A Study of M&A Methods of Financial Industry in Taiwan
Date Issued
2008
Date
2008
Author(s)
Lin, Shen-Hao
Abstract
This paper reviews the M&A methods of the Financial Industry in Taiwan and the relationship and application between three Acts, “The Financial Institutions Merger Act”, “Financial Holding Company Act”, and “Business Mergers and Acquisitions Law”. Although according to the studies of financial industry performance after M&A show only Economies of Scope could be reached but not Economies of Scale, we still recognize the legitimacy of the enactment of the M&A Acts in the financial industry. But there are some omissions exist in the three Acts mentioned above. After comparing the regulations, we suggest that the basic M&A rules which exclude the limitation in the process caused by other acts, like Securities and Exchange Act, should be integrated within the Business Mergers and Acquisitions Law or Company Act. Moreover, the government should not encourage the M&A between companies because the encouragement implies that the M&A is positive for all companies. In fact, the M&A is positive or negative should be determined by the business itself according the professional judgment. Therefore the M&A acts for general business should not include the tax preference rules. On the contrary, the M&A acts for financial industry could include rewarding policy due to the characteristic of financial industry which is always regulated by the government in Taiwan. Those encouragement or other regulative rules could put into the “Financial Business Mergers and Acquisitions Act” which have to merger the “Financial Institutions Merger Act” and “Financial Holding Company Act”. Finally, we use two cases, the Standard Chartered Group takeovers Hsinchu International Bank and Chinatrust FHC hostile takeover Mega FHC, to check the government policy and regulator attitude about M&A and make advices.
Subjects
Financial Holding Company
M&A
Bank
Business M&A Law
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