Passage of the Company Merger Law (
"The law is expected to help foster domestic business consolidation," said Gary Wang (王令麟), chairman of the General Chamber of Commerce (全國商業總會). "It will also impact Taiwan's economy and domestic companies in traditional industries may start to kick off mergers within three months."
The law will also help boost competitiveness, he said.
Under the new law M&A activities will be exempt from securities trading tax, business income tax and stamp tax if the deal meets with government criteria.
Merging companies can apply for government sponsored preferential loans.
According to Michael Wang (汪士邁), a senior partner at international law firm Baker and McKenzie, the freedom to use shares as currency in M&As will help to attract foreign multinationals.
"It's a shot in the arm for the Taiwanese merger-and-acquisition market," Wang said. "The law allows for a compulsory share exchange as opposed to the old rule that forced the purchasing company to negotiate with each shareholder of the company it wanted to purchase."
There is now a legal basis upon which a company can approach the management of the target company and request that they call a shareholder's meeting, at which time a two-thirds majority vote would force the minority shareholders to sell, Wang said.
The law will encourage greater participation by foreign corporations since they will now be on the same legal footing as domestic companies.
"Foreign companies interested in the Taiwan market will definitely benefit from this law," Wang said.
Under certain circumstances, the new shares floated by companies for the purpose of M&As can be exempted from securities regulations that require giving priority to company employees and shareholders in the purchase of such shares.
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