TAIWAN Law and Practice Contributed by: Sarah Wu, Lee & Li Attorneys-at-Law
applies when there is any change to the specif- ics reported. In addition, public companies in Taiwan are generally required to disclose certain material information, such as the material resolution of the board of directors or shareholders’ meeting or other circumstances having a material effect on the shareholders’ equity or the price of the shares. If the entry into a loan agreement or guarantee agreement or the provision of security for acquisition financing is considered material information, an instant disclosure of the major terms (eg, facility amount and guarantee limit) is required (note that the details, terms on fees or otherwise are not required). Certain Funds In addition, if the acquisition involves a tender offer, the competent authority will require the acquirer to provide documents evidencing the certainty of funds when the application for the tender offer is submitted for approval. Informa- tion required by the competent authority typi- cally includes, without limitation, the financing amount prepared or obtained by the acquirer for the proposed tender offer and the identity of the party that provides or structures the financing arrangement. On the other hand, as no regu- latory approval is required for non-tender offer acquisitions (eg, those done through merger or share swap), no review of the certainty of funds would be required, as such acquisition is purely private between the parties. 10. Jurisdiction-Specific Features 10.1 Other Acquisition Finance Issues Under Taiwanese law, there is no specific regula- tory requirement as to who can provide funds, and a lender is not required to obtain a licence
when financing an acquisition. However, the fol- lowing caveats are worth noting when structur- ing debt financing in Taiwan. Restriction on Intercompany Loans The Taiwan Company Act provides that the fund of a Taiwan-incorporated company may not be lent to the shareholders of that company or any other person, unless the borrower has a busi- ness relationship with the lending company or such lending is necessary short-term financing. As a result of this restriction, banks, insurance companies or pawn shops in Taiwan would nor- mally engage in acquisition financing as part of their regular business, and companies that are non-financial institutions would primarily refrain from entering into any similar arrangement. Anti-Money Laundering and Sanctions Similar to other jurisdictions and internation- al practice, when structuring an acquisition financing in Taiwan, the anti-money laundering and sanctions laws should also be taken into account, as the relevant regulatory regime and legal requirements in Taiwan have been brought into line with international standards. Such con- ditions would also form part of the banks’ “know your customer” checks, in accordance with their respective internal policies. Foreign Investment Approval Requirement Where the acquirer is a foreign entity, the acqui- sition of the Taiwanese entity would require for- eign investment approval from the DIR. There- fore, obtaining the DIR’s approval, among other things, will normally be a condition precedent to the first utilisation of the debt financing. Foreign Debt Registration Requirement To deal with the annual quota, Taiwanese cor- porate borrowers can register their medium and long-term foreign debt with the Central Bank of
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