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Financial holding companies that carry out share swap in compliance with the Financial Holding Company Act may do so by part share and part cash
According to the Financial Supervisory Commission of the Executive Yuan (the “FSC”), currently financial holding companies that carry out share swap in compliance with the Financial Holding Company Act may only use their shares in exchange for the issued shares of other financial institutions. However not allowing financial holding companies to use cash as consideration for shares is unreasonable and creates a barrier to merger activities, while not providing sufficient protection for the domestic shareholders.
To protect the interests of shareholders and add flexibility to the merger mechanism, the FSC in its 66th commissioners’ meeting passed a resolution that allows financial holding companies to offer part share and part cash in a share swap. The ratio of share to cash as consideration in the shares swap will be determined by the shareholders of the two merging companies. Also given that the objective of the Financial Institution Merger Act is to encourage merger, cash should also be included in the considerations for merger. In addition, the Business Merger and Acquisition Act has extended merger considerations from shares to cash and other assets to meet the actual needs. Thus the interpretation of merger considerations between financial institutions should not be narrowed down. The FSC points out that the Financial Holding Company Act and the Financial Institution Merger Act are special laws of the Business Merger and Acquisition Act. Any special provisions in such laws should be given a priority status in application, and matters not specified in those special laws will be governed by the Business Merger and Acquisition Act. |