[Last updated: 1 January 2025, unless otherwise noted]
3.1 Shareholding rights and powers
The table below provides an overview of the different rights and powers that are attached to different levels of shareholding within a Taiwan listed corporation:
Shareholding | Rights |
One share |
|
1% |
|
1% |
|
3% |
|
3%, continuously held for at least six months | The ability to apply to the court for an inspection of the company's business and property when deemed necessary in view of the state of the company's property. |
3%, continuously held for at least one year |
|
10%, continuously held for at least six months |
|
50%, continuously held for at least three months |
The right to call for a shareholders' meeting of the company. |
3.2 Restrictions and careful planning
Taiwanese law contains a number of rules that already apply before a tender offer is announced. These rules impose restrictions and hurdles in relation to prior stake building by a tender offeror. The main restrictions and hurdles have been summarized below. Some careful planning is therefore necessary if a candidate tender offeror intends to start up a process that is to lead towards a tender offer.
3.3 Insider dealing and market abuse
Before, during and after a tender offer, the normal rules regarding insider trading and market abuse remain applicable. For further information on the rules on insider trading and market abuse (see 6.3). The rules include, among other things, that manipulation of the target's stock price, e.g., by creating misleading rumors is prohibited. In addition, the rules on the prohibition of insider trading prevent a potential tender offeror that has inside information regarding a target company from launching a tender offer.
3.4 Disclosure of shareholdings
The rules regarding the disclosure of shareholdings and transparency apply before, during and after a tender offer.
Pursuant to these rules, if a potential tender offeror starts building up a stake in the target company, it will be obliged to announce its stake if the voting rights attached to its stake have passed an applicable disclosure threshold. The relevant disclosure threshold in Taiwan is 5%. In addition, public companies are required to disclose to the market the identity and the shareholding of any shareholder who owns a 10% stake thereof on a monthly basis.
When determining whether a threshold has been passed, a potential tender offeror must also take into account the voting securities held by the parties with whom it acts in concert (see 3.9). The parties could also include existing shareholders of the target company with whom the potential tender offeror has entered into specific arrangements.
3.5 Disclosures by the target company
The target company must continue to comply with the general rules regarding disclosure and transparency. These rules include that a company must immediately announce all material information. For further information on material information, see 6.1 below.
3.6 Announcements of a tender offer
According to the Tender Offer Regulations, no one can launch a tender offer before submitting a tender offer report to the FSC and making a public announcement. The tender offeror shall not make an announcement on the proposed tender offer before submitting the tender offer report to the FSC.
3.7 Early disclosures – Put-up or shut-up
Under Taiwanese law, the disclosure of material information shall follow the Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities and the Taipei Exchange Procedures for Verification and Disclosure of Material Information of Companies with TPEx Listed Securities. There is no early disclosure requirement specifically designed for the tender offer, and there is no sanction mechanism to force a person to make an announcement as to whether or not they intend to carry out a tender offer. This is also known as the put-up or shut-up mechanism.
3.8 Due diligence
The tender offer rules in Taiwan do not prohibit a prior due diligence from being organized. In practice, after the tender offeror and the major shareholders of the target company reach a certain consensus on the sales of shares, the major shareholder will usually procure the target company to allow a prior due diligence or pre-acquisition review by the tender offeror. Due to the potential risk that the tender offeror may obtain insider information before the tender offer is made, such due diligence is usually done for the purpose of confirming the publicly disclosed information.
3.9 Acting in concert
With respect to the Taiwanese tender offer rules, persons "act in concert" if they acquire the shares of the target company for a common purpose by means of a contract, agreement, or other form of meeting of minds.