Passed by the 183rd Commissioners' Meeting on April 12, 1995
Amended by the 410th Commissioners' Meeting on September 15, 1999
Promulgated by Order (88) Kung Fa Tzu No. 03182 on November 9, 1999
Amended by the 479th Commissioners' Meeting on January 11, 2001
Promulgated by Order (90) Kung Fa Tzu No. 00390 on February 13, 2001
Amended by the 561st Commissioners' Meeting on August 8, 2002
Pormulgated by Order (91) Kung Yi Tzu No. 0910007986 on August 16, 2002
Promulgated by Order (93) Kung Fa Tzu No. 0930001078 on February 11, 2004
Amended by the 643rd Commissioners' Meeting on Feburary 19, 2004
Amended by the 736th Commissioners' Meeting on December 15, 2005
Promulgated by Order (94) Kung Fa Tzu No. 0940010996 on December 27, 2005
Amended by the 751st Commissioners' Meeting on March 30, 2006
Promulgated by Order (95) Kung Fa Tzu No. 0950003388 on April 25, 2006
Amended by the 762nd Commissioners' Meeting on June 15, 2006
Promulgated by Order (95) Kung Yi Tzu No. 0950005808 on July 6, 2006
1. When filing for merger, an enterprise shall submit in duplicate a report form and each of the attachments specified in the report form.
2. The report form must be signed/sealed by each of the enterprises participating in the merger and the representative thereof. For an extraterritorial merger case, if difficulties do exist for obtaining the signing/sealing of the participating enterprise(s), please submit other documents sufficient to prove the agreement to merge.
3. Please print the merger report and the forms on A4 paper. Please prepare a table of contents, print the page number on the lower left corner of each page, and bind the report into volumes.
4. Where information such as quantities or prices are included in the attached documents, please specify the units in which they are expressed.
5. If an enterprise merger report contains material in a foreign language, a Chinese summary of the important content shall be included.
6. Applicable laws and regulations:
(1) Definition of "merger"
"Merger," as defined in Article 6 of the Fair Trade Law, means any of the following situations:
(i) where an enterprise and another enterprise are merged into one;
(ii) where an enterprise holds or acquires the shares or capital contributions of another enterprise to an extent of more than one-third of the total voting shares or total capital of such other enterprise;
(iii) where an enterprise is assigned by or leases from another enterprise the whole or the major part of the business or properties of such other enterprise;
(iv) where an enterprise operates jointly with another enterprise on a regular basis or is entrusted by another enterprise to operate the latter's business;
(v) where an enterprise directly or indirectly controls the business operation or the appointment or discharge of personnel of another enterprise.
In computing the shares or capital contributions referred to in subparagraph 2 of the preceding paragraph, the shares or capital contributions of another enterprise held or acquired by an enterprise(s) controlled by, controlling, or affiliated with the acquiring enterprise shall be included.
(2) Threshold for filing:
(i) Article 11, Paragraph 1, of the Fair Trade Law provides:
Any merger that falls within any of the following circumstances shall be filed with the central competent authority in advance:
(a) as a result of the merger the enterprise(s) will have one-third of the market share;
(b) one of the enterprises in the merger has one-fourth of the market share;
(c) sales for the preceding fiscal year of one of the enterprises in the merger exceed the threshold amount publicly announced by the central competent authority.
(ii) The provisions of the preceding paragraph shall not apply to any of the following circumstances:
(a) where any of the enterprises participating in a merger already holds no less than 50% of the voting shares or capital contribution of another enterprise in the merger and merges such other enterprise;
(b) where enterprises, of which 50% or more of the voting shares or capital contribution are held by the same enterprise, merge;
(c) where an enterprise assigns all or a principal part of its business or assets, or all or part of any part of its business that could be separately operated, to another enterprise newly established by the former enterprise solely;
(d) where an enterprise, pursuant to the proviso of Article 167, Paragraph 1 of the Company Act or Article 28-2 of the Securities and Exchange Act, redeems its shares held by shareholders so that its original shareholders' shareholding falls within the circumstances provided for in Article 6, Paragraph 1, Subparagraph 2, of the Fair Trade Law.
(iii) Calculation of market share
Under Article 4 of the Enforcement Rules to the Fair Trade Law, production, sales, inventory, and import/export value (volume) data for the enterprise and the particular market shall be taken into account when calculating the market share of an enterprise. Also, data necessary for the calculation of the market share may be based on that obtained upon investigation by the central competent authority or that recorded by other government agencies.
(iv) Threshold for "sales monetary amount" under [Article 11], Paragraph 1, Subparagraph 3 [of the Fair Trade Law]
According to Fair Trade Commission Public Notice Ref. Kung Chi Tzu No. 0910001699 of 25 February 2002, any merger of enterprises as referred to in the Fair Trade Law that falls within any of the following circumstances shall be filed with the Fair Trade Commission in advance:
(a) where an enterprise in a merger is a non-financial enterprise, its sales for the preceding fiscal year exceed NT$10 billion, and the enterprise it merges has a sales amount exceeding NT$1 billion in the preceding fiscal year;
(b) where an enterprise in a merger is a financial enterprise, its sales for the preceding fiscal year exceed NT$20 billion, and the enterprise it merges has a sales amount exceeding NT$1 billion in the preceding fiscal year.
Also, the sales monetary amount of a financial holding company or other holding company for the preceding fiscal year shall be verified and determined by calculating the combined sales monetary amounts for the preceding fiscal year of all of its subsidiaries in which it has controlling shareholdings.
(3) Who is required to file:
(i) According to Article 7 of the Enforcement Rules to the Fair Trade Law, a report of a merger of enterprises under Article 11, Paragraph 1, of the Law shall be filed with the central competent authority by the following enterprises:
(a) the enterprises in the merger, where an enterprise is merged into another, assigned by or leases from another enterprise(s) of the operations or assets of another, regularly runs operation jointly with another, or is commissioned by another enterprise to run operation;
(b) the holding or acquiring enterprise, where an enterprise holds or acquires shares or capital contribution of another enterprise;
(c) the controlling enterprise, where an enterprise directly or indirectly controls the business operations or the appointment or discharge of personnel of another enterprise.
(ii) If an enterprise required to file a report has not yet been established, the existing enterprises in the merger shall file the report(s).
(iii) When a financial holding company or other holding company participates in a merger by itself or through any controlled subsidiary, and if any condition in any subparagraph of Article 11, Paragraph 1, of the Fair Trade Law is met, the report shall be filed by the financial holding company or the holding company with the Fair Trade Commission.
(4) Documents required to be submitted with the filing
According to Article 8 of the Enforcement Rules to the Fair Trade Law, a report of an enterprise merger under Article 11, Paragraph 1, of the Law shall be filed with the central competent authority with the following documents attached:
(i) a written report form specifying the following information:
(a) type and substance of the merger;
(b) the name and the place of office of each participating enterprise, or the name and the place of the office or business of each participating company, sole proprietorship, partnership, or association;
(c) the scheduled date of the merger;
(d) the name of the attorney-in-fact, if any, and the supporting document therefor;
(e) other required information;
(ii) basic data on each participating enterprise:
(a) the name and residence or domicile of the responsible person or administrator, if any, of each enterprise;
(b) the capital and business items of each participating enterprise;
(c) the turnover in the preceding fiscal year of each participating enterprise and any enterprise with which it has a relationship of control or subordination;
(d) the number of employees of each participating enterprise;
(e) certificates of incorporation or establishment of each participating enterprise;
(iii) the financial statement and operating report for the preceding fiscal year of each participating enterprise;
The "balance sheet and income statement" may be substituted for the "financial statement and [operating] report."
(iv) data such as the production or operating costs, sales prices, and production and sales values (volumes) of the participating enterprises' goods or services related to the merger applied for;
(v) an explanation of the benefits of the merger for the overall economy and any disadvantages due to restraints on competition;
including:
(a) benefits of the merger for participating enterprises and for the overall domestic economy (including impact on relevant markets and upstream/downstream markets);
(b) impact on the participating enterprises and the overall domestic economy if the merger were to be prohibited;
(vi) major future operating plans of the participating enterprises;
including any other companies anticipated to be merged or acquired, expansion or reduction of operating locations or plans for relocation thereof; whether there are plans for concerted promotional activities between subsidiaries of the same group; and any other major investment or operations plans;
(vii) overview of the long-term investments by the participating enterprises in other enterprises;
(viii) if a participating enterprise' s stock is listed on the stock exchange or traded on the over-the-counter securities markets, the most recent prospectus or annual report,;
(ix) information of the market structure relating to horizontal competition or upstream and downstream enterprises of the participating enterprises:
information of the market structure such as the names and places of business of enterprises engaged in horizontal competition with a participating enterprise or of upstream and downstream enterprises of a participating enterprise, and the market shares or sales value (volume) of competitor enterprises in relevant markets in the past five years.
(x) other documents as specified by the central competent authority;
including any merger-related provisions of any contract or agreement documents between the participating enterprises.
(5) Waiting period for merger filing
The following provisions are set out in paragraphs 3, 4, and 5 of Article 11 of the Fair Trade Law and Articles 9 and 11 of the Enforcement Rules to the Fair Trade law:
(i) Enterprises shall not proceed to merge within a period of 30 days from the date the central competent authority accepts the complete filing materials, provided that the central competent authority may shorten or extend the period as it deems necessary and notifies the filing enterprise of such change in writing.
(ii) Where the central competent authority extends the period in accordance with the proviso of the preceding paragraph, such extension may not exceed 30 days; for cases of extension, decisions on the filing shall be made in accordance with the provisions of Article 12.
(iii) Where the central competent authority has not, at expiry of the period, given written notification of an extension in accordance or made any decision as referred to in the preceding paragraph, the enterprises may proceed to merge provided that the merger shall not proceed under any of the following circumstances:
(a) Where the filing enterprises consent to a further extension of the period;
(b) Where the filing contains any false or misleading item.
(iv) Where the materials submitted with the merger report fail to comply with the requirements Article 8 of the Enforcement Rules to the Fair Trade Law or are deficient in content, the central competent authority may issue notice to require supplementation or correction within a specified period of time, with the reasons stated for such requirement. If such supplementation or correction is not made within the specified time period or is so made but the submitted materials remain deficient, the filing will not be accepted.
(v) The date accepting the complete filing of report materials referred to in Paragraph 1 means the filing date on which the report materials filed with the central competent authority are in conformity with Article 8 of the Enforcement Rules to the Fair Trade Law and the contents thereof are also complete.
(6) Penalties:
(i) Under Article 13 of the Fair Trade Law, where any enterprise(s) proceeds with a merger in violation of Paragraph 1 or 3 of Article 11 of the Law, or proceeds with a merger despite that the central competent authority decides upon the filing to prohibit such merger, or fails to perform the undertakings required as pursuant to Paragraph 2 of Article 12 of the Fair Trade Law, the central competent authority may prohibit such merger, prescribe a period for such enterprise(s) to split, to dispose of all or a part of the shares, to transfer a part of the operations, or to remove certain persons from positions, or make any other necessary dispositions. Also, where an enterprise(s) violates a disposition made by the central competent authority pursuant to [Paragraph 1 of Article 13], the central competent authority may order the dissolution of such enterprise(s), or the suspension or termination of their operations.
(ii) Under Article 40 of the Fair Trade Law, where any enterprise(s) proceeds with a merger in violation of Paragraph 1 or 3 of Article 11 of the Law, or proceeds with a merger despite that the central competent authority decides upon the filing to prohibit such merger, or fails to perform the undertakings required as pursuant to Paragraph 2 of Article 12, in addition to the disposition pursuant to the provisions of Article 13, an administrative penalty of not less than NTT$100,000 nor more than NT$50 million shall be assessed upon such enterprise(s). Also, where any enterprise(s) proceeds with a merger under the circumstance set forth in Subparagraph 2 of the proviso of Article 11, Paragraph 5, of the Fair Trade Law, an administrative penalty of not less than NT$50,000 nor more than NT$500,000 shall be assessed upon such enterprise(s).