January 2024
Teresa Huang and Astrid Chou
To enhance the protection of buyers’ rights and maintain the stability of the securities market to be in line with conventional practices, the Financial Supervisory Commission promulgated amendments to the “Regulations Governing Public Tender Offers for Securities of Public Companies” and the “Regulations Governing Information to be Published in Public Tender Offer Prospectuses” on December 4, 2023. The key points of the amendments are outlined as follows:
I. Amendments to the “Regulations Governing Public Tender Offers for Securities of Public Companies”
1. Addition of documents that the tender offeror must file before the commencement date of the public tender offer, including an opinion letter from an independent expert on the fairness of the cash price calculation or exchange ratio in the tender offer, and minutes of the shareholders’ meeting or board meeting for the acquisition or issuance of stocks or corporate bonds as consideration for the tender offer when the tender offeror is a company. (Article 9, Paragraph 1)
2. To prevent the tender offeror from failing to fulfill closing obligations, it is stipulated that the tender offeror should not only provide proof that it has the ability to perform payment of the tender offer consideration but also submit an undertaking letter to fulfill the obligation. If the tender offer consideration includes domestic securities, the tender offeror should also submit proof of the ability to perform payment of the tender offer price. (Article 9, Paragraphs 3 to 6)
3. The mandatory public tender offer does not apply to situations where the acquisition of shares of another company is conducted through a share swap under the Business Mergers and Acquisitions Act (Article 11).
4. The extension of the public tender offer period is limited to one occurrence (Article 18).
5. In accordance with the amendment to Article 43-1 of the Securities and Exchange Act, adjustment of the thresholds for reporting and announcement of substantial holdings to 5 percent of the total issued shares of a public company (Article 27).
II. Amendments to the “Regulations Governing Information to be Published in Public Tender Offer Prospectuses”:
1. All tender offerors are required to provide an undertaking letter to fulfill the obligation to pay the tender offer price, removing the restriction that this requirement applies only when cash is used as the tender offer consideration (Article 7, Paragraph 2).
2. If stocks or corporate bonds are issued as consideration for the tender offer, the risk that when the securities cannot be issued as scheduled, and alternative methods will be adopted shall be disclosed (Article 8).
The main obligations added for tender offerors in this amendment include providing an independent expert opinion letter and an undertaking letter to fulfill the obligation. Except for Article 27 of the Regulations Governing Public Tender Offers for Securities of Public Companies, which will take effect on May 10, 2024, the amendments will be effective from the date of promulgation. Prospective tender offerors are advised to take note of these changes.
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