TAIWAN Law and Practice Contributed by: Eddie Chan, Derrick Yang, Winnie Lin and Yuan-Yuan Lo, Lee and Li Attorneys-at-Law
the shareholders or the board of directors. As a result, as long as the bidder can obtain the controlling voting power at the shareholders’ meeting and the board, the bidder will generally obtain the governance powers in public companies. 6.12 Irrevocable Commitments While the courts in Taiwan do not deem all voting agreements to be valid, the Business Mergers and Acquisitions Act (the “M&A Act”) allows shareholders to enter into a written agreement on the joint exercise of their voting rights and related matters when a com- pany enters into a merger or acquisition. In practice, agreements whereby major shareholders commit to vote in favour of the deal at the shareholders’ meet- ing and to tender shares are common. Negotiations on such agreements and transaction documents usu- ally take place concurrently. The undertakings usu- ally include irrevocable commitments to tender or vote by the principal shareholders of the target company, typically subject to board and/or regulatory approvals. However, the manager shareholders would require a fiduciary-out if a better offer is made. 6.13 Securities Regulator’s or Stock Exchange Process Under the public tender offer rules, a public announce- ment and offer to purchase the shares must be made and the prospectus and other relevant documents must be filed with the FSC before the date of launch- ing the tender offer. The FSC will review the offer price or other terms for formality, such as whether a fairness opinion has been obtained and whether any transaction terms required to be disclosed have not been properly disclosed in the prospectus. The usual timeframe for a public tender offer is 20 to 50 days, which can be extended by up to another 50 days by a one-off filing with the FSC if the regulatory approval required to complete the tender offer is not obtained within the initial 50 days or there is a competing bid. 6.14 Timing of the Takeover Offer Delays in obtaining regulatory/antitrust approvals are a legitimate reason for extending the tender offer period by another 50 days. However, if the necessary regulatory/antitrust approvals are still not obtained during the extension period, the tender offer will fail and become final. Therefore, in transactions requiring
multi-jurisdictional merger clearance, the bidder will normally opt to obtain regulatory approvals prior to launching the offer. 7. Overview of Regulatory Requirements 7.1 Regulations Applicable to a Technology Company Generally speaking, there are no specific prior per- mit, approval or licensing requirements for the estab- lishment and operation of a technology company in Taiwan, except for certain regulated industries. Prior permit, approval or licensing requirements may be needed if the technology company operates certain businesses, such as: • electronic payment services regulated by the FSC; • the manufacture, export/import, distribution or sale of medical devices regulated by the Ministry of Health and Welfare; and • manufacturing or importing of radio-frequency con- trolled telecommunications devices regulated by the National Communications Commission. The length of time to obtain prior permit, approval or licence varies across the various regulatory authorities and depends on the type of prior permit, approval or licence applied for. 7.2 Primary Securities Market Regulators The Securities and Futures Bureau of the FSC, the government agency responsible for public compa- nies, is the main regulatory body in charge of pub- lic M&A transactions. Additionally, the Taiwan Stock Exchange and the Taipei Exchange are delegated by FSC to promulgate and enforce the listing rules and regulations for public companies. 7.3 Restrictions on Foreign Investments Foreign (Non-PRC) Investment Foreign investors (as distinguished from investors from Mainland China) who wish to purchase or invest in shares of Taiwanese companies (other than port- folio investment in exchange-traded securities) are required to obtain foreign investment approval from the Department of Investment Review, Ministry of
265 CHAMBERS.COM
Powered by FlippingBook