Newsletter
CLARIFICATIONS OVER CMAL'S APPLICABILITY TO TAIWAN BRANCHES OF FOREIGN COM-PANIES
At a meeting held by the MOEA on 1 April 2002 to discuss points of doubt regarding the Com-pany Law and the Corporate Mergers and Ac-quisitions Law (CMAL), the MOEA passed two resolutions on the applicability of the CMAL to the Taiwan branches of foreign companies:
Article 4 Item 1 of the CMAL defines a "com-pany" as a company limited by shares estab-lished under the Company Law. Item 8 of the same article defines a "foreign company" as a profit-seeking company constituted and regis-tered under foreign law. The CMAL contains various explicit provisions regarding mergers and acquisitions between ROC companies and foreign companies; examples include Article 22 Paragraph 2, Article 27 Paragraph 3, and Article 33 Paragraph 3. But it makes no provision concerning mergers and acquisitions between the Taiwan branches of two or more foreign com-panies. Therefore the MOEA took the view that the provisions of the CMAL cannot apply to such cases.
According to the view adopted in the second resolution, under Article 22 Paragraph 2, Article 27 Paragraph 3, and Article 33 Paragraph 3 of the CMAL an ROC company may enter into a merger or acquisition with a foreign company; but where the merger or acquisition is with the Taiwan branch of a foreign company, it should still be conducted according to the provisions of Article 21 of the CMAL concerning cross-border mergers. The meaning of the resolution is not clear: there is no clear determination as to whether the CMAL applies if the Taiwan branch of a foreign company enters in its own right into a merger or acquisition with an ROC company, or if the Taiwan branch of a foreign company is converted into a subsidiary. These matters will require further clarification from the MOEA.