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The Financial Supervisory Commission (FSC) promulgated amendments to the Regulations Governing Tender Offers for Purchasing Public Company Securities (the "Regulations") and the Guidelines on Publication of Information in Tender Offer Prospectuses (the "Guidelines") on 5 July 2012. Below please find a brief summary:
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1.
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1. The major amendments to the Regulations are:
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(1) |
In accordance with the amendment to the rules governing publication of information online, the securities entities to which the tender offeror shall submit copies of Tender Offer ("TO") related documents have been revised to be the stock exchange or the Gretai Securities Market, the Securities and Futures Investors Protection Center, and other institutions designated by the FSC (Article 5).
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(2) |
By Paragraph 2, Article 43-5 of the Securities and Exchange Act, in the event that the FSC orders the tender offeror to amend the TO-related information on the grounds that the TO-related information filed and announced by the tender offeror violates the laws and regulations , the TO period should start anew after the amended information is announced and filed with the government authorities (Article 9).
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(3) |
In the event that the FSC orders the tender offeror to amend the TO-related information in accordance with Paragraph 2, Article 43-5 of the Securities and Exchange Act and the target company decides to revise its previous suggestion to the shareholders, the target company shall announce the revised suggestion and file the same with the FSC within 7 days (Article 14).
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(4) |
The target company has to set up an independent committee with at least three independent directors as the members of the committee, which shall announce its opinion on the TO within seven days of the target company's receipt of the TO application, the TO prospectus and other TO documents. If the target company has no independent directors on the board or it has fewer then three independent directors, the members of the committee shall be elected by the board. When responding to the TO, the committee has to express its opinion on the fairness, reasonableness and recommendation to the shareholders. The decision of the independent committee shall require at least a one-half affirmative vote of all members of the committee, and both the supporting and dissenting opinions of the members shall be duly recorded in the decision. When the target company receives any amendments to the TO documents made by the tender offeror, the target company shall notify the independent committee immediately for the independent committee to conduct an review again and shall publicly announce the result of the review within seven days. (Article 14-1)
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(5) |
In the event that by Paragraph 2, Article 43-5 of the Securities and Exchange Act, the FSC orders the tender offeror to amend the TO-related information on the grounds that the TO-related information filed and announced by the tender offeror violates the laws and regulations, the tender offeror shall announce the TO-related information and inform the tender offerees, the institution engaged by the tender offeror to handle the TO and the target company within 2 days of receipt of the FSC's order. (Article 21)
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(6) |
If the tender offer is a public company, the announcement of the TO shall be made at the Market Observation Post System. If the tender offeror is a non-public company, the announcement shall be made by the institution engaged by the tender offeror to handle the TO. (Article 26)
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2.
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The major amendments to the Guidelines are:
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(1) |
If the TO consideration is funded by a loan, the tender offeror has to disclose the source of the loan, the name of the lender and the collateral securing the loan. Furthermore, if the target company's assets or shares will be provided as collateral to help finance the buyer's acquisition, the evaluation of the financial consideration of the target company or the surviving company, as the case may be, should also be disclosed in the TO prospectus. (Article 7)
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(2) |
The tender offeror has to disclose in the TO prospectus information (e.g. purchase date, name of counterparty, share price and number of shares) about its own or its affiliate's acquisition of the shares in the target company held by any of the target company's directors, supervisors, managers, shareholders holding more than a 10% share in the target company, and affiliates in the past two years. If the tender offeror and/or its affiliates have signed any agreement or arrangement with any of the target company's directors, supervisors, managers and shareholders holding more than a 10% share in the target company in the past two years, the tender offeror shall disclose such information and attach these agreements to the TO prospectus (Article 11).
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(3) |
If the target company will be delisted after the TO, the following information shall be disclosed in the TO prospectus (Article 12):
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(i) |
a forecast of the target company's industry, the value of the target company, and the purpose of pursuing the tender offer;
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(ii) |
the fairness of the TO consideration and standards for determining its fairness;
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(iii) |
if the tender offeror or its affiliate has obtained any valuation report on the target company in the past two years, the contents of the valuation report, the identity and professional qualifications of the valuator, and the remuneration paid to the valuator;
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(iv) |
after completion of the TO and before the delisting, the merger plan with the target company, the method of handling the shares not tendered, and the potential tax exposure; and
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(v) |
any plan for re-listing of the target company on any local or foreign exchange in the future.
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(4) |
A fairness opinion issued by an independent expert should include at least the following information (Article 13):
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(i) |
valuation methods or principles or calculation method and comparison with the market value method, cost method, and discounted cash flow method adopted internationally;
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(ii) |
comparison with other companies listed on the Taiwan Stock Exchange or the Gretai Securities Market, including financial condition, profitability, and Price-to-Earnings ratio;
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(iii) |
if the TO consideration is referred to in any valuation report, the contents and the conclusion of the valuation report; and
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(iv) |
if the target company's assets or shares will be provided as collateral to secure the tender offeror's financing, the impact on the target company's or surviving company's (in the case of a merger) financial condition.
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