Application for approval of merger by shares transfer filed by Cathay Life Insurance Corp., Ltd. pursuant to Article 11 of the Fair Trade Law and Article 3 of the Regulations Governing the Review of Financial Holding Company Merger Applications
Case:
Application for approval of merger by shares transfer filed by Cathay Life Insurance Corp., Ltd. pursuant to Article 11 of the Fair Trade Law and Article 3 of the Regulations Governing the Review of Financial Holding Company Merger Applications
Key Words:
shares transfer, financial holding company merger
< b>Reference:
Fair Trade Commission Decision of November 22, 2001 (the 524th Commissioners' Meeting); Letter (90) Kung Yi Tzu No. 9015382-001
Industry:
Financial and Investment Services (6294)
Relevant Laws:
Articles 6 and 12 of the Fair Trade Law; Article 11 of the Regulations Governing the Review of Financial Holding Company Merger Applications
Summary:
1. Cathay Life Insurance Co., Ltd. (Cathay Life) planned to form Cathay Financial Holding Co., Ltd. through shares transfer in which Cathay Financial Holding would acquire 100% of Cathay Life's stock equity. Given that Cathay Life's sales in the previous fiscal year exceeded NT$5 billion, application for approval of the planned merger was filed with the Fair Trade Commission in accordance with Article 11 of the Fair Trade Law and Article 3 of the Regulations Governing the Review of Financial Holding Company Merger Applications.2. The planned merger in this application conforms to the definition set forth in Article 6(1)(ii) of the Fair Trade Law "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." Cathay Life's insurance premium revenues for fiscal 2000 were around NT$205 billion, or a 32.71% market share, and the company maintains more than 300 branch institutions and more than 20,000 employees throughout Taiwan. Insurance products approved by or on file with the Ministry of Finance currently include 130 life insurance plans, 27 health insurance plans, 37 accident and injury insurance plans and four annual pension plans. The core business of Cathay Financial Holding Co., Ltd. is investment and management of the invested enterprises. The company itself is not currently engaged in or provide investment services and thus the planned merger will not substantively alter the structure or market concentration of domestic financial markets nor will it cause an adverse impact on market competition or service expediency in financial markets.3. The development of diversified financial services companies has become an industry wide trend in Chinese Taipei's financial services industry and this merger will permit the further integration of Cathay Financial Holding Co., Ltd.'s financial resources while adjusting the company's organizational scale, improving efficiency in raising capital and raising the group's overall ability to assume risk, and is in keeping with current government policy regarding the financial services industry and beneficial to the overall economy.4. In summary, this merger will have no obvious impact on the competitive or structural circumstances of domestic financial markets, and will not impose restraints on competition. The overall economic benefit of the planned merger far outweighs any [potential] disadvantages resulting from restraints on [market] competition. The merger was thereby approved in accordance with the provisions of Article 12 of the Fair Trade Law and Article 11 of the Regulations Governing the Review of Financial Holding Company Merger Applications.Appendix:Cathay Life Insurance Co., Ltd.'s Uniform Invoice Number: 03374707Summarized by Hung, Hsuan; Supervised by Horng, Der-Chang