Merger Law boosts consolidation prospects for Taiwanese firms but problems remain

The race to acquire size following the island''s recent entry to WTO, was given a boost last week by the passing of the new Company Merger & Acquisition Law in the Legislative Yuan. Still, any change could be slow.

Under the new Company MA Law, which still needs ratification by the president in two weeks, companies will be able to use a compulsory share exchange during a transaction. Previously the buyer had to negotiate with each shareholder of the company.

The company can also now approach the management of a target company and request a shareholders' meeting at which time a two-thirds majority would force the minority shareholders to sell. And the law will encourage greater participation by foreign companies since they will be on an equal legal footing with Taiwanese companies.

In addition, MA will be exempt from the securities trading tax, business income tax and stamp tax, as long as...

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