TAIWAN Law and Practice Contributed by: Lihuei Mao (Grace), Dennis Yu and Christina Chiang, Lee and Li, Attorneys-at-Law
company to facilitate the completion of the proposed sale. • Liquidation preference in the event of a trade sale, liquidation or other event that consti - tutes a deemed liquidation event. “Exit” is typically defined as an IPO, dissolution, wind - ing up or liquidation. “deemed liquidation” event includes a merger and acquisition; the sale of all or substantially all the assets of the company; or any merger or acquisition of the subsidiary or affiliate of the company, where - by the target loses majority control of such subsidiary/affiliate after the closing. Despite the rarity of the occurrence of liquidity events, there has not been any significant change in the exit mechanisms. It is not common to stipulate transfer restrictions to VC funds in a shareholders’ agreement, other than right of first refusal or drag-along right as discussed above. 6.2 IPO Exits According to a survey from the Small and Medi - um Enterprise and Start-Up Administration (part of the Ministry of Economic Affairs), out of a total of approximately 636,648 newly established companies over 2017–22, only around 2,000 have successfully raised funds from VC inves - tors, and only 155 companies publicly listed on Taiwan’s stock market during the same period, which entails a successful rate of only 0.24% from start-ups to IPOs. Even if a few offshore listing precedents are taken into account (includ - ing Gogoro’s and Gorilla Technology’s listing on NASDAQ, Perfect Corp.’s listing on the NYSE, Gorilla Technology, Semilux International Ltd., TNL Mediagene and FST Corp.’s listing on the NASDAQ, Appier’s listing in Japan, and 17Live’s listing in Singapore), the success rate for Taiwan - ese start-ups reaching an IPO in recent years is still low.
The choice of listing venue depends on the product of/market for the relevant start-up. The support of shareholders and strength of differ - ent stock exchange are all important elements to be considered. Take Appier’s listing in Japan, for example; according to the local news, the key management of Appier advised that Japan has always been a key market for Appier, and given the shareholder relationships with SoftBank and LINE, choosing to list in Japan would greatly ben - efit Appier’s continued expansion in Japan. They also considered the software industry in Japan, capital structure and start-up scale, the active - ness of foreign capital, and the advice of inves - tors. Appier chose to list on the suitably growth- oriented Tokyo Stock Exchange Mothers Market. On the other hand, the TWSE’s efforts to pro - moting domestic listing by Taiwan start-ups are noteworthy. Since the launch of the TIB until the end of 2024, 30 companies have applied to be registered on the TIB, covering industries such as digital cloud, green energy and environmental protection, biotechnology and medical care, and electric vehicles. Out of those 30 companies, 20 have successfully been registered and publicly traded on the TIB with a total annual turnover of TWD24.96 billion in 2024. The price-to-book ratio of the stocks registered on the TIB is 4.47 as of the end of February 2025, which is signifi - cantly higher than the price-to-book ratio of the stocks listed on the main board of the TWSE; ie, 2.46. This shows the market is optimistic about the prospects of the start-ups registered on the TIB. This continuous growth is driving the forma - tion of new economic industry clusters, using an “innovation-driven” economic growth model to help companies expand into international mar - kets, strengthen operational resilience, dem - onstrate innovative capabilities, and ultimately elevate Taiwan’s position in the global innova - tion economy. Another good example of the out -
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