Thu, Dec 06, 2018 - Page 12 News List

FSC sets two-year cap for quitting hostile takeovers

By Kao Shih-ching  /  Staff reporter

The Financial Supervisory Commission (FSC) yesterday set a two-year cap on the withdrawal of hostile takeovers by buyers who cannot complete the deals within three years.

The commission last week had announced the amended regulations on mergers-and-acquisitions (M&As), which took effect on Friday, in a bid to increase flexibility to simplify consolidation efforts.

Under the eased regulations, buyers in a hostile takeover only have to purchase a 10 percent stake in their target to initiate a tender offer, down from the previous 25 percent.

However, during the question-and-answer session of a meeting of the legislature’s Finance Committee yesterday, Chinese Nationalist Party (KMT) Legislator William Tseng (曾銘宗) said that the new rules would only create chaos in the financial market.

It would become much easier for buyers to tender an offer, as a 10 percent purchase would require less funds, but they would not necessarily have to complete the M&As in three years, given the strong volatility in global equity markets, Tseng said.

The nation’s financial market might become more divided due to the eased rules, he said, adding that the three-year time frame was too long.

If he were head of the FSC, he would ask buyers to complete M&As in one year, he said.

The commission would ask buyers to prepare an exit plan if they cannot complete their planned M&As within three years of applying to the commission for permission, FSC Chairman Wellington Koo (顧立雄) said.

“If they fail to complete M&As in three years, they need to exit, and the buyers would no longer be able to participate in the board of directors, and their shares would have to go into a trust,” Koo said.

According to the commission’s preliminary plan, buyers would have to sell their shares completely in two years, Koo said, adding that the commission would monitor the situation.

However, Tseng said two years was not enough time.

CTBC Financial Holding Co (中信金控), which bought a 13 percent stake in Mega Financial Holding Co (兆豐金控), took seven years to completely divest itself of the Mega shares, the lawmaker said.

Koo said that he believes buyers who plan to initiate a hostile takeover would carefully review their plan before tendering an offer.

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