TaiwanM&ASummarySheet

1.Financing

NotamandatoryconditiontoatenderofferorotherM&Asituations(KPMG2015)
However,ifthebuyerneedsdebtfinancingtocompleteatransaction,thetargetmayrequirethebuyerto
providetherelevantfinancing/commitmentdocumentstothetransactionagreementtoprovetheyhaveability
tofundthetransaction(KPMG2015)
Ifanacquisitiontriggersacreditorprotectionprocedure,thebuyerandtargetmustwaitforatleast30days
afterapprovalofmergerbyshareholdersatshareholdersmeetingbeforethetransactionisperfected,during
thisperiod,thecreditormayfileobjections(repaymentoradditionalcollateralfortheirdebt)(KPMG2015,
Baker&Mckenzie2013)

2.Approvals

Majorityvoteatshareholdersmeetingattendedbytwothirdsoftheshareholders(KPMG2015)
Ifshortofthetwothirdsquorum,resolutionmaybeadoptedbytwothirdsoftheshareholderspresentatthe
generalmeeting(BusinessMergers&AcquisitionAct2015Article18)
Ifformergerbetweenparent&subsidiary(90%ownedbyparent),justtheboardofdirectorsapprovalwillbe
sufficient(KPMG2015)

3.TenderOffer

(Optional)3daysbeforethetenderdateOfferortofileanapplicationwithterms&conditionsofthe
proposedtenderoffertotheTSEforthemtoannouncepublicly,thisisoptionalbutusuallydonebecause
companyhastoannouncepubliclyunderSFB431(Baker&Mckenzie2013)
(Mandatory)5daysbeforethetenderdateOfferormust(unlessacquiringforlessthan5%oralreadyholds
morethan50%)publiclyannouncedthetenderoffer(throughcompanywebsite,ads,radio,telecom,letter
telephoneetc)andfilethePublictenderofferformunderSFBArticle282(Baker&Mckenzie2013)and:
Publictenderofferprospectus(anddeliveredtotarget)
Mandatecontractenteredbetweenofferorandtenderofferagent(anddeliveredtotarget)
Powerofattorney(ifany)
AnnouncethroughMOPStheintendedtenderoffer
(Mandatory)Within7daysaftertenderdocumentsarereceivedbytargetTargetmustreplytoSFB,copy
TSEandtheSecuritiesandFuturesInvestorsProtectionCenterandannouncethroughMOPSunderSFB
Article282(Baker&Mckenzie2013,IFLR2012):
Typeandnumberofsharesheldbydirectors,supervisoryandmajorshareholderswithmorethan10%
Recommendationmadetotargetsshareholders(byformingaspecialcommitteetoreviewfairness
andreasonableoftheterms,whichcontainsatleast3membersandallindependentdirectorsofthe
target,alldecisionaresupportedbysimplemajority,objectionswillberecordedandreportedtoSFB)
Materialadversechangestothefinancialscomparedwiththelastreport
Otherimportantinformation
(Mandatory)Within2daysafterexpiryofthepublictenderoffer,OfferormustfiletoSFBandpublicly
announce(Baker&Mckenzie2013):
Nameanddomicileofthetenderofferor

Nameofpubliccompanywhosesecuritiesarebeingacquired
Typeofsecuritiesacquired
Publictenderofferperiod
Lowerandupperthresholdsagreed*
Numberofactualsecuritiesbought
Time,manner,placeforpaymentofpurchaseconsideration
(Mandatory)Within10daysaftertheacquisition,theacquirermustalsodisclosetotheFSB(Baker&
Mckenzie2013)(thisisaseparatefilingcomparedtothetenderofferfiling,butmustbedoneaslongasthe
targetholds/acquiresmorethan10%share)
Identity,name,corporatename,nationalidentificationcardnumber(companyuniformnumber)of
acquirer
Totalnumberofsharesheldatthetimeofthefiling
Methodanddateofacquisition
Purposeofacquisition
Breakdownofsourcesofcapital
Totalnumberofsharesexpectedtobeacquiredwithinoneyear(couldlookatpreviousfilingfor
numberofsharescompanyexpectstoacquirelasttimearoundApril2015?)
Thepublictenderofferperiodmustbeatleast10calendardaysbutnotmorethan50calendardays,could
extendforanother30daysuponapprovalfromFSB(Baker&Mckenzie2013)
IfTenderOfferorproposedtoacquire20%ormorewithina50daytimeframe,themandatorytenderoffer
ruleistriggered(publictenderoffermustbemadewithidenticalpurchaseconditions,i.e.cannotjustbuy
throughthenormalstockexchange/bulktrading)(Baker&Mckenzie2013)
*SubjecttofilingrequirementwithFSC,tenderofferormustspecifyalowerthresholdandupperthresholdfor
thenumberofsharesthatitintendstoacquire,andtenderofferorisnotobligatedtopurchaseanyoftheshares
tenderediftheactualnumberofsharestenderedfallsbelowtheminimumnumbersetbytheofferoratthe
outsetandcouldonlywithdrawofferundercertaincircumstancessuchasMAE(upto2014,nocase
suspendedduetoMAE)orinsolvencyofthetargetcompany(Baker&Mckenzie2013)
Thetransactionpartiescouldestablishotherconditionsprecedentbasedonownrequirements(KPMG2015)
Tenderofferormustmandateasecuritiesfirm,banks,institutionapprovedbytheSFBresponsibletotakethe
depositofsecurities,deliveryofpublictenderofferprospectus,receiptandpaymentofpublictenderoffer
fundsorsecurities(Baker&Mckenzie2013)
Poisonpills&staggeredboard(antihostile)arenotpermissibleunderTaiwanlaw(KPMG2015)

4.Squeezeout

Nostatutorysqueezeoutmechanism,amajorityshareholderhasnorighttoforcetheminorityshareholdersto
sellexceptforacashoutmergerandtheshareholdersapprovalhasbeenobtained(Baker&Mckenzie2013)
Minorityshareholderscouldhowever,askforanappraisalrightsofthesharesbygoingtocourt(usuallywill
getfairpricewhichisthemarketprice,couldbeevenlowerthanthatofferedbythecompany)(Baker&
Mckenzie2013)

Glossary
Maingoverningbodies

FinancialSupervisoryCommission(FSC)
SecuritiesandFutureBureau(SFB):themajorityoffilingareguidedbySFB
FairTradeCommission:antitrustobligations(FTC)
MinistryofEconomicAffairs:tointerprettheBusinessMergersandAcquisitionsAct(MEA)

Mainlawandregulations

CompanyAct:dutiesofboard(dutyofloyaltyanddutyofcare),mergers,salesofassets,businesstransfer,
votingrequirements,formationanddissolution
BusinessMergersandAcquisitionsAct:dutyofboardtoactinbestinterestofshareholderswhenpassing
resolutionforbusinesscombination,andgeneralguidanceonmergers
SecuritiesandExchangeLaw(SFBArticles):salesofshares,tenderoffer,proxysolicitation,disclosure
requirements
RegulationsGoverningtheOfferingandIssuanceofSecuritiesbySecuritiesIssuers:salesofshares,tender
offers,proxysolicitation,disclosurerequirements
TaiwanStockExchangerules:reportingobligationsandtradingrestrictions
FairTradeAct:antitrustobligations,30daysinadvancefilingifoneoftheinvolvedpartieswillhave33%of
marketshareaftertransaction,onehas25%marketsharebeforetransaction,onesturnoverexceedsthreshold
amountannouncedbyFTC(exceedingNT$10bnandNT$1bnrespectively),willalsoonacasebycasebasis
determinewhetherthecompanyaftercombinationwillmonopolize/dominatethemarket,createadditional
barrierstoentry,affectmarketstructure/degreeofmarketconcentration
Foreigninvestmentregulatoryscheme:prohibited(nationalsecurity,postalservice,defenseandmilitary),
restricted(civilaviation),permissible(therest);investmentfromChinaarealsosubjecttoamorestringentset
ofapprovalprocess/criteria

Transactiondocuments

Mergeragreement(Taiwanlaw)
Shareswapagreement
Sharepurchase/subscriptionagreement(Taiwanlaw)
Assettransferagreement
Shareholders/votingagreement(Taiwanlaw)
Transitionagreement
Escrowagreement
Executiveemploymentagreement

KPMG2015:https://www.kpmg.com/TW/zh/services/law/team/Documents/publications/edition357chapter45
mergersacquisitions2015taiwan.pdf
Baker&Mckenzie2013:http://www.bakermckenzie.com/files/Uploads/Documents/MA_Guide_.pdf
BusinessMergers&AcquisitionAct2015:http://gcis.nat.gov.tw/elaw/query/LawListE.jsp?LAW_CO=0910206010

SecuritiesExchangeLaw:http://law.fsc.gov.tw/law/EnglawContent.aspx?Type=E&id=1393