A comparison of M&A laws: Taiwan

    By James Hsiao and Lori Hung, Dentons
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    Taiwan’s cross-border transactions had declined in the past two years, due to global uncertainties relating to the pandemic, travel restrictions and supply chain disruptions. With a greater focus on local development, there has been a rise in injected capital into domestic green energy developments, such as wind and solar power farms.

    As evidenced by statistics published by the Investment Commission of the Ministry of Economic Affairs (MoEA), the authors also see an increase in industries such as shipping, warehousing, wholesale and retail, signalling that businesses in Taiwan are ready for the opening of borders and anticipating a renewed rise in cross-border commerce.

    This is also expected to bring about a new upward trend in the local M&A market, as companies begin to seek new opportunities while manufacturers, suppliers and business partners deepen their impact and presence in the Asia-Pacific region.


    James Hsiao, Dentons
    James Hsiao
    Senior Partner
    Tel: + 886 2 2702 0208 Ext. 206
    Email: james.hsiao@dentons.com.tw

    Key statutes relevant to M&A are:

    • The Company Act, promulgated by the MoEA;
    • The Business Mergers and Acquisitions Act, promulgated by the MoEA;
    • The Securities and Exchange Act, promulgated by the Financial Supervisory Commission; and
    • The Statute for Investment by Foreign Nationals, promulgated by the MoEA.

    It is worth noting that depending on the industry and deal structure of each M&A transaction, additional statutes and regulations may also be applicable.

    For example, where the overseas investor intends to transact in the renewable energy industry, such as wind and solar power farms, the Renewable Energy Development Act will come into play. Where the M&A deal involves a drastic change in the employment of current employees, the Labour Standards Act (as promulgated by the Ministry of Labour) may become applicable.


    In response to the focus on the local market, a new amendment to the Securities and Exchange Act was promulgated on 21 April 2023. Prior to the amendment, any individual or entity acquiring more than 10% of the total issued shares of a public company shall report such an acquisition to the competent authority and make a public announcement; and any public tender offer to purchase the securities of a public company that bypassed the centralised securities exchange market or over-the-counter market could be conducted only after the offer was reported to the competent authority.

    Lori Hung, Dentons
    Lori Hung
    Tel: + 886 2 2702 0208 Ext. 216
    Email: hsiaoching.hung@dentons.com.tw

    After the amendment, the reporting threshold has been lowered to 5% of the total issued shares of a public company.

    The Executive Yuan also earlier published and passed an amendment to the Business Mergers and Acquisitions Act, on 24 May 2022. Since the amendment, current directors of the board are now required to declare any material interests and reasons behind their approval or objection to the merger, strengthening informational transparency between the company and shareholders, and allowing shareholders to make a more informed decision regarding mergers.

    Additionally, restrictions requiring the approval of the shareholders’ meeting have been eased. Merger deals where the consideration does not exceed 20% of the net value of the company may now be decided by the board of directors alone, streamlining and accelerating the merger process. The amendment allows for the cost of intangible assets obtained through the merger to be amortised within a set range of time, and also allows startup entrepreneurs to pay income tax on considerations received from selling a startup company within the next three years.

    The above-mentioned amendments aim to create a friendly environment for M&A of businesses, and the authors anticipate a rise in the number of M&As with travel restrictions cancelled and cross-border commerce picking up again.

    Earlier, in January 2020, the Judicial Yuan promulgated the Commercial Case Adjudication Act. In the past, commercial litigation cases were often complicated, with a tendency to spawn other cases, and often unable to be resolved within a short period of time. This could lead to restricting operations of related companies, impacting market enthusiasm to invest, and may even impact or damage Taiwan’s economic competitiveness.

    The Commercial Case Adjudication Act simplifies the litigation process by implementing mandatory mediation before any litigation commences, and appoints experienced finance professionals as well as those with related backgrounds to act as mediators.

    Further, for cases that fail to be resolved through mediation, the commercial court bars parties from representing themselves and mandates parties to appoint qualified attorneys. This further simplifies and quickens the process, creating a friendlier environment for businesses to deal with potential commercial disputes.


    Despite multiple legislative efforts to attract inbound investment, foreign investors still need to jump through several hurdles, depending on the circumstances.

    Firstly, to maintain an understanding of the industries and ensure compliance with regulations, the Investment Commission sets standards and examines investments both by foreign investors into Taiwan and outbound investments. Foreign investors must apply to the Investment Commission for approval prior to investment. Subject to the Statute for Investment by Foreign Nationals and related enforcement rules, it is at the discretion of the commission whether to approve or deny such a request.

    Even if the application is approved, the Investment Commission may request further documentation. Due to the strict and detailed review process, it is not uncommon for an application to take several months before ultimately being approved.

    Secondly, the Cross-Strait Act and its enforcement rules, as promulgated by the Mainland Affairs Council of Taiwan, regulate investment in the island by mainland-funded businesses and individuals. Mainland Chinese businesses with a large amount of capital may, depending on the circumstances, encounter difficulty investing in certain restricted industries.

    In addition, due to recent global uncertainties relating to trade tension between the US and mainland China, international companies may need to reconsider their overall composition and arrangement when dealing with the two global powers.

    Investors, therefore, need to think and strategise carefully about any potential impact not only of ongoing trade tension, but also ramifications on their businesses regionally.

    Lastly, the US Federal Reserve announced interest rate hikes by seven times alone in 2022, continuing into 2023. In response, Taiwan’s Central Bank has also announced interest rate rises, prompting local banks to follow suit. For businesses requiring facilities from financial institutions, this may be another hurdle; taking potential future interest rate hikes into account when determining M&A offers.


    Despite the above-mentioned challenges, the authors maintain an optimistic outlook on Taiwan’s M&A market for 2023. Global transactions had already started rising in the latter half of 2022. While the pandemic has impacted and damaged multiple industries, the authors note that this could also serve as a breeding ground for consolidation of businesses in impacted industries.

    With the implementation of M&A-friendly legislation and a dedicated court for commercial disputes, the authors expect continued growth of the M&A market in 2023 and onwards.

    Dentons Law Firm


    3F, No. 77, Section 2

    Dunhua South Road

    Taipei, Taiwan

    Contact details:
    Tel: +886 2 2702 0208
    Email: james.hsiao@dentons.com.tw


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