The Research of Takeover Legislation ─from Domestic Takeover Cases

In recent years, Merger and Acquisition (M&A) has become the primary tool for enterprises to extend and develop their domains in the worldwide market. Correspondently, hostile takeover also plays an important role under this trend of M&A. More and more law makers and the legislation of many countries accept that hostile takeover is also a kind of M&A, and may have the function to supervise the target company’s performance. However, for the managers of the target company, especially the board of directors, can they make any defense to the hostile takeover? What kind of defense may the target company use? How can we judge that the defense made by the managers or the board of directors is advantageous to the company, not for the purpose to protect the management and other self interest? There is no common consensus for the above questions in the legislation. The first part of this article introduces the recent legislation related to the hostile takeover in different countries, and compares the effect of agreed takeover and hostile takeover.

The cases of M&A in Taiwan are cumulatively increasing every year. No matter agreed takeover or hostile takeover, many legal issues, or some issues that can’t be decided legal or illegal clearly, are happened during the procedure of M&A. The second part of the article illustrates several M&A cases and analyzes the possible legal issues, for example, the board of directors revokes tender offer to evade the application of compulsory tender offer in the


Securities and Exchange Act, so the shareholders who own the majority shares, directors and supervisors can sell the shares and acquire the premium of transferring the shares; on the contrary, the shareholders in public lose the platform of transaction and can not sell their shares. In addition, to operate President Chen’s policy of “Second Financial Resolution”, the government speeds to release the shares of financial entities and banks which owned by the government, especially to release the shares of the financial entities that the government does not take the controlling rights. However, the procedure of shares/controlling rights transferring incurs many arguments and abuses. This article analyzes these cases, provides some suggestions to the related authorities Ministry of Finance, and Financial Supervisory Commission, Executive Yuan for their reference, and hopes to fulfill the procedure of shares release on the fair and public benefit basis.