4 December, 2018
On August 29, 2018, the FSC issued an administrative order (Ref. No. Chin-Guan-Jen-Fa-Zi 1070331908) amending the previous interpretation regarding the scope of exemption for a public company in an acquisition transaction from obtaining financial statements of the target company or having CPA opinion (“CPA’s Opinion”) for demonstrating the fairness of the acquisition price pursuant to the proviso of Article 10 of the “Regulations Governing Acquisition and Disposal of Assets by Public Companies”.
The gist of the amendment is as follows:
(1) Since the target company in an acquisition transaction could be formed, either by private issuance or public offering, in accordance with domestic law or a foreign law, the interpretation of the term “law” referred to in the aboce-mentioned provision, and which the public company making the acquisition relies to exempt from the requirement that it obtain the target company’s financial statement or the CPA’s Opinion to demonstrate the equivalence of the price between the securities acquired together with the rights and interest represented by such securities and the ratio of capital injection, should be expanded to include the domestic as well as the relevant foreign law.
(2) Since the cross subscription of securities by cash between a public company and its wholely owned subsidiaries (“Event”) is considered an intra organizational restructuring, the companies participating an Event should be capable of obtaining the financial and business information of the companies raising capital; therefore the exemption from the requirement of obtaining financial statements of the issuing company or the CPA’s Opinion should be expanded to an Event as such.
(3) Given that the Financial Holding Companies, Banking Enterprises, Insurance Enterprises and Securities Enterprises are professional investors who possess the capability of evaluating the value of securities, and that the acquisition and disposing of securities are part of their regular business, those professional investor may be exempt from the requirement of obtaining CPA’s Opinion in the event that they have established a system or model of securities valuation for acquisition or disposing of securities and have used the appropriate models or statistic methodology to evaluate the value thereof.
For further information, please contact:
Steven Yen, Tsar & Tsai Law Firm
StevenYen@TsarTsai.com.tw
