TAIWAN Law and Practice Contributed by: Eddie Chan, Derrick Yang, Winnie Lin and Yuan-Yuan Lo, Lee and Li Attorneys-at-Law
1. Market Trends 1.1 Technology M&A Market
will play a pivotal role in shaping the future and driving sustainable growth of the industry.
The global economic and political uncertain- ties may have slowed Taiwan’s M&A market. The performance of the Taiwanese stock mar- ket remained outstanding during the past 12 months, with the index continuously reaching new highs. This has raised the expected trans- action value for companies. Compared to the last year to date, the overall number of M&A transactions in Taiwan have not shown a signifi- cant increase in terms of deal value and number. The transaction value of Taiwan’s M&A deals in the first quarter of 2024 declined compared to the same period in 2023, yet the number of transactions slightly increased. Notwithstand- ing the foregoing, the transaction value in the technology industry grew from the second half of 2024, showing a revival in the technology M&A market. 1.2 Key Trends Taiwan’s semiconductor market has benefited from the AI boom and the promotion of technol- ogy integration during the last 12 months. This has led to a rebound in M&A transactions in the country’s technology industry, with a strong focus on fostering innovation and expanding market reach. Meanwhile, Taiwanese technology companies are actively pursuing global transfor- mation and upgrading, with an increase in over- seas investment and cross-border mergers and acquisitions. During the past 12 months, sev- eral transactions involved regional mergers and acquisitions, which were driven by the reshaping of supply chains. As Taiwan’s technology industry continues to thrive, strategic partnerships and acquisitions
2. Establishing a New Company, Early-Stage Financing and Venture Capital Financing of a New Technology Company 2.1 Establishing a New Company Many start-up companies founded by Taiwan- ese nationals are initially incorporated in Taiwan. Setting up a company in Taiwan typically takes around two weeks, assuming there are no for- eign investors involved. However, while some venture capital investors are open to investing in Taiwanese-based start-ups, many institutional and reputable investors prefer for the target com- pany to re-domicile or restructure to the Cayman Islands or the British Virgin Islands. This prefer- ence is driven by the greater flexibility offered by these jurisdictions for venture capital investors to structure special corporate governance and shareholder rights, as well as their more favour- able tax regimes. As a result, start-up compa- nies may choose to re-domicile or restructure to the Cayman Islands or the British Virgin Islands when they have matured to a stage where they are seeking funding from institutional investors overseas. 2.2 Type of Entity In Taiwan, there are various forms of business entities that can be used to operate a business. However, companies limited by shares and closely held companies (limited by shares) are the primary choices for venture capital invest- ment. These types of companies are allowed to issue preferred shares with different rights and privileges, making them suitable for significant minority investments.
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