TAIWAN Law and Practice Contributed by: Eddie Chan, Derrick Yang, Winnie Lin and Yuan-Yuan Lo, Lee and Li Attorneys-at-Law
A notification would be required for a combination in the following circumstances: • if, as a result of such combination, any of the par- ticipating enterprises will obtain at least one third of the market share; • if any of the enterprises participating in the com- bination holds at least one quarter of the market share before the combination; or • if the preceding fiscal year’s turnover of the par- ticipating enterprises, calculated on a group-wide/ consolidated basis, exceeds the amount set forth by the TFTC, as follows: (a) the aggregate global turnover of all the partici- pating enterprises in the preceding fiscal year exceeds TWD40 billion, and at least two of the participating enterprises had a turnover in Taiwan of at least TWD2 billion in the preceding fiscal year; (b) for a combination among non-financial en- terprises, one of the participating enterprises 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 enterpris- es, one of the participating enterprises gener- ated an annual turnover of at least TWD30 billion, while the other participating enterprise generated an annual turnover of at least TWD2 billion. 7.6 Labour Law Regulations In the event of a merger or asset transfer, the acquiring company must notify employees who will be retained at least 30 days before the completion of the trans- action. Employees who receive a retention notice must inform the acquiring company of their decision to accept or decline the offer within ten days. Fail- ure to respond will be considered as consenting. If employees decline the offer or are not retained, the target company may lay them off on the grounds of redundancy. The target company must provide pen- sion or severance pay and give prior notice to these employees. Mass redundancies must comply with the notice requirements and negotiation procedures as per regulations.
In the case of a tender offer or share exchange, employees do not need to be notified, as there will be no change in employer. Any redundancy lay-off is subject to the labour law requirements. 7.7 Currency Control/Central Bank Approval Taiwan regulates foreign exchange transactions. There is no limit on the total investment amount for foreign investors as long as the investment is approved by the DIR or through trading in Taiwan’s securities market. However, for substantial investment or repatriation amounts that could significantly impact the exchange rate of New Taiwan Dollars, the Central Bank of Tai- wan may impose restrictions on the daily conversion quota. 8. Recent Legal Developments 8.1 Significant Court Decisions or Legal Developments A significant recent court decision related to M&A involved a minority shareholder challenging resolu- tions adopted by a board of directors and a sharehold- ers’ meeting. In 2022, Far EasTone, one of Taiwan’s biggest telecoms companies, entered into a merger agreement with a rival player, Asia Pacific Telecom, whereby Far EasTone will be the surviving listed com- pany and Asia Pacific will delist and merge into Far EasTone. Both shareholders’ meetings of Far EasTone and Asia Pacific Telecom approved the merger in 2022 and the transaction was pending merger clearance. However, a minority shareholder of Asia Pacific Tel- ecom filed a claim in court, asserting that the reso- lutions adopted in the shareholders’ meeting of the company should be revoked due to a procedural flaw. Despite the TFTC granting conditional clearance for the merger filing, a court ruling in 2023 deemed that the resolutions adopted in the shareholders’ meeting of Asia Pacific Telecom must be revoked. The ruling of the court was made on the grounds that: • certain directors with conflicts of interest did not abstain from voting; • certain directors with conflicts of interest did not make disclosures to the board; and • the shareholders’ meeting did not explain the shareholders’ reasons for supporting or opposing the proposal, and there were certain procedural
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