April 2018
In case two foreign companies engage in mergers and acquisitions overseas, the remainder of the labor pension reserve of their two branch offices in Taiwan may be transferred to the surviving or new company pursuant to the agreement between the new and old employers after payment is made out of the pension reserve to employees who are not retained (Taiwan)
2018.2.14
Jenny Chen
The Ministry of Labor issued the Lao-Dong-Fu-Three-1060136515 Circular of February 14, 2018 (hereinafter, the "Circular"), holding that in case two foreign companies engage in mergers and acquisitions overseas, the remainder of the labor pension reserve of their two branch offices in Taiwan may be contributed or transferred to the surviving or new company pursuant to the agreement between the new and old employers after payment is made out of the pension reserve to employees who are not retained.
Under Article 11 of the Enforcement Rules of the Labor Pension Statute, in the event that a business entity is reorganized or transferred in manners prescribed under Article 20 of the Labor Standards Law or is subject to merger/acquisition as prescribed under the Business Mergers and Acquisitions Lawor the Financial Institution Mergers Law, the applicable pension system and the retained years in service chosen pursuant to Paragraphs 1 and 2 of Article 9, Paragraph 1 of Article 11, or Paragraph 1 of Article 35 of the Labor Pension Statute by employees who are retained shall be assumed by the business entity which survives, is newly established or receives the transfer.
In addition, the Jing-Shang-10600500230 Circular of January 12, 2017 from the Ministry of Economic Affairs generally stated that pursuant to Articles 21, 22, 27, 28, 31 and 38 of the Business Mergers and Acquisitions Law, corporate relations governed by the Business Mergers and Acquisitions Law are limited to those between two domestic companies or between a domestic company and an overseas company. Therefore, Article 15 of the Business Mergers and Acquisitions Law does not apply to the relations between the branch offices of two overseas companies.
It was further pointed out in this Circular when two foreign companies are conducting a merger or acquisition overseas, consolidation between their branch offices in Taiwan are also taking place. Although the labor pension reserve of the non-surviving branch office is not governed by Article 15 of the Business Mergers and Acquisitions Law, which requires such labor pension reserve to be transferred to the surviving or newly established company, still the remainder, if any, of the labor pension fund used to pay pension or severance to employees who are not retained pursuant to the agreement between the new and old employers may be transferred to the dedicated labor pension reserve account set up by the surviving company or newly established company pursuant to the agreement between the old and new employers.
Jenny Chen
The Ministry of Labor issued the Lao-Dong-Fu-Three-1060136515 Circular of February 14, 2018 (hereinafter, the "Circular"), holding that in case two foreign companies engage in mergers and acquisitions overseas, the remainder of the labor pension reserve of their two branch offices in Taiwan may be contributed or transferred to the surviving or new company pursuant to the agreement between the new and old employers after payment is made out of the pension reserve to employees who are not retained.
Under Article 11 of the Enforcement Rules of the Labor Pension Statute, in the event that a business entity is reorganized or transferred in manners prescribed under Article 20 of the Labor Standards Law or is subject to merger/acquisition as prescribed under the Business Mergers and Acquisitions Lawor the Financial Institution Mergers Law, the applicable pension system and the retained years in service chosen pursuant to Paragraphs 1 and 2 of Article 9, Paragraph 1 of Article 11, or Paragraph 1 of Article 35 of the Labor Pension Statute by employees who are retained shall be assumed by the business entity which survives, is newly established or receives the transfer.
In addition, the Jing-Shang-10600500230 Circular of January 12, 2017 from the Ministry of Economic Affairs generally stated that pursuant to Articles 21, 22, 27, 28, 31 and 38 of the Business Mergers and Acquisitions Law, corporate relations governed by the Business Mergers and Acquisitions Law are limited to those between two domestic companies or between a domestic company and an overseas company. Therefore, Article 15 of the Business Mergers and Acquisitions Law does not apply to the relations between the branch offices of two overseas companies.
It was further pointed out in this Circular when two foreign companies are conducting a merger or acquisition overseas, consolidation between their branch offices in Taiwan are also taking place. Although the labor pension reserve of the non-surviving branch office is not governed by Article 15 of the Business Mergers and Acquisitions Law, which requires such labor pension reserve to be transferred to the surviving or newly established company, still the remainder, if any, of the labor pension fund used to pay pension or severance to employees who are not retained pursuant to the agreement between the new and old employers may be transferred to the dedicated labor pension reserve account set up by the surviving company or newly established company pursuant to the agreement between the old and new employers.
