TAIWAN Law and Practice Contributed by: Sarah Wu, Lee & Li Attorneys-at-Law
9.2 Listed Targets In Taiwan, requirements for the acquisition of public companies are mostly identical to those applicable to private companies (see 9.1 Regu- lated Targets ), provided that the acquisition of the public company is generally subject to certain laws and regulations that safeguard the integrity of the acquisition process and the rights of minority shareholders. Timeframe If the target public company is listed on the Tai- wan Stock Exchange (TWSE) or Taipei Exchange (TPEx), the acquisition would be subject to the rules governing the delisting process, and all these additional laws, regulations, rules and requirements could lead to variations in terms of the financing timeframe, the structure of fund utilisation or the conditions precedent, all of which should be considered when structuring the financing deal. Tender Offer Pursuant to the Taiwan Securities and Exchange Act, a mandatory tender offer would be triggered within 50 days, if required for an acquisition of 20% or more of the total issued shares of a pub- lic company. In addition, the use of considera- tion other than cash in tender offers is permitted by the Financial Supervisory Commission (FSC) (eg, domestic or foreign securities that satisfy certain requirements prescribed by the FSC as consideration), provided that stocks traded on PRC stock exchanges may not be accepted as consideration for a tender offer. Moreover, the properties of an offer can be used as considera- tion if approved by the FSC on a case-by-case basis. Requirement for Shareholders’ Approval As the minority squeeze-out provisions are not stipulated in the Taiwan Company Act, the pub-
lic company acquisition and the terms are still required to be approved by the shareholders of the target company with: • a majority vote at the shareholders’ meeting, which requires the attendance of sharehold- ers representing two thirds or more of the total number of the company’s issued shares; or • a super-majority vote (where applicable) at the shareholders’ meeting attended by share- holders representing a majority of the total number of the company’s issued shares. Once the attending shareholders approve the acquisition and terms, all shareholders of the target company are bound by the approval of the proposed acquisition. As such, a public compa- ny may conduct a cash merger or a cash-share exchange to squeeze out its minority sharehold- ers by obtaining approval from the sharehold- ers’ meeting’s quorum requirements and voting thresholds. However, if the acquiring company holds 90% of the target company’s shares, the acquisition can be carried out with the approval of both companies’ boards of directors without the shareholders’ approval. In addition, the shareholders’ approval is often structured as the condition precedent for utilis- ing funds in an acquisition financing context. In Taiwan, transacting parties would typically agree that substantial parts of the acquisition funds cannot be utilised unless the necessary share- holder approval is duly obtained. Requirement for Information Disclosure to the Competent Authority If any acquirer acquires more than 10% of the total issued shares of a public company, such acquisition must be reported to the competent authority and announced publicly; the same
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