be concluded that the “control/subordinate” relation exists among these entities. • The “control/subordinate” relation is pre - sumed to exist if a majority of the executive shareholders or directors in a company are simultaneously acting as the executive share - holders or directors in another company, or if a majority of the total number of outstand - ing voting shares or the total amount of the capital interest of a company and another company is held by the same shareholders. Please note that only the Taiwanese sales are relevant when calculating the turnover threshold for foreign entities, which shall include: • sales generated “in” Taiwan by the parties’ affiliates, branch offices or any other enti - ties defined by Article 11, Paragraph 2 of the TFTA; and • direct sales “into” Taiwan by selling to Tai - wanese customers. 2.6 Calculations of Jurisdictional Thresholds For more details on the calculation of the juris - dictional thresholds, please see 2.5 Jurisdiction- al Thresholds . The TFTA is silent on the con - version of sales booked in a foreign currency. In practice, using the annual average exchange rate published by the Central Bank of Taiwan for the conversion is acceptable to the TFTC. 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds Please see 2.5 Jurisdictional Thresholds . Specifically, Article 11, Paragraph 2 of the TFTA stipulates that the turnover should be calculated
on a “group-wide/consolidated” basis – ie, by including the sales amount of an enterprise that is controlled by, controlling or affiliated with the enterprise in the combination, and of an enter - prise where both itself and the enterprise in the combination are controlled by the same enter - prise or enterprises. The TFTA is silent on whether any change in the business during the reference period (such as other acquisitions, divestments or business clo - sures) should be factored in when calculating the turnover; however, in general, the TFTC accepts the annual turnover figures stated in the parties’ audited financial statements as the benchmark to calculate the turnover. 2.8 Foreign-to-Foreign Transactions As long as a foreign-to-foreign transaction falls under the definition of a combination as stated in 2.3 Types of Transactions , and meets any of the filing thresholds as provided in 2.5 Jurisdic- tional Thresholds , such transaction is subject to merger control in Taiwan. Prior to June 2023, there was a local effects test under the TFTA, according to which the TFTC may decide not to exercise its jurisdiction over a pure foreign-to-foreign transaction after weigh - ing several factors. However, on 30 June 2023, the TFTC promul - gated amendments to the Merger Guidelines, and concurrently repealed the Guidelines on Extraterritorial Mergers. Thereafter, except for non-notifiable types of combination, an extra - territorial combination that meets any of the filing thresholds must be notified to the TFTC in accordance with the TFTA, and the waiver of jurisdiction will no longer be applicable.
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