{"id":124060,"date":"2026-01-05T11:45:08","date_gmt":"2026-01-05T11:45:08","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=124060"},"modified":"2026-01-05T11:45:08","modified_gmt":"2026-01-05T11:45:08","slug":"taiwan-private-equity","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/taiwan-private-equity\/","title":{"rendered":"Taiwan: Private Equity"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-124060","comparative_guide","type-comparative_guide","status-publish","hentry","guides-private-equity","jurisdictions-taiwan"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Lee and Li, Attorneys-at-Law<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/12\/Firm-Logo-1.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Lee and Li, Attorneys-at-Law<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/12\/Firm-Logo-1.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Private Equity laws and regulations applicable in Taiwan<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What proportion of transactions have involved a financial sponsor as a buyer or seller in the jurisdiction over the last 24 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Although statistics and data in connection with private deals are not publicly available in Taiwan, financial sponsors are involved in a wide range of transactions such as renewable\/infrastructure projects, privatizations and IPOs. Over the past 24 months, there has been a significant increase in overseas investments, with Taiwanese corporations and financial sponsors placing greater emphasis on strategic markets such as the United States and Japan. In addition to traditional indirect investments through private equity funds, many leading Taiwanese technology companies are proactively leveraging their own corporate venture capital arms or co-investing alongside international private equity funds. These efforts are focused on securing key technologies in next-generation supply chains, including AI cloud computing, storage chips, high-performance computing, and network infrastructure. In the meantime, private equity firms and other financial sponsors remain committed to enhancing value within their portfolio companies, often through horizontal and vertical integration.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the main differences in M&A transaction terms between acquiring a business from a trade seller and financial sponsor backed company in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A financial seller tends to provide limited fundamental representations and warranties (such as warranties to title of shares, capacity, and authority) to shield itself from contingent or post-closing liabilities. A financial seller will also offer limited indemnity, such as shorter survival periods, de minimis and basket thresholds, and liability caps. Sometimes, W&amp;I insurance will be introduced to cover the financial seller\u2019s risk. Fixed consideration without any post-closing adjustments, clawback or escrow arrangements would be the preferred way for a financial seller to structure a clean exit.<\/p>\n<p>On the other hand, given that a trade seller engages in the operation of the company, it will often be required to provide more comprehensive business representations and warranties, offer sufficient indemnity, and undertake post-closing covenants. In addition, the purchase price may be subject to adjustments such as completion accounts, earn-outs, or deferred consideration to ensure the purchase price closely reflects the underlying valuation\/financials.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">On an acquisition of shares, what is the process for effecting the transfer of the shares and are transfer taxes payable?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Where no share certificate is issued, the transfer of shares in a company limited by shares will take effect pursuant to the closing as agreed by the parties and be subject to income tax instead of securities transaction tax (\u201cSTT\u201d).<\/p>\n<p>In contrast, if share certificates are issued to represent the issued and outstanding shares in a company limited by shares, which is the case in most of the transactions involving financial sponsors, the share transfer will take effect after the share certificates are duly endorsed by the parties and delivered to the buyer. Such share transfer is subject to STT taxed at 0.3% of the purchase price borne by the seller. While the seller bears the STT, the buyer, being the statutory tax withholder, is required to withhold STT from the purchase price and pay it to the treasury by the day following the closing date.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How do financial sponsors provide comfort to sellers where the purchasing entity is a special purpose vehicle?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A special purpose vehicle (SPV) is commonly used by financial sponsors as the investment entity. In practice, the financial sponsor may provide a letter of intent, parent guarantee, equity commitment letter and\/or bank commitment letter to boost its profile and reassure the sellers its commitment to the closing. In the case of launching tender offer, the Regulations Governing Public Tender Offers require proof of funding: (i) for cash consideration, a performance guarantee from a bank or a letter from a qualified financial adviser or CPA confirming the financial ability; and (ii) for shares consideration, such shares must be domestic securities traded on the Taiwan Stock Exchange or the Taipei Exchange or foreign securities prescribed by the FSC.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How prevalent is the use of locked box pricing mechanisms in your jurisdiction and in what circumstances are these ordinarily seen?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Locked box pricing mechanism is quite common in Taiwan. It is preferred in public or auction deals as it provides price certainty (i.e., fixed price without post-completion adjustment) which will simplify the settlement of consideration without re-examining the completion accounts.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the typical methods and constructs of how risk is allocated between a buyer and seller?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Deal risks are primarily allocated between a buyer and a seller through contractual arrangements such as closing conditions, representations and warranties, disclosure, indemnity, price adjustments, and (reverse) break-up fees. A seller would balk at factors that could jeopardize deal certainty, such as burdensome closing conditions, extensive warranties without exceptions or qualifiers, wide range or uncapped indemnity, complicated price adjustments and extensive termination grounds favoring the buyer. On the other hand, a buyer would expect thorough disclosure by the seller and negotiate for flexibility to back out for unforeseen circumstances or conditions attached to regulatory approvals. Hence, the buyer usually requires comprehensive warranties from the seller with sufficient indemnity coverage, post-closing price adjustments to accurately reflect the valuation, substantive closing conditions, MAC clause, and\/or long-stop date for an ultimate way out. Additionally, in bidding processes where the seller has more control over the due diligence and transaction timelines, the risk is allocated procedurally to the buyer despite the advantage of an expedited process. In most cases, the pricing mechanism, closing conditions, limitations of liability and termination are heavily negotiated as needed.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How prevalent is the use of W&I insurance in your transactions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Parties to a local deal tend to rely on representations and warranties and seek indemnity pursuant to the transaction documents. However, we have seen an increasing trend of using W&amp;I insurance in cross-border and auction deals, especially in cases of financial sponsor exit. With a W&amp;I insurance in place, the sell-side can achieve a clean exit and the buy-side can be reasonably compensated through a simplified claim process. Nonetheless, the use of W&amp;I insurance is also heavily negotiated, and the underwriting process by the W&amp;I insurer would incur transaction costs and potentially prolongs the deal timeline.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How active have financial sponsors been in acquiring publicly listed companies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In general, financial sponsors become more actively involved in acquiring listed companies in Taiwan. Privatizations of listed companies may be initiated by corporate investors in the same industry. Nonetheless, there have been a number of take-private deals driven by financial sponsors in recent years. For example, Morgan Stanley\u2019s take-over of Microlife Corp, a medical device manufacturer, in 2018, KKR\u2019s take-over of LCY Chemical Corp, a petrochemical company, in 2019, and BPEA\u2019s take-over of a leading contact lenses manufacture, Ginko International Co., Ltd, in 2022.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Outside of anti-trust and heavily regulated sectors, are there any foreign investment controls or other governmental consents which are typically required to be made by financial sponsors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Foreign direct investments are generally subject to pre-closing review by the Department of Investment Review (DIR) of the Ministry of Economic Affairs (MOEA). Inbound investments are regulated by two separate frameworks that distinguish foreign investors from investors from the People&#8217;s Republic of China (PRC). A foreign investor is generally permitted to invest in a Taiwanese company unless that company operates in prohibited or restricted industries as set forth in the government-published &#8220;Negative List.&#8221; In contrast, PRC investments face much stricter regulations and may only invest in businesses listed on the &#8220;Positive List.&#8221; A PRC investor means (a) an individual, juristic person, organization or any other institution from the PRC (\u201cPRC National\u201d); and (b) any company located in any third area (an area other than the PRC or Taiwan) where (i) more than 30% of its equity or capital is collectively held by PRC National(s), or (ii) the company is controlled by PRC National(s).<\/p>\n<p>In cases where an investment involves a PRC investor or pertains to sensitive business sectors such as critical infrastructure, financial industry and telecommunications, the DIR will require detailed disclosure about the investor&#8217;s shareholding structure and investment plan. Additionally, the DIR will consult with relevant governmental bodies for their opinions on the impact associated with the proposed investment. For private equity investments, financial sponsors typically need to provide the DIR with a list of limited partners (LPs), including their places of incorporation and the origin of their funds. Given that the general partner (GP) is responsible for managing the investments, more detailed disclosures about the GP are required, including but not limited to the nationality or place of incorporation for each level of the investment vehicle, as well as the names and nationalities of shareholders and directors at each level, including the ultimate beneficial owner(s).<\/p>\n<p>DIR approval is usually a condition to the closing of a transaction involving foreign investment. Therefore, the composition of the financial sponsor and deal structure should be carefully planned before submission, to reduce the risk of repeated inquiries from the DIR, which may prolong or even jeopardize deal certainty.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is the risk of merger clearance normally dealt with where a financial sponsor is the acquirer?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Merger clearance should be assessed by the parties to the transaction at the outset of structuring the deal. This analysis allows both parties to come to a preliminary conclusion on the filing requirements and the likelihood of obtaining the clearance. The parties may also file for pre-notification consultations with the Taiwan Fair Trade Commission to further evaluate and facilitate a smoother review process for the merger filing. In addition, merger clearance risk is usually addressed contractually by: (i) making the merger clearance a condition to the closing, (ii) requiring the parties to make best\/reasonable efforts to cooperate, (iii) including a \u201chell or high water\u201d clause requiring the buyer to take all necessary actions to secure the clearance, and\/or (iv) requiring a reverse break-up fee in favor of the seller if the clearance is not obtained. Risk allocation measures will vary depending on the target business, the background of the buyer (including its portfolio investments), and the bargaining powers of the parties. Due to increased regulatory uncertainty in recent years, financial sponsors tend to avoid committing to a hell or high water clause. While reverse break-up fee provisions are not common in small to medium size transactions, we have seen them adopted in larger or cross-border transactions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Have you seen an increase in (A) the number of minority investments undertaken by financial sponsors and are they typically structured as equity investments with certain minority protections or as debt-like investments with rights to participate in the equity upside; and (B) \u2018continuation fund\u2019 transactions where a financial sponsor divests one or more portfolio companies to funds managed by the same sponsor?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Minority investments are more appealing to financial sponsors when investing in new industry such as offshore windfarm projects or forming consortium to participate in mega deals. These investments are typically structured as equity investments in the form of preferred shares with minority protections such as board representation, veto rights on reserved matters, liquidation preference, and tag-along rights to ensure that the financial sponsors&#8217; interests are protected. Financial sponsors may also invest through debt-like instruments with conversion or equity participation rights, such as convertible notes, which allow them to benefit from potential equity upside while maintaining certain creditor protections.<\/p>\n<p>In response to the challenging exit environment and the desire to maximize return, some financial sponsors may opt to extend ownership of promising assets or portfolio companies beyond the typical lifespan of the fund through continuation fund transactions. While offering more flexibility in exit strategies, the continuation fund is not frequently seen or used as a strategic vehicle in the Taiwanese M&amp;A market.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are management incentive schemes typically structured?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Management incentive schemes can be structured as cash or equity incentives. Cash incentives usually include performance bonuses, retention bonuses, and phantom stock. Equity incentives are often used to align the interests of the management team and the financial sponsor while minimizing the need for significant cash expenditure. The structure of equity incentive schemes varies depending on the underlying deal, but typically includes employee treasury stocks, employee stock options (\u201cESOP\u201d), and restricted stock units (\u201cRSU\u201d). The equity incentives can be offered at the level of the subject Taiwan company or at the level of the offshore holding company to streamline the holding structure.<\/p>\n<p>For equity incentives, the equity will vest according to a time- or milestone-based vesting schedule determined by the board. The rights of the management shareholders will be subject to certain restrictions, such as transfer restrictions, exit conditions (e.g., good leaver\/bad leaver provisions), call options of the company, and\/or restrictions on the voting and\/or dividend rights. Such restrictions may be embodied in the plan documents or embedded in the preferred shares or restricted stock units awarded to the management team.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any specific tax rules which commonly feature in the structuring of management's incentive schemes?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Cash bonuses are typically subject to personal income tax at a progressive rate of up to 40% depending on the consolidated personal income in the same year. While there are various forms of employee incentive schemes in Taiwan, ESOPs and RSUs are the most common choices. Typically, when a Taiwanese company grants ESOPs or RSUs to its employees, the incentives will be taxed based on the difference between the fair market value of the shares at the time of exercise (for ESOPs) or vesting (for RSUs) and the exercise price paid by the employee (note that the taxation could be deferred to the time of disposing such shares or RSUs). This difference is classified as &#8220;Other Income&#8221; and subject to the same personal income tax at a progressive rate of up to 40%. The holders will be taxed again upon the subsequent sale of these shares; capital gains are exempt from personal income tax pursuant to Article 4-1 of the Income Tax Act, but may be subject to a 20% Alternative Minimum Tax (AMT) if the company is not publicly listed.<\/p>\n<p>Furthermore, under Article 19-1 of the Statute for Industrial Innovation, employees may be eligible for preferential tax treatment. If certain requirements are met, such as the annual stock acquisition value not exceeding NTD 5 million and the employee maintaining both the shares and employment within the same corporate group for at least two years, the employee can choose to calculate income based on the lower of the market value of the shares at the acquisition or actual sale price.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are senior managers subject to non-competes and if so what is the general duration?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Directors and managerial officers are subject to statutory non-competition obligations that prohibit them from engaging, for their own benefit or the benefit of others, in business activities similar to or in competition with the company\u2019s operations during their term of office. Such non-competition restrictions may be waived by the board of directors or shareholders on a case-by-case basis.<\/p>\n<p>Contractually, it is common for senior managers to be subject to certain restrictions during and\/or after their term of engagement. Such restrictions typically include standard commitments such as non-compete, non-solicitation or anti-poaching, non-disparagement, and non-dealing clauses, which are often part of equity packages or engagement contracts in an M&amp;A deal. In the case where a management shareholder is the seller, the manager will often be subject to a non-competition period of up to two years from (i) the completion of the deal, or (ii) if the manager is retained by the company post-closing, the date on which the manager\u2019s employment with the company is terminated. In determining the enforceability of a post-termination non-competition agreement, the court will consider the duration, geographical area, and scope of the restricted activities and reasonable compensation. In particular, the company must have legitimate business interests that necessitate protection. Although the company\u2019s relationship with a senior manager is different from that with an employee who is personally and economically subordinate to the company, the court would often refer to the statutory requirements for a post-employment non-competition clause applicable to employees, namely that the non-compete duration should not exceed two years post-termination and that reasonable compensation should be paid, which should be at least half of the employee&#8217;s monthly salary at the time of termination.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How does a financial sponsor typically ensure it has control over material business decisions made by the portfolio company and what are the typical documents used to regulate the governance of the portfolio company?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A financial sponsor with a majority stake will generally have control over the board and the shareholders\u2019 meeting, as well as the business decisions of the portfolio company. In addition, a financial sponsor usually maintains control over the portfolio company through the following mechanisms:<\/p>\n<p>(i) The right to appoint a certain number of directors and\/or supervisors of the portfolio company;<\/p>\n<p>(ii) Information rights to access financial data and other specific operational details of the company from time to time; and<\/p>\n<p>(iii) Reserved matters subject to the board\u2019s or shareholder\u2019s approval.<\/p>\n<p>The above rights are typically included in a shareholders\u2019 agreement and, to the extent permitted by applicable law, in the Articles of Incorporation (\u201cAOI\u201d) of the portfolio company. The Taiwan Company Act requires the approval of the board or shareholders for certain significant matters, such as amendments to the AOI, mergers, dissolutions, dividends, and changes to the capital structure or board composition. If the shareholders wish to set higher approval threshold for the reserved matters, the MOEA considers that such arrangement is only permissible for matters that are explicitly permitted under the Company Act. Therefore, financial sponsors are advised to ensure the compliance with the Company Act when determining the scope of reserved matters in the shareholders\u2019 agreement or the AOI.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it common to use management pooling vehicles where there are a large number of employee shareholders?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Management pooling vehicles (\u201cMPVs\u201d) are commonly used for consolidating the employees\u2019 ownership in equity incentive schemes such as ESOPs. An MPV is helpful in streamlining the shareholding structure and simplifying the administration of equity incentive schemes. By deploying an MPV, employee shareholders can enjoy the economic benefits of being a shareholder, while being detached from the company\u2019s operations and governance, as they do not have voting rights or participate in the shareholders\u2019 agreement. In addition, the exit of employee shareholder could be achieved by transferring the shares of MPV without complicating the existing shareholding structure<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the most commonly used debt finance capital structures across small, medium and large financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For small or medium capital financing, secured loans from a single bank or a syndicate of banks are the most common sources of debt financing. Bonds are also an option for debt financing but would be subject to more complicated regulations and procedures. Mezzanine financing is limited in Taiwan due to restrictions in the Banking Act.<\/p>\n<p>Project finance is widely adopted in the development or divestment of solar and offshore wind projects in Taiwan. Large-scale investments such as infrastructure or energy projects are typically funded by non-recourse or limited-recourse project finance where repayment of the funds relies on the cash flow generated by the project itself, with the project company&#8217;s shares or assets serving as collateral. As local banks have gained more experience in financing renewable energy sector, project finance has become the desired debt financing structure for institutional investors seeking debt financing in large investments.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is financial assistance legislation applicable to debt financing arrangements? If so, how is that normally dealt with?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In general, the Company Act restricts a Taiwanese company from providing financial assistance, such as loans (except for loans to a company with which it has a business relationship or short-term loans not exceeding 40% of its net value) or guarantees (except as permitted under its AOI or other laws). These restrictions aim to protect the company&#8217;s capital and the interests of its creditors and shareholders. In practice, companies often navigate these restrictions by structuring financing arrangements along these legal requirements. This may involve ensuring that any financial assistance does not encroach or negatively affect the company&#8217;s capital. Additionally, companies may utilize alternative financing structures, such as leveraged buyouts, in which the target company&#8217;s assets are used as collateral post-acquisition, rather than pre-acquisition financial assistance.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">For a typical financing, is there a standard form of credit agreement used which is then negotiated and typically how material is the level of negotiation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no standard form for credit agreements in financing transactions required under Taiwanese law. Banks often use their own templates for single bank loans. For syndicated loans, the documentation usually begins with (i) a commitment letter committing to provide the financing, (ii) a term sheet detailing the terms and conditions of the loan, (iii) a mandate letter appointing the bank to the various roles in a syndicated loan, and (iv) a fee letter setting forth the fees payable. The final agreements for acquisition financing generally include a credit agreement, security and guarantee agreement, pledge agreement, and intercreditor agreement. The parties often refer to standard forms published by the Asia Pacific Loan Market Association (APLMA) in their negotiations. Key terms such as interest rates, covenants, securities, and repayment schedules are heavily negotiated, depending on the scale\/structure of the deal, the prospects of the transaction, as well as the borrower&#8217;s creditworthiness.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What have been the key areas of negotiation between borrowers and lenders in the last two years?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Interest rate adjustments and target valuation are critical points of discussion, particularly in light of fluctuating global economic conditions. Borrowers have sought more favorable terms, but lenders usually aimed to mitigate the risks associated with rate volatility. Loan covenants have also been heavily negotiated, with borrowers seeking terms that are more flexible to accommodate potential financial uncertainties, while lenders have aimed to mitigate the risks resulted therefrom. Refinancing has gained prominence as borrowers seek to optimize their financial positions amidst economic challenges. On the other hand, environmental, social, and governance (ESG) considerations have increasingly influenced negotiations, with lenders incorporating ESG criteria into their lending practices. These areas reflect the dynamic nature of borrower-lender negotiations in response to evolving economic and regulatory landscapes.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Have you seen an increase or use of private equity credit funds as sources of debt capital?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Private equity credit funds are on the rise in Taiwan\u2019s financial market. Lately, state-owned banks have partnered with international asset management firms to introduce parallel loans in the Taiwan market. In this arrangement, both the bank and the asset management company jointly provide loans to businesses. This offers domestic companies\u2014especially small and medium-sized enterprises and startups\u2014a more flexible financing option compared to traditional bank loans, supporting their growth and development.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">3848<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/124060","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=124060"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}