Foreign companies will find it much easier to get involved in M&A in Taiwan, thanks to sweeping legal changes.
The new legislation is aimed at shaking up the country's lacklustre financial services industry. Changes to M&A laws and the introduction of the Financial Holding Company (FHC) Act are paving the way for long-awaited consolidation.
The Company Merger Law introduced in January makes it much easier for domestic and foreign companies to engage in M&A. Michael Wong, a partner at international law firm Baker&McKenzie in Taipei, says the new law is a radical change.
"Companies that wish to purchase other companies will no longer be required to negotiate with each shareholder individually," he says. "The process will be simplified by a mandatory share exchange in which only two-thirds of shareholder votes will be needed to ensure a sale." Significantly, the law provides a legal basis for cross-border mergers involving offshore companies and allows foreigners to use their own shares as payment for the first time. Legally they are now on a level playing field, says Wong.
Consolidation of Taiwan's financial services industry has long been considered necessary following excessive fragmentation when the government introduced deregulation in 1992.