Investing in Taiwan: Bridging the cross-strait gap

1. What are the main regulatory developments to Taiwan's M&A Act How do they affect cross-strait investment

The Taiwan Ministry of Economic Affairs' proposed amendment to the M&A Act aims to simplify the M&A procedure, protect the rights of shareholders and creditors and re-visit the tax incentives, which further expand the types of M&A transactions. In particular, the draft expands the M&A types that only require board approval with a super-majority vote (without any requirement to seek the shareholders' approval) to include “merger of companies under common control”, “short-form share swap” (i.e. between parent company and subsidiary) and “short-form de-merger” (i.e. between parent company and subsidiary), as well as “small-scale de-merger” and “small-scale share swap” (i.e. if the business to be transferred or the consideration to be paid meet certain conditions). It also expands the scope of consideration for de-mergers and share swaps to include cash and other assets from just new shares.

In addition to these regulations, mainland investors wanting to acquire Taiwan companies will also need to, in certain circumstances, obtain government approval, i.e., approval from the Investment Committee (IC). When granting approval, the IC will consult with a wide range of other governmental agencies and take their input into account to determine whether this acquisition will, for instance, jeopardise economic safety or the public interest. Typically, an acquisition of an island-wide famous brand or a high-tech company with cutting-edge technology may be difficult to obtain the approval of the authorities. The uncertainty caused by this discretional IC approval and the restrictions on shareholding percentage by the mainland investors (as indicated in question 4 below) are viewed as the main hurdles for cross-strait investment or acquisition activities.

2. Given the increasing number of cross-strait disputes, are final civil judgments from China readily enforced by the Taiwan courts What challenges remain in enforcement

Enforcement is recognised under the Act Governing Relations between the People of the Taiwan Area and the Mainland Area and by the courts. Notwithstanding this, in practice, if the application of PRC law rendered in the judgment is against Taiwan public policy, good moral or a default judgment, the Taiwan courts have the discretion to rule against the recognition. In addition, for political reasons, the documentation delivery and exchange procedures between Taiwan and mainland may be time-consuming. The defending parties from time to time may leverage this to deter enforcement.

The Taiwan arbitration associations are also building appropriate arbitration organisations for any civil disputes between the people of mainland China and Taiwan.

3. Is Taiwan's IP environment conducive to foreign and Chinese investment

Yes. The Taiwan Intellectual Property Office (TIPO) regulates patents, trademarks, trade secrets, copyrights and other intellectual property affairs. In general, patents, trademarks, trade secrets and copyrights are governed by the Patent Act, Trademark Act, Trade Secret Act and Copyright Act respectively.

Taiwan also has IP courts established under the IP Case Adjudication Act and IP Court Organisation Act, so as to expedite the court process and ensure the quality of judgment.

4. Are there any specific sectors or industries in Taiwan that are guarded or protected from foreign investment to foster domestic growth

In general, all industries are open to foreign investment except for those listed in the government's “negative list”, which is updated from time to time. For instance, foreign ownership (direct and indirect) in the telecommunications business is limited to 60% (including a direct foreign investment limit of 49%); it is limited to less than 50% for satellite television broadcasting services and public natural gas services and limited to 49% for high-speed railways. Foreign ownership is also limited for industries such as air-catering companies, aviation transportation businesses (airlines), and general aviation businesses (commercial helicopters and business jet planes) to less than 50%.

5. Does Taiwan have any tax incentives in place to attract Chinese or foreign investment

Tax incentives are available for all foreign and local investors, depending on the industry, scale and location of the investment. The government has established various science-based industrial parks and export processing zones. Companies within these areas are entitled to various tax incentives and one-stop services to handle various registrations and permits (including work permits for foreign professionals), which greatly simplifies the application process and shortens application times in order to attract foreign investors.

The government further introduced free trade zones (including, but not limited to, Kaohsiung, Taipei, the Keelung seaports and Taoyuan airport) with incentives similar to those of the science-based industrial parks.

Taiwan is proposing a bill to establish free economic pilot zones to demonstrate a model of business convenience and liberalisation. The special law will relax restrictions on the flow of goods, people, capital and information, as well as provide a friendlier tax regime and allow for more convenient land acquisition. Hiring, entry and residence rules for foreign and mainland Chinese white-collar professionals will be relaxed in the pilot zones. Zone enterprises will be able to invite mainland Chinese people to Taiwan for short-term business purposes without number limitations.

6. What is the labour environment like in Taiwan Are labour costs high Are there labour unions and how active/aggressive are they

The labour costs for white collars are reasonable and modest. Employees are generally well-skilled and high-quality in terms of their profession.

Taiwan unions are not active except in certain industries such as in the banking and petrochemical industries. In general, if the number of employees reaches 30 or more, the employees may form a labour union within the enterprise. Labour unions have not been actively involved in settling labour disputes between individual employees and the employer.

7. What labour laws are in place to guarantee stable employment practices for Chinese or foreign businesses

Labour related issues are mainly regulated by the Labour Standards Act (LSA), Labour Pension Act (LPA), Employment Service Act, Act of Gender Equality in Employment, Union Act, Employment Welfare Statute, among others.

The LSA was enacted in July 1984 and last amended in 2011 to increase the penalty for violation. The terms and conditions of any agreement between an employer and an employee shall not be below the minimum standards provided in the LSA. The terms and conditions of employment under the LSA are mandatory, which cannot be unilaterally changed by the employer.

In addition to the LSA, the government also promulgates, among others, the Labour Pension Act and National Pension Act to introduce an annuity pension scheme; the Labour Insurance Act and National Health Insurance Act to provide social insurance for health, retirement and unemployment; the Employment Service Act to regulate employment filings and work permits matters; the Act for Settlement of Labour-management Disputes to provide mediation and arbitration dispute resolutions; the Union Act and the Collective Agreement Act to regulate union's activities; and the Act of Gender Equity in Employment to prohibit discrimination.

Employees are entitled to benefits such as labour insurance, health insurance and unemployment subsidies.

8. How serious is antitrust regulation and enforcement Which regulators are responsible for supervising Taiwan's competitive environment

Antitrust is regulated under the Fair Trade Act (FTA). The Fair Trade Commission (FTC) is the administrative authority of the FTA. The FTA mainly regulates antitrust, merger review and unfair competition related matters. Foreign investment and M&A activities of regulated industries may also be subject to prior approvals of other authorities (such as the FSC for financial institutions and National Communications Commission (NCC) for telecommunications) depending on the structure of the M&A activities.

Under the FTA, a merger (i.e. combination) review/notification is required for any business that meets either the turnover or the market share threshold, unless otherwise qualified for exemption. In general, the FTC's decision is based on an economic cost-benefit analysis depending on the type of combination.

Entities in competition with each other are prohibited from engaging in concerted actions, unless they have obtained prior approval from the FTC. A “concerted action” refers to competitors' attempt to mutually restrict prices of goods or services, quantities, technology, products, equipment, trading counterparts or territories or otherwise restrict each other's commercial activities. Such actions can exist by contract, agreement or other means of communication. If the FTC considers the violation material, the fines could be up to 10% of the violating entity's turnover in the last fiscal year.

The FTC is aggressive in enforcing sanctions against concerted actions, while for merger control review, it is more flexible and grants approval in most cases.

9. Does Taiwan place a strong focus on compliance and anti-corruption like China does What do you recommend to companies unfamiliar with the local business practices in Taiwan

In general, there are no specific anti-bribery or anti-corruption laws (such as the UK Bribery Act or US Foreign Corrupt Practices Act) in Taiwan. However, the Criminal Code, Anti-corruption Statute (mainly related to government servants), Public Official Service Act, Ethical Rules for Public Officials and the Lobby Act provide certain guidance and impose reporting requirements or criminal liabilities, which indirectly prohibits government servants (or the official authorised to perform government or public duty) or non-government servants from any bribery-related activities. In addition, the Criminal Code provides criminal penalty on general breach of fiduciary duty.

For foreign or mainland companies engaging in business in Taiwan, it is advisable to consult with attorneys for any potential compliance issues derived from business transactions, or, more fundamentally, for setting up an internal compliance system to deal with these issues on a routine and operational basis.


The author would like to thank Echo Yeh and Mike Lu from Lexcel Partners in Taiwan for their help in preparing this article.

1. 哪些是台湾《企业并购法》的主要监管修订？有关法规如何影响两岸的投资？

台湾经济部建议修订《企业并购法》，旨在简化企业并购流程、保障股东和债权人的权利，并重新探讨税务优惠，再次扩大企业并购交易的类型。草案其中重点是新增的企业并购类型只需董事会通过绝大多数投票批准（无需寻求股东批准），包括“共同控制下的企业合并”、“简易股份互换”（即母公司和子公司之间的股份互换）和“简易公司分割”（即母公司和子公司之间的公司分割），以及“小规模公司分割”和“小规模股份互换”（即拟转让的业务或拟支付的代价须符合若干条件）。《企业并购法》还扩大了公司分割和股份互换的代价范围，除新股外，还可以现金和其他资产作为代价。

除此等规定外，有意收购台湾企业的内地投资者还需要在某些情况下获得政府审批，即获得投资审议委员会审批。给予核准时，投资审议委员会会咨询多个其他政府机构，并考虑他们的意见，决定收购是否会危及经济安全和损害公共利益。一般情况下，内地投资者对全岛知名品牌或具先进技术的高科技公司进行收购取得当局审批的难度相对较高。投资审议委员会这种相对宽泛的裁量权所带来的不确定性，以及下面第四条问题提到的对陆资持股台湾公司的上限规定，皆被视为对两岸投资或收购活动的主要障碍之一。

2. 鉴于两岸纠纷越来越多，台湾法院是否都会执行中国的最终民事判决？执行方面仍存在什么挑战？

有关执行是根据《台湾地区与大陆地区人民关系条例》经由法院认可。尽管如此，在执行时，如果判决所引用的中国法律违反了台湾公共政策、善良风俗或该判决为缺席判决，台湾法院具有酌情权拒绝认可。此外，因为政治原因，两岸之间的文件送达和互换程序可能会耗时。经常，被告一方会利用这点来妨碍执行。

台湾仲裁协会也对中国大陆和台湾人民之间的任何民事纠纷建立相应的仲裁机构。

3. 台湾的知识产权环境对外国和中国的投资是否有利？

是。台湾智慧财产局负责监管专利、商标、商业秘密、著作权和其他知识产权事务。一般来说，专利、商标、商业秘密和著作权分别由《专利法》、《商标法》、《营业秘密法》和《著作权法》管辖。

台湾亦根据《智慧财产案件审理法》和《智慧财产法院组织法》设有智慧财产法院，加快法院程序和确保审判质量。

4. 台湾有没有任何受保护或受保障的特定领域或行业不接受外资，以促进本土经济增长？

一般情况下，除了在政府不时更新的“负面清单”内列出的行业外，所有行业都对外资开放。举例来说，电信业务的外国所有权（直接和间接）限于60%（含49%的外国直接投资限额）；卫星电视广播服务和公共天然气服务限于50%以下，而高速铁路限于49%。某些行业的外国所有权也受到限制，如航空餐饮业务、航空运输业务（航空公司），以及通用航空业务（商业直升机和商业喷气飞机）等限于50%以下。

5. 台湾有没有任何税务优惠来吸引中国或外国的投资？

税务优惠适用于所有外国和本地投资者，视乎投资的行业、规模和地点而定。政府已经设立了各个科学工业园区和出口加工区。此等区域内的公司享有各项税务优惠，以及一站式服务，处理各种登记和许可证（包括外国专业人士的工作许可证），可大大简化申请程序，缩短申请时间，并吸引外国投资者。

政府进一步推出自由贸易区，包括但不限于高雄、台北、基隆海港和桃园机场，提供与科学工业园区类似的税务优惠。

台湾正在提出一项草案，计划建立自由经济示范区，展示商业便利和开放的模式。此特别的法规将放宽对商品、人民、资金和信息流通的限制，并提供更有利的税制和允许以更方便的方式购入土地。示范区将放宽对国外与中国大陆白领人才的雇佣、入境和居留规定。区内企业将可以短期商业目的邀请大陆人民无限次来台。

6. 台湾的劳动环境是怎样的呢？劳工薪酬支出昂贵吗？有没有工会组织？它们活跃/激进吗？

白领的劳工薪酬合理且适中。以他们的专业来说，员工普遍熟练和高素质。

除了某些如银行和石油化工等行业外，台湾的工会并不活跃。一般来说，员工人数如达到30人或以上，员工可以在企业内组织工会。工会尚未积极参与解决员工个人和雇主之间的劳动纠纷。

7. 台湾有什么劳动法规可保障中国或外国企业在劳动方面的稳定操作？

劳动相关问题主要受《劳动基准法》、《劳工退休金条例》、《就业服务法》、《性别工作平等法》、《工会法》、《职工福利金条例》等规范。

《劳动基准法》于1984年7月通过，最近一次修订在2011年，并加大了违规处罚。雇主与员工之间订立任何协议的条款和条件不得低于《劳动基准法》规定的最低标准。《劳动基准法》下的雇佣条款和条件为强制性，不可由雇主单方面更改。

除《劳动基准法》外，政府还颁布了以下法规，包括：《劳工退休金条例》和《国民年金法》以推行年金退休金方案；《劳工保险条例》和《全民健康保险法》为医疗、退休和失业提供社会保险；《就业服务法》规范就业存档和工作证问题；《劳资争议处理法》为解决纠纷提供调解和仲裁；《工会法》和《团体协约法》规范工会活动；《性别工作平等法》禁止歧视。

员工有权享有劳动保险、医疗保险和失业补助金等福利。

8. 反垄断的法规和执法严谨吗？哪个监管机构负责监察台湾的竞争环境？

反垄断受《公平交易法》规范。公平交易委员会为《公平交易法》的行政机关。《公平交易法》主要负责监管反垄断、并购审查和不公平竞争相关事项。视乎并购活动的结构，受规范行业的外资和并购活动也可能需要其他机关的事先审批，例如监管金融机构的金融监督管理委员会和监管电信业务的国家通信传播委员会。

根据《公平交易法》，除非符合豁免资格，达到营业额或者市场份额门槛的任何企业需要作出并购（即合并）审查／通知。一般来说，公平交易委员会的决定根据合并类型进行经济成本效益分析。

除非获得公平交易委员会的事先批准，相互竞争的实体禁止进行一致行动。“一致行动”指竞争者试图共同限制商品或服务的价格、数量、技术、产品、设备、交易对手或地区，或以其他方式限制对方的商业活动。此等行为可以通过合同、协议或其他沟通形式达成。如果公平交易委员会认为违规严重，可处高达违规实体上一年度营业额10％的罚款。

公平交易委员会积极对一致行动施行处罚，不过在并购监控审查方面，则有较大灵活性，并在大多数情况下予以批准。

9. 台湾有没有如中国般注重合规及反贪污？您对不熟悉台湾当地业务习惯的企业有什么建议？

一般而言，台湾并没有特定的反贿赂或反贪污法律（如英国《贿赂法》或美国《海外反腐败法》）。不过，《刑法》、《贪污治罪条例》（主要与政府公务员有关）、《公务员服务法》、《公务员廉政伦理规范》及《游说法》规定若干指引及报告要求或刑事责任，间接禁止政府公务员（或官方授权履行政府或公共职务的人士）或非政府人员进行任何与贿赂有关的活动。此外，《刑法》对违反一般诚信义务规定刑事处罚。

建议在台湾进行业务的外国或内地企业咨询律师，了解有关业务交易的任何潜在合规问题，或对设立内部合规机制等基本事宜，提供法律意见，在日常操作上应对此问题。


作者感谢台湾惇安法律事务所的叶秋英顾问以及卢伟铭律师的大力协助完成这篇文章。