TAIWAN Law and Practice Contributed by: Lihuei Mao (Grace), Dennis Yu and Christina Chiang, Lee and Li, Attorneys-at-Law
has not been any significant change to these mechanisms recently. 3.6 Corporate Governance Venture capital investors typically have cer - tain rights over the management of the target company, including information and inspection rights, a guaranteed board seat or board observ - er seat, and the ability to participate in or con - trol the company’s decision-making process in relation to the board and shareholders’ reserved matters. These reserved matters typically pertain to key issues that could significantly impact the business or operation of the company, such as: • amending the constitutional documents; • financing; • implementing an ESOP; • engaging in mergers and acquisitions; • dissolution and liquidation; and • entering into key licensing agreements. Additionally, certain matters are reserved for the board or shareholders’ vote for governance purposes, such as related-party transactions or agreements with founders or key employees. 3.7 Contractual Protection A target company’s and its major shareholders’ standard representations and warranties gener - ally relate to the following: • valid incorporation and existence and capi - talisation of the company; • completing/obtaining necessary corporation actions/government or third-party consents; • no breach of legal or contractual obligation/ no termination of material contracts; • full disclosure of financial information; • no material legal proceedings; • ownership of or right to use all IP rights and assets necessary for the business operation;
• entry into of necessary proprietary rights/non- disclosure/non-compete agreements; • compliance in all material aspects; and • full and accurate disclosure of information material to the investors’ investment. A target company and its major shareholders shall adhere to a set of standard and crucial covenants and undertakings from the execution of the transaction documents until the closing of the transaction. These obligations include refraining from taking major actions, such as borrowing money, disposing of material assets, ceasing any existing business, or taking any actions that are out of the company’s ordinary course of business. In addition, they shall take all measures to fulfil the conditions of the trans - actions and to ensure their representations and warranties remain true and correct up to the closing. The most prominent project is the Business Angel Investment Programme launched by the NDF with an aim to establish a sound start-up investment mechanism to improve the angel investment environment in Taiwan. The details of the Business Angel Investment Programme are as follows. • Its term runs from May 2018 to 31 December 2025. • The total amount of funds allocated to the programme is TWD5 billion (around USD167 million). • The investment is structured as a subscrip - tion of equity in eligible start-ups by the NDF, 4. Government Inducements 4.1 Subsidy Programmes
572 CHAMBERS.COM
Powered by FlippingBook