TAIWAN Law and Practice Contributed by: Eddie Chan, Derrick Yang, Winnie Lin and Yuan-Yuan Lo, Lee and Li Attorneys-at-Law
grounds of redundancy. The target company must provide pension or severance pay and give prior notice to these employees. Mass redundan- cies 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 sub- stantial investment or repatriation amounts that could significantly impact the exchange rate of New Taiwan Dollars, the Central Bank of Taiwan 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 the minority shareholder chal- lenging the resolutions adopted by the board of directors and the shareholders’ meeting. In 2022, Far EasTone, one of Taiwan’s biggest tel- ecoms companies, entered into a merger agree- ment with a rival player, Asia Pacific Telecom, whereby Far EasTone will be the surviving listed company and Asia Pacific will delist and merge into Far EasTone. Both shareholders’ meet- ings of Far EasTone and Asia Pacific Telecom approved the merger in 2022 and the transac- tion was pending merger clearance. However,
a minority shareholder of Asia Pacific Telecom filed a claim in the court, asserting that the reso- lutions adopted in the shareholders’ meeting of the company should be revoked due to a proce- dural 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 their reasons for supporting or opposing the proposal, and there were certain procedural and substantive flaws in the fairness opinion issued by an independent expert. Asia Pacific Telecom was compelled to recon- vene a shareholders’ meeting in order to rectify the procedural flaws and eventually adopted the new resolutions pertaining to the approval of the merger. This contentious case serves as a stark reminder that even technical procedural flaws in a resolution can have adverse consequences on the outcome of a public deal. 9. Due Diligence/Data Privacy 9.1 Technology Company Due Diligence In the realm of M&A transactions involving public companies, it is important to consider insider- trading restrictions. According to the “disclose or abstain” rule, individuals who have access to material non-public information must either dis- close that information or refrain from trading on it. Therefore, a public company should exercise caution when sharing material information with
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