There have been no recent significant changes regarding Taiwan’s regulatory processes for merger control and FDI (including national security screenings), which generally remain consistent with prior practice. Due to the significant number of mergers and acquisitions involving financial institutions last year, the importance of obtaining sectoral regulatory approvals has greatly enhanced to ensure compliance with industry-specific rules and to maintain market stability. Most M&A-related litigation centres on disputes concerning defects in resolutions of shareholders’ or board of directors’ meetings, conflicts of interest involving directors, and the reasonableness of the transaction price.

With a surge in M&A deals in financial industry, the Financial Supervisory Commission (FSC) has updated its regulations to tighten merger guidelines and safeguard market stability. This revision, spurred by the contentious 2025 bid by two financial holding companies for a single target, is seen as an effort to overhaul the long-standing rules to enhance transparency and market stability.

In addition, in response to the growth of outbound investments from Taiwan, a 2025 amendment to the Industrial Innovation Act requires prior approval from the relevant authority for overseas acquisitions in specific countries or regions that involve critical national industries or technologies, or that reach a certain threshold amount.

The financial industry was most affected by sectoral regulatory approvals and the competent authority’s stance, driven by a surge in industry consolidation in 2025. The FSC introduced significant amendments to the Financial Holding Company Investment Management Regulations in late 2025, providing clearer guidance for financial holding companies engaging in M&A activities. The key highlights of these regulatory updates include:

• Financial holding companies must use cash for initial investments in public companies to minimise stock price volatility.
• The initial investment must secure at least a 25% stake in the target company.
• The acquirer must submit a reasonable and feasible plan outlining the initial investment strategy.
• A period for DLR adjustments has been introduced to better align with market practices.
• Decisions by the board must be supported by opinions from the audit committee and independent experts.
• Details of tender offers must remain confidential until regulatory approval is obtained, in order to prevent market disruption.
• An applicant whose investment application is rejected cannot apply to invest in the same target for one year.

In Taiwan, merger control is primarily governed by the Fair Trade Act (FTA) and its Enforcement Rules, supplemented by regulations and guidelines issued by the Fair Trade Commission (FTC). Together, these establish a comprehensive framework with clear rules on merger filing thresholds, turnover calculations, exempted merger types, relevant market definitions, pre-notification consultations, and the review and handling of merger filings. Additionally, special merger review regimes may apply to regulated industries. For example, the Regulations for the Examination of Financial Holding Company Merger Cases specifically govern mergers within the financial sector.

FDI and national security screening are governed by a layered statutory framework, including the Act for Investment by Foreign Nationals, the Act Governing Relations with the Mainland Area, the Hong Kong and Macau Relations Act, and their sub-laws. Additionally, the Department of Investment Review (DIR) has issued a “negative list” that, on an exceptional basis, identifies industries where foreign investments are prohibited or restricted, as well as a “positive list” that explicitly outlines the sectors open to PRC investors. Legislation aimed at protecting Taiwan’s core national critical technologies, such as the Industrial Innovation Statute and other national security laws, also plays a key role.

Beyond merger control and FDI considerations, sector-specific approvals may also be triggered by investments in regulated industries such as financial services, telecommunications or energy.

M&A-related disputes are typically resolved through settlement, arbitration or other alternative dispute resolution mechanisms as stipulated in the transaction agreements. When litigation is pursued, the applicable procedural rules and substantive laws vary depending on the nature of the claim. Procedural frameworks may include the Administrative Litigation Act, the Commercial Case Adjudication Act or the Code of Civil Procedure. Substantive laws that could apply include the Securities and Exchange Act (insider trading), the Company Act (fiduciary duties) and the Civil Code (torts, breaches of contract, or damages).

In Taiwan, the FTC is responsible for merger control, including reviewing merger filings, investigating violations and imposing sanctions. The FTC also issues rulings and promulgates relevant regulations, as authorised under the FTA.

FDI and national security reviews are primarily conducted by the DIR. They oversee both inbound and outbound investments, with an aim to safeguard public interest and national security. During these reviews, the DIR may consult other competent authorities through intra-governmental processes. For example, in cases involving PRC investors, they may consult with the National Security Bureau and the Mainland Affairs Council.

Sector-specific approvals are managed by the relevant sector-specific authority, such as the FSC for financial institutions, the National Communications Commission (NCC) for telecommunication businesses, and the Energy Administration for the energy sector. Merger, FDI and sector-specific reviews are typically conducted in parallel. Failure to obtain necessary regulatory approval from the relevant competent authority may prevent the parties from proceeding with the closing.

Previously, the FTC’s Guidelines on Handling Extraterritorial Mergers governed the determination of whether a foreign-to-foreign transaction conducted outside Taiwan falls under the FTC’s purview. Following the abolition of these guidelines on 30 June 2023, foreign-to-foreign mergers are now subject to the same filing thresholds and procedures as domestic transactions, except that joint ventures established or operated by foreign businesses outside Taiwan, with no economic activities within Taiwan, are exempt from merger filing.

Additionally, if a foreign-to-foreign merger is subject to Taiwan’s merger control and the transaction value is below TWD2.5 billion, a simplified filing procedure may apply, unless the case involves significant public interest, high entry barriers, or other specified factors that require the standard filing process.

FDI approval would be required for a foreign-to-foreign transaction only when (i) there is a change in the immediate foreign shareholder of a local company, or (ii) a PRC investor(s) will retain more than 30% of the equity interests in aggregate or control of the local company.

Merger control, FDI review and sector-specific approval processes are typically conducted in parallel. However, in some cases, FDI approval is a prerequisite that must be obtained before sector-specific authorities can grant its final approval, and vice versa.

Inter-agency consultation is common in the regulatory approval process. For instance, the FTC may seek comments from sector regulators regarding market definitions and the current competitive landscape, while the DIR may seek their input on sector-specific considerations. Investments involving PRC-related entities are subject to heightened scrutiny, and comments are often solicited from the National Security Bureau, the Mainland Affairs Council and other relevant industry authorities.

Beyond these interactions, information sharing among different authorities is limited as competent authorities are legally obligated to keep case-specific information in strict confidence.

Under Article 10 of the FTA, transactions that qualify as a “combination” and meet the specified market and turnover thresholds must be pre-notified to the FTC and receive clearance, unless otherwise exempted. For example, certain internal restructurings may be exempt (see 3.5 Exemptions and Simplified Procedures for details).

A “combination” includes mergers; acquiring or holding one-third or more of another enterprise’s voting shares or capital; transferring or leasing substantial business or assets; establishing ongoing joint operations or management contracts; and directly or indirectly controlling another enterprise’s operations or personnel. “Control” is assessed case by case, with further criteria detailed in Article 6 of the Enforcement Rules of the FTA, such as majority shareholding, overlapping directors or shareholders, or joint business operations. Shares held by related or commonly controlled enterprises are aggregated when calculating thresholds.

A merger filing to the FTC is required if: (i) any party to the merger will hold at least one-third of the market share post-transaction; (ii) any party to the merger has a market share of at least one-quarter pre-merger; or (iii) the turnover thresholds established by the FTC are exceeded.

Said turnover thresholds are: (i) combined global annual turnover exceeding TWD50 billion, with at least two parties each generating at least TWD3 billion in local turnover; (ii) for non-financial enterprises, one party generating at least TWD20 billion in local turnover and another generating at least TWD3 billion locally; or (iii) for financial enterprises, one party generating at least TWD40 billion in local turnover and another generating at least TWD3 billion locally. When calculating these thresholds, the turnover of enterprises that control, are controlled by, or are under common control with any party to the merger is aggregated. For foreign enterprises, typically only sales within Taiwan are considered. This includes sales made in Taiwan by the foreign enterprise itself and its affiliates, as well as sales made into Taiwan through direct transactions with Taiwanese customers.

Merger filing in Taiwan is mandatory if any of the statutory filing thresholds are met. However, voluntary filing may be considered in borderline cases, such as when parties’ market shares are close to the thresholds or in extraterritorial transactions where applicability is not entirely clear. In such situations, voluntarily seeking clearance from the FTC helps avoid potential penalties or post-closing challenges. Enterprises may also use the FTC’s pre-filing consultation service to clarify filing obligations and minimise risks.

Merger filings (if required) are usually filed after the parties’ board of directors approves the transaction or the signing of a definitive agreement, as the FTC requires evidence of intent to proceed with the review.

The parties must maintain a standstill after filing and are prohibited from closing the transaction until they receive clearance from the FTC. The FTC’s review period typically lasts 30 business days but may be shortened or extended by written notice for up to an additional 60 business days. If the FTC neither objects, extends nor issues a decision within this timeframe, the parties may proceed with closing, unless an exception applies (such as an agreement to further extend the review period or the provision of false or misleading information).

Implementing the transaction before obtaining merger clearance may result in penalties, including prohibition of the combination, divestiture or transfer of the acquired business, removal of designated personnel, and/or administrative fines ranging from TWD200,000 to TWD50 million.

Certain types of business combinations are exempt from merger filing requirements, regardless of whether the filing thresholds are met. Examples of such exemptions include mergers with or between controlled subsidiaries, intra-group restructurings, and joint ventures established or operated by foreign businesses outside Taiwan that have no economic activities within Taiwan.

Simplified procedures may apply in certain cases, such as transactions involving low market shares (eg, horizontal mergers with a combined post-merger market share below 20%, or below 25% if one party’s share is under 5%, as well as vertical mergers with a combined market share below 25%). Simplified procedures may also apply in cases with limited ties to Taiwan, such as when the relevant Taiwan revenue is below TWD200 million, the target had no Taiwan revenue in the previous fiscal year, or an extraterritorial transaction is valued below TWD2.5 billion.

Notwithstanding the above, the FTC may still require a full review for reasons such as public interest or high entry barriers.

After receiving the initial merger filing, the FTC may issue a Request for Information letter to obtain additional details or clarifications. Once all required information has been submitted and the filing is deemed complete, the 30-business-day review period will begin. If the FTC raises no objections within this period and no extension applies, the parties may proceed with the merger. Depending on the circumstances, the FTC may either shorten the review period or extend it up to 60 additional business days by written notice, if necessary.

The parties must submit the following information to the FTC in a merger filing, using the FTC’s standard form:

• basic information of the parties;
• production and sales data for the past three years in Taiwan;
• market structure and horizontal competition information;
• upstream and downstream market information;
• transaction details;
• relevant market description;
• entry barriers in the relevant market(s);
• economic analysis; and
• information on their local investments in Taiwan.

Key supporting documents include the parties’ financial reports, the definitive agreement or board resolutions, a power of attorney (if local counsel is engaged for the filing) and the latest certificate of incorporation. All filings must be submitted in the Chinese language; documents originally drafted in a foreign language must be fully translated or accompanied by an excerpted translation. The FTC may also request additional information if deemed necessary.

To assist the parties with their merger analysis, the FTC offers non-binding, confidential pre-filing consulting services. However, any comments or opinions provided during this process are advisory in nature only and do not affect the parties’ independent filing decisions.

Generally, if there is no indication of significant competitive restraints after considering all relevant factors, the FTC will conclude that the overall economic benefits of the merger outweigh any potential disadvantages and will grant clearance. However, if competitive restraints are suspected, the FTC will undertake a more detailed assessment.

Additionally, the FTC may consider industry-specific factors when reviewing mergers in sectors that impact public welfare, such as airlines, banking and finance, and 4C industries, in accordance with its established guidelines. In some cases, the FTC may also refer to its own precedents involving the same market(s) under review to inform its decision.

In Taiwan, the most examined theories of harm in merger review include the following:

• Unilateral effects: whether the merged entity could raise prices or reduce quality due to less competition between the merging parties, considering market shares, concentration, product substitutability, etc.
• Co-ordinated effects: whether the merger increases the risk of collusion among remaining competitors, influenced by factors such as market transparency and barriers to entry.
• Entry and countervailing power: whether new entrants are restricted or may improve competition; whether the buyers in the relevant market(s) may constrain the merged firm’s market power.
• Vertical foreclosure: in vertical mergers, the potential for restricting rivals’ access to key inputs or customers, raising barriers to entry, or facilitating collusion will be considered.
• Conglomerate concerns: inconglomerate mergers, the potential for cross-market leveraging or other anti-competitive effects will be considered.
• Additional factors may also be considered, such as innovation and impacts on digital ecosystems.

Parties may present efficiency and failing firm arguments in merger filings for the FTC’s consideration. Efficiency claims must demonstrate that the efficiencies are achievable in the short term, unattainable without the merger, and ultimately benefit consumers. Failing firm arguments require evidence that the firm cannot meet its debt obligations in the short term, cannot survive through less anti-competitive alternatives, and will exit the market in the absence of the merger.

The FTC typically assesses these arguments within the broader context of industry and market dynamics. For example, in a 2017 case, the FTC approved a cable TV merger despite a high market share. The decision cited factors such as digitalisation, shifting consumer demand from cable TV to online and alternative platforms, demonstrated efficiencies, the failing status of one party, and increased competition. These considerations together led to the conclusion that the overall economic benefits still outweighed potential anti-competitive concerns.

The FTC may impose structural, behavioural or hybrid remedies to address competition concerns arising from mergers. Structural remedies may include requiring divestment of shares/assets, business transfers or personnel changes, whereas behavioural remedies may involve obligations such as continued supply to third parties, IP licensing, or bans on exclusive dealing, discrimination or tying. Hybrid remedies, combining elements of both, may also be applied on a case-by-case basis. In some cases, the FTC may inform the parties of potential competition concerns and invite them to propose appropriate remedies.

To ensure effective oversight, the FTC may require the parties to provide periodic or ad hoc updates on the progress of remedy implementation.

Third parties such as competitors, customers, suppliers, employees and other relevant stakeholders may participate in the FTC’s review process by submitting comments either voluntarily or in response to the FTC’s invitation. Specifically, after the FTC accepts a filing and decides to exercise jurisdiction, it will publish a summary of the proposed transaction on its website, typically for one week, to solicit public feedback.

If the FTC believes that the transaction may have a significant impact on the local market, it may also reach out to relevant customers, suppliers or competitors and/or hold a symposium or public hearing to gather additional input from stakeholders. Additionally, the FTC may seek external opinions or commission academic and research institutions to conduct specific analyses related to industry or economic issues.

Furthermore, if a party involved in the transaction does not consent to the merger, such as in a hostile acquisition, the FTC will inform that party of the reasons for the filing and solicit their opinion.

As outlined in 4.7 Third-Party Participation, the FTC publishes summaries of proposed transactions on a designated section of its official website to solicit public feedback. This summary primarily includes information about the parties involved, the type of combination or transaction structure, and the industries concerned, and excludes detailed business or financial information.

The parties to the transaction may request that the FTC keep specific information (such as commercial or financial data and trade secrets) confidential and withhold it from public disclosure. The FTC generally honours such requests unless disclosure is deemed essential to the public interest.

The materials and deliberation process of the FTC’s plenary meetings are kept confidential, but written decisions, administrative acts and administrative guidance are published promptly after such meetings. Other materials will typically be declassified after six months. The right to access files is protected under the general administrative procedure framework, and declassified materials are accessible unless otherwise prohibited by law.

Any party to whom the decision is addressed, or any interested third party with legal standing, may file an appeal against the FTC’s administrative decision by petitioning the High Administrative Court for judicial review, within two months of receiving the decision.

The administrative litigation process is similar to that of civil litigation, with the FTC serving as the defendant. While the judgment of the High Administrative Court may be further appealed to the Supreme Administrative Court for legal review, the Supreme Administrative Court will overturn such judgment only on grounds of legal error.

Taiwan welcomes foreign investment and has an established FDI review process that encourages international partnerships while safeguarding national interests. The DIR reviews all inbound investments under two separate regimes: one for foreign investors and one for PRC investors.

• Foreign investors (including those from Hong Kong/Macau) may generally invest in Taiwan unless their business falls under the restricted or prohibited sectors listed in the Negative List, which is published by the DIR under the Statute for Investment by Foreign Nationals.
• PRC investors face enhanced controls due to ongoing geopolitical tensions across the Taiwan Strait and are only permitted to invest in certain businesses specified on the Positive List. A PRC investor is defined as either (i) an individual, juristic person, organisation or institution of the PRC (a “PRC National”), or (ii) any company located in a third area (ie, an area other than the PRC or Taiwan) in which more than 30% of the equity or capital is held by PRC National(s), or which is controlled by PRC National(s).

The national security screening process is integrated into the FDI review and intra-governmental consultation process. The DIR will conduct a comprehensive assessment of applications, taking into account factors such as the nature of the business, scale of investment, investor background, national security, public welfare, impact on the industry, and stakeholder rights to ensure alignment with policy objectives.

All inbound investments by foreign or PRC investors are subject to the DIR’s review, regardless of industry. Please refer to 5.3 Triggers and Thresholds for the detailed types of transactions covered by the FDI review.

The FDI review applies to investments in all sectors by foreign or PRC investors of the following types:

• Foreign investments include (i) acquiring stock or capital contributions in a Taiwanese company; (ii) setting up a branch office, proprietary business or partnership in Taiwan; and (iii) providing shareholder loans for a term of one year or longer to Taiwanese companies in the first two categories.
• PRC investments include (i) acquiring stock or capital contributions in a Taiwanese company, proprietary business, partnership or limited partnership (except acquiring, in a single transaction or in aggregate, less than 10% of the shares in a TWSE- or TPEX-listed company); (ii) setting up a branch office, proprietary business or partnership in Taiwan; (iii) providing shareholder loans for a term of one year or longer to Taiwanese companies referred to above; (iv) having control over a Taiwanese proprietary business, partnership, limited partnership or private company via contractual arrangement; and (v) acquiring the business or assets of a Taiwanese private company through a third-area company controlled by the PRC investor.

FDI approval is mandatory for inbound investments and is often a prerequisite for closing. After implementing the investment, the investor should report to the DIR on the completion of the investment, ie, the injection of capital or settlement of purchase price.

The foreign or PRC investor will initiate the FDI review process by submitting an application to the DIR. This submission usually occurs after the signing of the transaction documents and running in parallel with merger filing. This application should include information such as the investor’s identity, shareholding structure up to the ultimate beneficiary owner, investment plan, source of funds, and other relevant details.

The DIR will conduct an initial review and may consult with other relevant competent authorities regarding their assessment of the investment. Ad hoc reviews may also be carried out depending on the case. The scope and timeline of the DIR’s review will depend on factors such as the investor’s identity, the complexity and size of the investment, and the nature of the target businesses. During the review process, the DIR has the discretion to request additional information as deemed necessary. Generally, foreign investment applications are processed within six to eight weeks, whereas PRC investment applications typically require at least six to nine months.

The DIR may reject or restrict an investment application if (i) a foreign investment may threaten national security, public order and/or good morals or such investment is prohibited by law; or (ii) a PRC investment may result in monopolies, threaten Taiwan’s national security, or have a negative impact on Taiwan’s economic development or financial stability.

Moreover, the DIR will conduct a more rigorous review if a PRC investor is involved or the business pertains to sensitive sectors such as critical infrastructure, power supply, transportation, telecommunications and broadcasting, or other restricted industries.

The DIR may attach conditions to its approvals to address concerns raised during the review process. These conditions may include restrictions on ownership, limitations on certain shareholders’ management control or veto rights, constraints on permitted business activities, exclusion of specific sensitive assets, and other case-specific commitments.

Outright rejection of an application is rare unless the investment relates to prohibited businesses. In practice, during the review process, the DIR may raise concerns with the applicant, who can then amend the investment plan or take other mitigation measures to address those concerns. This communication helps to ensure compliance while balancing regulatory requirements with business objectives.

If a foreign investor fails to comply with the DIR’s filing requirements or conditions, the DIR may cancel the investor’s right to remit profits or interest derived from the investment for a specified period, or order the investor to withdraw the investment and revoke the investor’s shareholder rights.

A PRC investor may face more serious repercussions if it fails to comply with the filing requirements or conditions. In such cases, the investor may incur an administrative fine ranging from TWD120,000 to TWD25 million (approximately USD4,000 to USD833,333). Additionally, the authorities may order the violator to cease or withdraw the investment, or to rectify the violation within a specified timeframe. The violator’s shareholder rights may also be suspended as necessary.

The DIR may independently review closed transactions at its discretion. Since compliance with post-closing conditions is an ongoing obligation, the DIR may monitor the investor’s business activities by requesting periodical or ad hoc reports to ensure continued compliance.

The FDI review process is generally conducted on a confidential basis. However, the DIR may disclose the outcome of an application if it deems such disclosure necessary (such as a significant case in its news release). If an investment application is rejected, investors may file a petition with the Executive Yuan to challenge the DIR’s decision. Should the petition be denied, investors may still seek judicial review by filing an administrative lawsuit in court.

In Taiwan, certain regulated sectors require specific change-of-control or ownership approvals in connection with M&A. These requirements are primarily set forth in sector-specific legislation and are overseen by the relevant competent authority.

For example, in the financial sector, the Financial Holding Company Act mandates that financial holding companies obtain approval from the competent authority for mergers and business transfers. The Banking Act and Insurance Act require individuals or related parties acquiring a certain percentage of a bank or insurance company’s voting shares to obtain prior approval from the competent authority. Similarly, under the Telecommunications Management Act, transfers, acquisitions or investments in telecommunications enterprises exceeding certain thresholds, or resulting in a market share of 25% or more, require approval from the NCC. In the electricity sector, merging enterprises must submit a detailed merger plan to the Bureau of Energy for prior approval.

In regulated sectors, the process of obtaining sector-specific approvals often begins well before signing, typically starting with informal consultations with the relevant competent authority.

Following signing, transactions usually enter a regulatory filing phase, which may involve FDI applications, merger control filings and other sector-specific approval processes. These procedures often run concurrently and can take three to six months or longer, depending on factors such as administrative capacity, deal structure and complexity, the industry involved and the parties’ business scale. In practice, merger clearance and FDI approval are usually secured before the sector-specific authority issues its approval.

In Taiwan, sector-specific regulators apply distinct substantive standards when reviewing M&A transactions, which are tailored to the unique characteristics and policy objectives of each industry.

For example, in the financial sector, the FSC evaluates factors such as market competition, operational efficiency, financial soundness and public interest considerations. In the telecommunications sector, the NCC assesses resource allocation, industry development, user rights, market competition and national security. In the energy sector, regulatory oversight focuses on the stability and security of energy supply, compliance with technical and operational standards, the financial capacity to sustain licensed operations, and other undertakings attached to the previously granted approvals.

In practice, sector-specific approvals are co-ordinated alongside merger control and FDI/national security reviews through parallel but independent procedures, each governed by its own legal framework.

When the FTC reviews merger filings and the DIR evaluates FDI applications, they may seek input from the relevant sectoral regulators. As to sector-specific approvals, the regulators typically (though not always, depending on the sector) issue their final approval only after merger clearance and FDI clearance have been obtained. This sequencing ensures that sector-specific concerns are addressed only after the transaction has met broader competition and national security requirements.

A common practical issue in co-ordinating sector-specific approvals with merger control and FDI reviews is the alignment in review timelines and requirements, given that each process is governed by different set of rules and overseen by different authorities. While the processes are typically conducted in parallel, the sectoral regulators are usually the final gatekeeper and tend to withhold their final approval until after the parties have received both the merger clearance and the FDI approval.

One pitfall is failing to engage with the competent authorities at an early stage, particularly in highly regulated sectors. Early informal consultations, even before signing, are crucial to identify potential regulatory concerns and to secure a preliminary indication of support (informal blessing). This step is essential to avoid unexpected obstacles that could delay or derail the transaction at a later stage.

Regulatory approvals, including but not limited to foreign investment approval, merger clearance, and approvals by the competent authorities as required for deals involving regulated sectors (such as financial, telecoms, energy or healthcare deals), are typically included as conditions precedent. Litigation-related conditions precedent typically include the absence of outstanding or threatened litigation that could impact the deal, court orders preventing the closing, or any material adverse effects resulting from litigation.

The longstop date is typically set based on the anticipated time required to satisfy the conditions precedent, as agreed upon by the parties. This includes the time needed to obtain the necessary regulatory approvals for the transaction, along with a reasonable buffer to account for potential delays or alignment on the conditions attached to regulatory approvals.

The efforts standards for obligations to fulfil closing conditions are usually determined on a case-by-case basis, subject to negotiation between the parties in each case. Generally, buyers tend to avoid “hell or high water” commitments due to the significant burden they impose on the buyer to complete the deal; instead, buyers may try to negotiate for standards such as “reasonable best efforts” or “commercially reasonable efforts”. Such tendency has grown stronger in recent years amid increasing regulatory uncertainty.

That said, in practice, it is not uncommon to adopt “hell or high water” commitments for the fulfilment of closing conditions involving obtaining more predictable regulatory approvals such as foreign investment approval, merger clearance and ad hoc approval from the competent authorities (where applicable), especially when these approvals are uncontroversial and mandatory for completion of the transaction.

Regulatory and litigation risks are allocated between buyers and sellers based on factors such as the industry involved, the level of regulatory scrutiny, the complexity or difficulty of obtaining requisite approvals across different sectors, the parties’ bargaining power and risk appetite, etc.

For example, in practice, break fee arrangements may be seen in cross-border public transactions or auction deals with Taiwan elements and are usually set at 1% to 5% of the purchase price; however, they are less common in deals where the buyer is private equity-backed. Reverse break fees are relatively common and are typically 1.5 to two times the amount of the break fee.

Interim operating covenants are widely used in local deals. Typically, these covenants require the seller to operate the business in the ordinary course between signing and closing, and restrict non-regular business activities, such as entering into new business partnerships, engaging in joint product development, entering into other material contracts, or making significant capital expenditures, without the buyer’s prior consent. The scope of these covenants, including which actions require notification or approval, is usually negotiated on a case-by-case basis.

Buyers typically have the right to be informed about the target’s key operational and financial status between signing and closing (eg, through regular reports); however, direct discussions with management or employees regarding their employment terms or retention are usually restricted during this period, as such interactions can be sensitive. This careful balance helps protect the business’s stability while providing the buyer with necessary visibility throughout the interim period.

Co-ordinating multi-jurisdictional merger control, FDI and sectoral reviews presents several challenges, as each competent authority may have different review processes, criteria and timelines, and may impose varying conditions or reach divergent conclusions regarding the transaction.

As applicable regulatory approvals from all relevant jurisdictions are typically conditions precedent that cannot be unilaterally waived, transaction documents often include provisions allowing markets or business functions that fail to secure necessary regulatory approvals (or are subject to onerous conditions or remedies) to be carved out or excluded; alternatively, the parties may agree to proceed with staged closing in those jurisdictions where approvals are already secured. These approaches help mitigate delays or blockages that could impede closing. However, such exceptions generally do not apply to markets or business functions that are material to the overall deal; in those cases, the parties may need to renegotiate the best way to proceed.

Additional mechanisms to manage this risk may include implementing a longstop date or break fee, depending on the parties’ risk tolerance and the strategic importance of the affected jurisdictions.

In Taiwan, litigation arising from M&A transactions is relatively uncommon. This is primarily because most disputes are resolved through arbitration or settlement, which offers advantages in terms of confidentiality and procedural efficiency.

When litigation does arise, it typically concerns the parties’ internal decision-making processes, their management’s fiduciary duties, and minority shareholders’ claims. These may include challenges to the validity of the shareholders’ or board resolution approving the deal, whether board members exercised due care in evaluating the transaction, or the legality of the decision to cash out minority shareholders in a merger or the fairness of the compensation they received.

M&A-related litigation in Taiwan remains limited in volume. However, among the disputes that do arise, claims most commonly focus on alleged procedural defects, governance failures and breaches of fiduciary duties (such as conflicts of interest and disclosure obligations).

For example, in a notable 2022 merger involving telecommunications companies, a minority shareholder sought annulment of a party’s shareholders’ resolution approving the transaction. The shareholder alleged that a director concurrently served as a director and senior executive of both parties to the merger, thereby creating conflicting duties of loyalty; such director failed to disclose these interests to the board, which then proceeded to convene the shareholders’ meeting. The court of first instance upheld the claim and annulled the resolution on procedural grounds.

Similarly, in a 2025 case concerning a food company’s TWD3.6 billion investment in a payment platform, the court invalidated the transaction after finding that the board resolution was adopted through an unlawful process, including lack of quorum at the audit committee meeting, inadequate notice to directors, and insufficient disclosure caused by last-minute agenda changes. The court of first instance therefore held that the resolution of the board of directors was unlawful and that the transaction was invalid. This case is currently under appeal.

Generally speaking, when a court or tribunal interprets contract clauses in M&A transactions (including material adverse change/effect clauses, termination rights, and disputes regarding the satisfaction of closing conditions), it places primary emphasis on the express provisions of the contract and upholds the definitions and criteria mutually agreed upon by the parties.

Accordingly, the parties must draft the contract with special care, ideally incorporating clear, objective standards of assessment. This may include, for example, specifying both qualitative and quantitative criteria for a material adverse change/effect (such as a defined percentage threshold of EBITDA or transaction value), ensuring closing conditions are precisely articulated, clearly defining force majeure events, annexing agreed-upon forms to the transaction documents and avoiding the conferral of excessive interpretative discretion.

In circumstances where no objective standard exists and a dispute escalates to arbitration or litigation, it is common practice to seek expert determination, whereby an independent third-party expert is engaged to provide an impartial opinion.

In practice, disputes regarding the parties’ obligations to obtain regulatory approvals, offer remedies or challenge adverse decisions are typically managed through tiered contractual mechanisms. These mechanisms generally require the principals of both parties to engage in good-faith negotiations as an initial step. If negotiations fail, the dispute may then proceed to mediation. Only when these consensual efforts prove unsuccessful will the matter escalate to formal dispute resolution, which is more commonly conducted through arbitration rather than litigation. This preference reflects the parties’ desire to maintain confidentiality and preserve their commercial relationships.

On a side note, in Taiwan, litigation challenging adverse regulatory decisions (such as merger clearance determinations) remains relatively uncommon. Nonetheless, a limited number of cases have arisen. For instance, in 2019, a proposed merger between two prominent karaoke businesses was repeatedly blocked by the FTC on competition grounds. The parties pursued administrative remedies, with the case ultimately reaching the Supreme Administrative Court, but they eventually withdrew the appeal. In practice, the parties and the regulatory authorities may also resolve such disputes through negotiated settlements.

Disputes arising directly from M&A transactions are most commonly resolved through arbitration. In cross-border M&A deals, it is common practice to designate Singapore (SIAC) or Hong Kong (HKIAC) as the seat of arbitration. Once a foreign arbitral award is recognised by a Taiwanese court, it carries the same weight as a final and binding court judgment and can serve as the basis for compulsory enforcement.

With respect to litigation relating to defects in resolution procedures, it is common to seek provisional injunctions from the court to preserve the status quo before the judgment becomes final. Such injunctions may include, for example, prohibiting the convening of specific shareholders’ meetings, restricting the transfer of certain shares or assets, or preventing the exercise of particular voting rights.

In Taiwan, litigation challenging merger control or FDI decisions is relatively uncommon. This is primarily due to procedural requirements and judicial deference. First, any party wishing to contest such a decision must exhaust administrative remedies by filing an administrative appeal directly with the relevant authority; only if this appeal is unsuccessful may the party proceed with judicial review. Second, experience shows that courts tend to uphold administrative decisions in practice, out of respect for the specialised expertise of administrative agencies and the statutory authority granted to them.

Under Taiwan law, a party subject to an adverse administrative decision is entitled to challenge the decision. Interested parties whose existing and legitimate rights or de jure interests have been adversely affected by the decision are also eligible to do so; however, third parties with only economic, emotional or similar connections do not qualify as interested parties. Furthermore, there must be a direct causal link between the infringement of the interested party’s rights and the allegedly unlawful administrative decision for the challenge to be admissible. Consequently, if the party seeking to file a challenge is not the addressee of the decision, pursuing such a challenge is generally more difficult.

In practice, courts typically acknowledge the specialised expertise and statutory authority of administrative agencies and thus defer to their discretion and uphold their decisions.

That is, courts exercise a relaxed scrutiny in judicial review to show a deference to the discretion of and the decisions rendered by the administrative branch, and will intervene on an exceptional basis only in cases of manifest error. Such errors include, for example: wrongful reliance on incorrect or incomplete facts; misapplication of legal concepts to facts; interpretations of law that contradict established rules or higher legal norms; decisions that violate generally accepted value standards; decisions based on irrelevant considerations; or violations of statutory requirements, including due process, legal principles or other fundamental doctrines. Thus, judicial intervention is limited to clear and significant errors undermining the legality or fairness of the administrative decision.

Interim relief is more commonly sought in cases involving challenges to corporate procedures, such as prohibiting the convening of a board or shareholders’ meeting, or disputing the validity of a board or shareholders’ resolution approving a transaction. These measures help maintain the status quo until the dispute is finally resolved.

For example, in a 2025 case involving a food company’s TWD3.6 billion investment in a payment platform, a shareholder challenged the board resolution approving the transaction and petitioned the court to enjoin the closing of the transaction pending the court’s final judgment. In considering the petition, the court assessed the necessity of preserving the status quo and ultimately granted the injunction.

Conversely, interim relief is less common in disputes involving administrative decisions. Generally, neither the initiation of administrative litigation nor the filing of an administrative appeal suspends the enforcement of the disputed administrative decision. The court may only stay enforcement if it determines that doing so is necessary to prevent irreparable harm and that an urgent situation exists.

In Taiwan, litigation challenging merger control, DIR or other regulatory decisions are relatively uncommon. Consequently, follow-on damages actions or other civil claims are even more infrequent.

In principle, in civil proceedings, if a fact has already been established by a court, then unless the court’s judgment is clearly unlawful or the parties present new evidence in a subsequent lawsuit sufficient to overturn the original decision, neither party may make contrary assertions in another lawsuit involving the same parties and the same key issue, nor may the court issue a contradictory judgment.

Generally speaking, follow-on or standalone damages actions arising from M&A transactions are infrequently pursued in Taiwan. On the rare occasions when such actions do occur, they typically involve insider trading or breach of fiduciary duty claims related to public companies. This is largely due to the nature of merger transactions, which often involve insider information, numerous internal and external participants from both sides, extensive business decisions and planning, and prolonged negotiation and operational timelines. Collectively, these factors increase the risk of failures, flaws or breaches in the exercise of fiduciary duties and insider trading during the merger process.

To strengthen investor protection, Taiwan’s Securities Investor and Futures Trader Protection Act provides for an opt-in class action mechanism. When securities-related incidents stemming from the same cause harm multiple securities or futures investors, if 20 or more investors authorise the Securities and Futures Investors Protection Center to act on their behalf, the Center may initiate class action lawsuits or submit the matter to arbitration in its own name. In practice, these claims typically involve false financial reports or prospectuses, stock price manipulation and insider trading.

In Taiwan, private enforcement following regulatory decisions or M&A-related misconduct is uncommon in the form of court litigation, as most disputes are resolved through settlements, arbitration or other contractually agreed dispute resolution mechanisms, which remain confidential in nature. Consequently, publicly available judicial precedents addressing limitation periods, causation and the quantification of damages are limited.

That said, as a general rule, unless otherwise agreed upon by the parties, limitation periods are typically governed by ordinary civil law prescription rules. Practical challenges often arise in determining when the claimant is deemed to have knowledge of the damage and the liable party. Establishing causation can also be difficult, as claimants must prove a direct causal link between the alleged misconduct and the losses suffered, despite the influence of multiple market or transaction-specific factors. As to damages, clear and credible evidence is usually required, though in insider trading claims (which are relatively more common among the few publicly available M&A-related litigation cases), statutory damage calculation mechanisms apply, thereby easing the investors’ burden of proof.

This is why representations and warranties insurance and other forms of coverage are increasingly being adopted as essential risk mitigation tools in M&A transactions.

As competition or regulatory disputes arising from M&A cases are rarely seen in Taiwan, there is limited information on whether and how settlements, mediation or other forms of alternative dispute resolution are employed to resolve such disputes. That said, the rules set forth by Taiwan’s FTC permit it to enter into settlement agreements with enterprises as an alternative to issuing an administrative decision.

The FTC may also enter into a settlement agreement with an enterprise during litigation proceedings. For example, in 2017, the FTC imposed a fine of TWD23.4 billion on a US company for abusing its dominant market position. After the claimant filed a lawsuit challenging the decision, the parties ultimately reached a settlement under which the claimant agreed to a five-year commitment to invest in Taiwan and comply with various undertakings.

Policies and enforcements regarding competition law and generative artificial intelligence (AI) is expected to be rolled out in the following 12 to 24 months. The FTC has been seeking public input in connection with AI-related competition law issues, with a particular focus on how large AI companies might gain market share or control essential resources through horizontal or vertical mergers. The consultation also explores the risk of anti-competitive bundling or tying strategies in diversification mergers. Key sectors such as AI chips and cloud services, which are already concentrated, will likely face increased regulatory scrutiny. This includes examining investments, licensing and employment practices that could raise competition concerns.

It is essential for deal-makers to involve legal advisers when structuring M&A transactions in Taiwan. Apart from the FDI application and merger filing, sectoral regulatory approval may also be required, particularly for highly regulated industries such as financial services, healthcare, energy and tobacco, and for publicly listed companies. The parties are advised to assess transaction hurdles and approval requirements, in order to accurately estimate the transaction timeline. By identifying the regulatory risks early on, the parties may implement mitigation measures and develop a contingency plan for effective risk management. These steps help ensure compliance, avoid unnecessary delays and facilitate a smoother transaction process.

For international buyers and investors engaging in cross-border transactions involving Taiwan, several key considerations are critical for navigating regulatory approvals and structuring the transaction effectively:

• Cross-jurisdictional reviews: Cross-border transactions often require regulatory approvals from multiple jurisdictions. Co-ordinating the review processes and timelines across authorities in different jurisdictions is essential. For example, the FTC will take into account the decisions made by authorities in other jurisdictions when reviewing a merger filing.
• Geopolitical considerations: Transactions involving PRC investors require special attention due to increased scrutiny. Investors must carefully assess their ownership structure and applicable restrictions to comply with FDI restrictions. A thorough understanding of the regulatory environments in both Taiwan and the investor’s home jurisdiction is critical for managing geopolitical risks.
• Jurisdictional issues: Choosing the appropriate dispute resolution venue, mechanism and applicable law that align with the parties’ interests can reduce uncertainty in the event of a dispute, ensure the enforceability of judgments/awards and facilitate the effective resolution of potential conflicts.