On 24 May 2022, the Legislative Yuan passed its third reading of the amendment to the Business Mergers And Acquisitions Act, which is subject to promulgation by the President. We summarize the amendment below:
1.To protect shareholders’ rights and interests
(1)Important contents of directors’ interest in the subject proposal and reason why he/she supports or holds against the merger and acquisition proposal shall be indicated in the shareholders’ meeting agenda (Article 5); and
(2)Shareholders voting against the merger and acquisition proposal will be entitled to exercise appraisal right (Article 12).
2.To expand the application of whale-minnow merger
In a merger and acquisition where the share consideration issued by the acquiring company does not exceed 20% of its total issued voting shares, or the total consideration paid by the acquiring company does not exceed 20% of its net worth, no resolution by the shareholders’ meeting is required and only a board approval is sufficient (Articles 18, 29 and 36).
3.Tax benefits
(1)Intangible assets acquired by a company from a merger and acquisition transaction may be amortized in certain years evenly based on the actual acquiring costs; in general, it will be 10 years for business rights, 15 years for copyrights, and 10 years for others if the laws do not provide otherwise (Article 40-1); and
((2)An individual shareholder of an acquired start-up company receiving a consideration of shares, who is subject to deemed dividend tax under the Income Tax Act, may elect to defer the tax liability incurred to the third year from the next year of receipt of the consideration and the income tax will be levied evenly over three (3) years (Article 44-1).
Stacy Lo / Will Chen