Before a Public Takeover Bid
3. Before a Public Takeover Bid

[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
  • The right to attend and vote at general shareholders' meetings.
  • The right to obtain a copy of the documentation submitted to general shareholders' meetings.
  • If the board of directors decides, by resolution to commit any act in violation of any law, regulation or the company's articles of incorporation, any shareholder who has continuously held shares of the company for at least one year may request the board of directors to discontinue such act.

1%

  • The ability to nominate the candidates for directors.
  • The right to propose an agenda item in the annual general shareholders’ meetings. 
1%
  • The right to request in writing for the supervisor(s) of the company to institute, for the company, an action against a director of the company.
  • The ability to apply to the court for appointment of an inspector to inspect the current status of business operations, the financial accounts and the property of the company.
3%
  • The ability to institute a lawsuit for a judgment to discharge the director who has, in the course of performing their duties, committed any act resulting in material damages to the company or in serious violation of applicable laws and/or regulations.
  • The ability to convene a shareholders' meeting after obtaining an approval from the competent authority when the board of directors fails or cannot convene a shareholders' meeting on account of share transfer or any other causes.
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

  • The right to request the board of directors to call a special shareholders' meeting by filing a written proposal.
  • The ability to apply to the court for removal of the liquidator. 

10%, continuously held for at least six months

  • The right to apply to the court for reorganization in the event that a company which publicly issues shares or corporate bonds suspends its business due to financial difficulty or there is a perceived risk of suspension but with the possibility for the company to be reconstructed or rehabilitated.
  • The right to apply to the court for a ruling for the dissolution of the company in the event of an apparent difficulty in the operation of a company or serious damage. 

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.