TAIWAN Law and Practice Contributed by: James Huang, Eddie Hsiung and Maggie Huang, Lee and Li, Attorneys-at-Law
acquisition of 10%, 25% or 50% of the issued voting shares of a bank. In addition, the shares held by a third party for or on behalf of the investor or their related parties in trust, by mandate or through other types of contract, agreement or authorisation should be aggregated with the shareholdings held by such investor or the related parties. Regulatory Filings and Related Obligations The application documents sent to the FSC for the acquisition of 10% or more of the issued vot - ing shares of a bank should include documents and information regarding: • the investor’s existing shareholding; • other documents and information that may be required by the FSC on a case-by-case basis. Additional documents and information would be required in an application for the acquisition of 25% or 50% of the issued voting shares of a bank, including documents and information regarding the following. • In an application for a 25% acquisition: (a) the investor’s business and finance con - ditions by which the investor may improve • the proposed acquisition; • the source of funds; and the soundness of the operation of the bank and its management strategy; (b) the investment structure; (c) an evaluation of the effect on the bank’s business and finance condition within three fiscal years after the acquisition; and (d) the CPA-audited financial statements of the investor (including their related par - ties) or alternative financial information for the last three fiscal years.
• In an application for a 50% acquisition, in addition to the aforementioned application documents required for a 25% acquisition: (a) a business plan; (b) the proposed management team; and (c) protection of the bank’s employees’ interests. Ongoing Requirements Regarding Supervision Once an investor (together with their related par - ties provided under the Banking Act) acquiring or holding more than 5% of the voting shares of a bank has reported to the FSC, any subsequent change in the shareholding by more than 1% is also required to be reported to the FSC. 4. Governance 4.1 Corporate Governance Requirements Relevant Statutory and Regulatory Requirements In addition to the board of directors, a bank must set up an audit committee comprised of its independent directors to review important mat - ters and transactions (including related parties’ transactions). Also, according to the Banking Act and the Implementation Rules of Internal Audit and Internal Control System of Financial Hold - ing Companies and Banking Industries, a bank should establish an internal audit system and internal control system comprising three main elements: • a self-inspection system; • a legal compliance system; and • a risk management mechanism to ensure effective corporate governance. The internal control system of a bank should be approved by its board of directors. It should
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