Angela Wu
The Ministry of Economic Affairs rendered the Jing-Shang-10502016270 Circular of March 21, 2016 (hereinafter, the “Circular”) to interpret Article 12 of the Business Mergers and Acquisitions Act to address issues relating to a shareholder’s request that the company should purchase his/her shares upon the merger or acquisition of the company.
Under Article 12, paragraph 1 of the Business Mergers and Acquisitions Act, when a company is conducting a merger or acquisition, its shareholders may request the company to purchase their shares for a fair price at that time. Paragraph 2 of the same article provides that if any shareholder makes such request, the request shall be lodged in writing in 20 days from the day the resolution is adopted in the shareholders’ meeting and specify the requested purchase price, and the shareholder shall deposit the certificates of his/her shares.
Paragraph 3 of the same article provides: “When the shareholder deposits his/her share certificates, the company shall entrust such matter to an institution that is permitted by law to handle shareholder services.” It is pointed out in the Circular that the “institution that is permitted by law to handle shareholder services” refers an organization that may be entrusted with shareholder services under Article 3, Paragraph 1 of the Guidelines for Handling Shareholder Services by Public Offering Companies.
In addition, Paragraph 4 of the same article provides: “The shareholder’s request will become void when the company cancels the action set forth in the same paragraph.” According to the Circular, except a company cancels the merger or acquisition actions enumerated in Paragraph 1, once the share certificates of dissenting shareholders are deposited to an institution entrusted to handle shareholder services, the deposit can no longer be cancelled.
It is further pointed out in the Circular that under Article 2, Paragraph 1 of the Business Mergers and Acquisitions Act, if a company implements a simplified merger or acquisition, Article 316-2 of the Company Law shall apply mutatis mutandis to the period for making share payment to dissenting shareholders. To wit, the shareholders shall be informed immediately after a resolution is adopted, and a period of not less than 30 days shall be designated along with the statement that the shareholders may raise a written objection within the period and request the company to purchase their shares for a fair price at that time.