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Title	BUSINESS MERGERS AND ACQUISITIONS LAW
Announced Date	2002-02-06
Content	CHAPTER I GENERAL PROVISIONS Article 1 The Business Mergers and Acquisitions Law (the Law) is enacted to facilitate merger /consolidation and acquisition by a business for purposes of reorganization and optimal operation efficiency. Article 2 Any merger /consolidation and acquisition by a company shall be done pursuant to this Law; if not so provided, the Company Law, the Securities and Exchange Law, the Statute for Upgrading Industries, the Fair Trading Law, the Labor Standard Law, the Statute For Investment By Foreign Nationals and other applicable laws and regulations shall govern. Any merger /consolidation and acquisition by a financial institute shall be done pursuant to the Law Governing Merger of Financial Institutions and the Financial Holding Company Law; if not expressly provided in the said two Laws, this Law shall govern. Article 3 The "Competent Authority" as used in this Law denotes the Ministry of Economic Affairs (MOEA). If any provisions set forth in this Law involving the business of the authority in charge of the relevant end-enterprise; the Competent Authority of this Law shall process things and matters hereunder jointly with that relevant authority. Article 4 Interpretation In this Law -- 1.Company means a company limited by shares incorporated under the Company Law. 2.Merger and acquisition include merger, consolidation, acquisition, and division of a company. 3.Consolidation and merger refer to an act wherein any and all companies involved pursuant to this Law or any other applicable law are dissolved, and a new company is incorporated (consolidation) to generally assume all rights and obligations of the dissolved companies; or by any company surviving the merger from all the companies involved (merger), with shares of the surviving or newly incorporated company or any other company, cash or other assets as the consideration. 4.Acquisition means any company acquiring shares, business or assets of other company in exchange for shares, cash or other assets under this Law, the Company Law, the Securities and Exchange Law, the Law Governing Merger of Financial Institutions or the Financial Holding Company Law. 5.Share exchange means, by the resolution of the general meeting, a company transferring all its issued shares to another company in exchange for the issue to its shareholders of shares in that company. 6.Division refers to an act wherein a company transfers all its independently operated business or any part of it under this Law or other applicable law to an existing or a newly incorporated company as the consideration for that existing company or newly incorporated company to issue new shares to that company or shareholders of that company. 7."Parent and subsidiary company" means－any company, directly or indirectly holding the majority of the total number of the issued voting shares or the total amount of the capital stock of another company shall be the parent company, and the other company with its shares held by the parent company shall be the subsidiary company. 8.Foreign Company means a company, for the purpose of profit－making, organized and incorporated in accordance with the law of a foreign county. Article 5 When a resolution of merger /consolidation or acquisition is passed, the Board of Directors shall, in the course of conducting the merger /consolidation or acquisition, in the best interest of the shareholders, fulfill its duty of care. Any director involved in decision-making for a merger/consolidation or acquisition shall be liable for any damage to the company as a result of breach of applicable laws, ordinances, Articles of Incorporation or the resolution of the general meeting in dealing with the merge/consolidation and acquisition provided, however, upon producing sufficient evidence of minutes or written statement concerning disagreement, the director may be exempted from the liability. Article 6 Before any resolution of merger/consolidation and acquisition by the Board of Directors, a company that has its share certificates publicly issued shall seek opinions from an independent expert on the justification of share exchange ratio or distribution of cash or other assets to shareholders, then report the opinions to the Board of Directors and, if the resolution by the general meeting is required, to the general meeting. Article 7 If, as a result of merger/consolidation and acquisition, a company has become a company limited by shares held by the government or a single juristic person, the functional duties and power of the general meeting of that company shall be exercised by the Board of Directors and in this case, provisions governing the general meeting as set out in the Company Law shall not apply. The directors and supervisors of the company referred to in the preceding Paragraph shall be appointed by such government shareholder or juristic person shareholder. Article 8 In case of any of the following events, the company may not be required to reserve new shares to be issued for subscription by its employees, to notify then existing shareholders for subscription, to appropriate a certain ratio for public offering, and not subject to Articles 267(1) through 267(3) of the Company Law and Article 28-1 of the Securities and Exchange Law: 1.All new shares are issued for being acquired; 2.All new shares are issued for the acquisition of issued shares of another company; 3.New share are issued for share exchange 4.New shares are issued for division of company. Any new shares issued hereunder may be paid up in cash or assets required in the business of the company, and such issuance is exempted from Article 270 of the Company Law. Article 9 Any reorganization plan proposed under Article 304 of the Company Law may expressly provide that the credits of the creditors on the company shall be applied to pay up calls required by new shares issued by the company acquired by the creditors, and this may be exercised after seeking the approval from the meeting of interested parties held under Article 305 of the Company Law and the ruling of approval by the court, without being subject to Articles 270, 272 and 296 of the Company Law. Article 10 In the merger/consolidation and acquisition by a company, the shareholders may decide ways and related matters on joint exercise of voting rights by written agreement among themselves. In the merger/consolidation and acquisition by a company, the shareholders may transfer their shares to a trust company or a financial institute operating trust business to put their voting rights in trust and the trustee shall exercise such voting rights as specified in a written trust deed. To operate against the company by putting their voting rights in trust, the shareholders shall deliver to the company no later than five days prior to the meeting date of the general meeting the written trust agreement, list of the names, titles, residence (domicile) of shareholders, the total number, class and quantity of shares with their voting rights transferred in trust. Article 11 In the merger/consolidation and acquisition by a company, the written agreement among shareholders, the company and shareholders, may reasonably regulate the following issues: 1.The company, other shareholder or a designated third party shall have the priority to purchase the shares transferred by the shareholder; 2.The company, shareholder or a designated third party may have the priority to subscribe for shares held by other shareholder; 3.The shareholder may request other shareholder to jointly transfer their shares; 4.Any transfer of shares or offering shares as a security in pledge to a given person by a shareholder shall seek the approval from the Board of Directors or the general meeting; 5.The transferee or pledgee of shares; and 6.Restraining shares from being transferred or offered as a security in pledge within a specific period of time. The company not having its share certificates publicly issued may stipulate the aforesaid issues in the Articles of Incorporation. The so-called reasonable restrictions referred in Paragraph One shall comply with the following principles: 1.Such restrictions are prescribed for the compliance with the Securities and Exchange Law, the Tax Law or any other applicable laws and ordnances; and 2.Such restrictions are prescribed due to being a shareholder, or as required by business competition or operation development. In issuing new shares due to merger/consolidation and acquisition by a company that has its share certificates publicly issued, and thus subject to restrictions of transfer or pledge of shares as provided in Paragraph One, such restriction shall be explicitly entered into the prospectus as specified in the securities and Exchange Law or in the document to be delivered to the investors as specified by the authority in charge of securities. As provided in Article 163(1) and 163(2) of the Company Law, that transfer of shares shall not be prohibited or restricted by any provision in the Article of Incorporation and transfer of shares owned by promoters shall not be effected until the elapse of one year after the incorporation registration, are not applicable to Paragraphs One and Two hereof. The sum of purchased quantity of shares by a company pursuant to items 1 and 2, Paragraph One and those redeemed and purchased quantity of shares under other laws and ordinances shall not be greater than twenty percent of the total shares issued by that company and the total amount of redemption and bought back shall not be greater than the sum of retained earnings plus premiums on share issued above their par value and realized capital surplus. Article 12 If any of the following events occurs in the course of merger/ consolidation and acquisitions by a company, the shareholder may request the company to buy back his shares held at then prevailing fair price: 1.If a company attempts to amend its Articles of Incorporation to prescribe restrictions on transfer or pledge of shares, the shareholder has expressed his objection, in writing or verbally with a record before or during the meeting and waived his voting right; 2.In case of any merger/consolidation proceeded under Article 18 of this Law by a company, the shareholder of the surviving or dissolved company has expressed his objection, in writing or verbally with a record before or during the meeting and waived his voting right provided, however, that in the merger/consolidation proceeded under Article 18(6) of this Law, only the shareholder of the dissolved company may express such dissension; 3.In case of any summary merger/consolidation proceeded under Article 19 by a company; the shareholder of the subsidiary company has expressed his objection in writing within a term specified in the notice and publication given under Article 19(2) of this Law by the Board of Direction of the subsidiary company; 4.In case of an acquisition proceeded under Article 27 of this Law by a company; the shareholder has expressed his objection, in writing or verbally with a record before or during the meeting and waived his voting right; 5.In case of share exchange proceeded under Article 29 by a company, the shareholder of the transferor and the existing transferee company has expressed his objection, in writing or verbally with a record before or during the meeting and waived his voting right; or 6.In case of a division proceeded under Article 33 by a company, the shareholder of the company being divided or of the existing recipient company has expressed his objection, in writing or verbally with a record before or during the meeting and waived his voting right. Articles 187 and 188 of the Company Law shall apply mutatis mutandis provided, however, that for any summary merger/consolidation proceeded under Article 18(6) or Article 19, the date as resolved by the Board of Directors shall be the reference date for any transaction. Article 13 A company purchasing shares under Article 12 shall proceed as follows: 1.Any shares purchased from shareholders of the dissolved company shall be surrendered together with other shares issued by that dissolved company to file an application for registration of cancellation; 2.With the exception of the shares transferred to shareholders of the dissolved company or any other company according to merger/ consolidation agreement, share exchange agreement, division plan or any other contract, any shares redeemed or bought back other than in accordance with the preceding item shall be soled at fair market price within three years from the date of redemption or bought back. If the shares so redeemed or bought back remain unsold after expiry of the foregoing time limit, such shares shall be deemed as the shares which have never been issued by the company; and under such circumstance, the company shall apply for an alteration of the entries of the then existing corporate registration in respect of such shares accordingly. No shares redeemed or bought back under this Law shall be produced as pledge and shall not be entitled with shareholder right before such shares having been sold or cancelled. Article 14 In case the Board of Directors is unable to exercise its power and authority, a temporary manager may be elected upon a resolution adopted by a majority of the shareholders present at the general meeting, who represent two-thirds or more of the total number of the issued shares. The scope and term of power and authority to be exercised by the temporary manager shall also be specified for the temporary manager to exercise the power and authority of the Chairman of the Board and the Board of Directors in the event that the Board of Directors is unable to exercise its power and authority. For a company whose share certificates have been publicly issued, if the total number of shares represented by shareholders at the general meeting is short of the quorum, the temporary manager may be elected by two-thirds of the votes of the shareholders present at the general meeting who present a majority of the total number of issued shares. An application for registration shall be filed within fifteen days upon the appointment or removal of the temporary manager as the case may be. Article 15 In the course of a merger/consolidation by a company, any sum of the pension reserves appropriated by the dissolved company surviving from pension and severance pay made to separated labors shall be transferred from the designated account of labor pension reserves monitor commission of the company to that of the newly incorporated or surviving company. In the transfer of the entire business or any part of it by a company as a result of acquisition of assets or division, the transferor company or the divided company upon having made the separated labors the pension and the severance pay, shall transfer the pension reserves appropriated for the labors stay with the company and to be transferred together with the business or the assets in pro rata to the designated account of labor pension reserves monitor commission of the transferee company. The dissolved company, the transferor company or the divided company as described in the preceding two Paragraphs shall be liable for making the pension and severance pay to the separated labors, and the labor pension reserves to be appropriated as required by the law shall reach the amount specified as the minimum in filing the application for a suspend appropriation by the applicable labor laws and ordinances before transferring all the remaining labor pension reserves or in pro rata to the labor pension reserves monitor commission of the survived company or the transferee company. Article 16 Any surviving company, newly incorporated company or transferee company shall no later than thirty days before the reference date of the merge serve a written notice expressly describing labor conditions to any and all labor stay after the merge according to the negotiation between the existing and the new employers. Any labor within ten days upon receiving the notice shall notify his decision of whether to accept the conditions in writing to the new employer. The absence of such notice from the labor shall be deemed as a consent to stay with the company after the merger/ consolidation. Any labor having accepted the continued employment later refuses to stay with the company for personal reasons whatsoever is prevented from requesting any severance pay from the employer. The service years of the labor accepting the continued employment achieved at the dissolved company, transferor company or divided company before the merger/consolidation shall be recognized by the survived company, newly incorporated company or the transferee company after the merger/consolidation. Article 17 In case of a merger/consolidation by a company, any labor separated and any labor declined the continued employment as provided in the first Paragraph of preceding Article shall be entitled with a prior notice of termination of employment or paid a wage payable during that prior notice and be duly paid the labor pension or severance pay in accordance with Article 16 of the Labor Standard Law. CHAPTER II MERGER, ACQUISITION AND DIVISION Section One Merger/Consolidation Article 18 Unless otherwise provided in this Law, a resolution for merger/ consolidation or dissolution of a company shall be adopted by a majority vote at the general meeting attended by shareholder representing two-thirds or more of the total number of the issued shares of the company. For a company that has its share certificates publicly issued, if the total number of shares represented by shareholders present at the general meeting is short of the quorum, the resolution may be adopted by two-thirds of the votes of the shareholders present at the general meeting who present a majority of the total number of issued shares. Where a higher criteria for the total number of shares represented by the shareholders present at the general meeting and the total number of votes required to adopt a resolution thereat are specified in the Articles of Incorporation, such higher criteria shall prevail. In case of any special shares are issued by the company, the merger/ consolidation shall be separately resolved by the holders of those special shares with the exception of that a resolution by the general meeting is not required as provided by this Law or a resolution by the meeting of special shareholders is not required as expressly provided in the Articles of Incorporation. All the provisions set forth in the preceding three Paragraphs shall apply mutatis mutandis to the resolution of the meeting of special shareholders. Any company holding the shares of other company participating in the merger/consolidation, or the company or its assigned representative is elected as a director to other company participating in the merger/consolidation, then the company or its assigned representative may exercise voting right in the resolution of the merger/consolidation by such other company. Actions by the shareholders of the surviving company as prescribed by the preceding four Paragraphs on a plan of merger/consolidation is not required if the number of shares issued as a result of the merger/consolidation will not exceed by more than twenty percent of the total number of issued voting shares of the surviving company immediately before the merger/consolidation, and the total amount of cash or the total value of the assets delivered to the shareholders of the dissolved company will not exceed by more than two percent of the net value of the surviving company provided, however, that the assets of the dissolved company may not be insufficient to offset its liabilities. Under such circumstance, a resolution for merger/ consolidation shall be adopted by a majority vote of the directors present at the Board meeting attended by directors representing two-thirds of the directors of the surviving company. Article 19 Where ninety percent or more of the total number of the issued shares of a subsidiary company is held by its parent company, the parent company may merge/consolidate with the said subsidiary company upon a resolution to be adopted separately at the board meeting of both the parent and subsidiary company by a majority vote of the directors present at the meeting attended by directors representing two-thirds of the directors of the respective companies. After adoption of the resolution by the board of directors of subsidiary company under the preceding Paragraph, the details of the resolution and entries required to appear in the merger agreement shall be published with ten days. A notice shall be served to each of its shareholders and shall state that any shareholder who has an objection against that resolution, may submit a written objection requesting the subsidiary company to buy back, at the then prevailing price, the shares of the subsidiary company he holds. The given time referred in the preceding Paragraph shall not be shorter than thirty days. Article 20 In the case of merger/consolidation between two independent companies limited by shares or between a company limited by shares and a limited company, the surviving or the newly incorporate company under the merger/consolidation project shall be limited to a company organized in the form of a company limited by shares. Article 21 The following requirements shall be fulfilled in case of any merger/ consolidation of a domestic company with a foreign company: 1.The said foreign company, pursuant to the law of incorporation, shall be a company limited by shares or a limited company and is duly allowed to be merged/consolidated with other company; 2.The merger/consolidation agreement has been duly resolved by the general meeting, the Board of Directors of that company or otherwise, pursuant to law of incorporation; and 3.The surviving company or newly incorporated company after the merger/consolidation shall exist only in the form of a company limited by shares. The foreign company shall designate before the reference date of the merger/consolidation a representative for any service made within the territory of the Republic of China. Article 22 The merger/consolidation plan shall be made in writing and certain the following particulars: 1.The name and capital of the merged/consolidated company and, after the merger/consolidation, the name and capital of the surviving or newly incorporated company. 2.Where shares are to be issued by the surviving company, the newly incorporated company, or other company as a result of merger/ consolidation, the total number of shares, classes of shares and amount of each class, or the amount of cash and other assets. 3.Where shares are to be issued to shareholders of the dissolved company by the surviving company, the newly incorporated company, or other company as a result of merger/consolidation, the total number of shares, classes of shares and amount of each class, the amount of cash and other assets, method of distribution, together with other relevant matters. 4.Any things and matters related to the shares duly redeemed or purchased by the surviving company for the distribution to the shareholders of the dissolved company. 5.Any change to the Articles of Incorporation of the surviving company or Articles of Incorporation to be executed by the newly incorporated company; and 6.Criteria and conditions for the computation of share exchange ratio by the listed (OTC) company. The preceding Paragraph is also applicable, mutatis mutandis, to the merger/consolidation with a foreign company. Article 23 Upon the merger/consolidation is resolved, a company shall immediately publish and notify each creditors of such merger/consolidation and specify a period of not less than thirty days to allow objection filed by the creditor. A company that has not given notice or made public announcement in the manner referred to in the preceding Paragraph, or fails to satisfy a creditor who has raised an objection to the merger/consolidation or to furnish an appropriate security, to create any trust exclusively for creditors' satisfaction, to certify that such merger/consolidation is without prejudice to the rights of creditors, shall not asset the merger/consolidation as a defense against such creditor in action. The requirements specified in the first Paragraph hereof shall be applicable only to the creditors of the dissolved company or the subsidiary company in the merger/consolidation provided in Article 18(6) of this Law and the summary merger/consolidation provided in Article 19 of this Law, and the date of the merger/consolidation is referred to the date of the resolution by the Board of Directors instead of the general meeting. Article 24 All rights and obligations of any company dissolved due to merger/ consolidation shall be generally assumed by the surviving company or the newly incorporated company after the merger/consolidation; the status as a concerned party of the dissolved company in any on-going litigation, non-litigation, business arbitration and any other proceedings shall be taken over by the surviving company or the newly incorporated company. Article 25 The transfer of all rights and obligations pertaining to any properties acquired from the dissolved company by the surviving company or the newly incorporated company shall become operative on and after the reference date specified for the merger/consolidation provided, however, that any acquisition, hypothecation, loss or change of any right under other applicable laws shall be registered before its disposition is permitted. The following documents are required to be forthwith registered with the appropriate authorities by lot by the surviving company or the newly incorporated company in carrying out the alteration or merger/ consolidation registration for the rights pertaining to the assets described in the preceding Paragraph without being subject to the restriction that any registration for alteration of rights shall be jointly completed by the obligor and obligee as provided in Article 73(1) of the Land Law, Articles 63 and 64 of the Patent Law, Article 7 of the Transaction Law of Secured Moveable Properties and any other applicable laws and ordinances: 1.Minutes evidencing the resolution of merger/consolidation by the general meeting or the Board of Directors. 2.Certificate of the registration for the merger/consolidation. 3.A list of registered assets of the dissolved company before the merger/consolidation and the list of assets in the registration for modification completed by the surviving company or the newly incorporated company. 4.Any other documents specified by the registration authorities. Unless a longer period is otherwise provided by other applicable laws and ordinances, the registration specified herein shall be completed within six months upon the reference date of merger/ consolidation without being subject to the completion of registration for alteration of land rights within one month as provided in the first paragraph of Article 73(2) of the Land Law. Article 26 The surviving company shall report the merger/consolidation in the first general meeting held after the merger/consolidation. Section Two Acquisition Article 27 The notice of credit transfer in the acquisition of business or assets by a company under general assumption or transfer, or under Articles 185(1)(ii) or 185(1)(iii) may be made in the form of publication in lieu and the recognition from the creditors is not required in any undertaking of liabilities without being subject to Articles 297 and 301 of the Civil Code. Article 25 of this Law are applicable mutatis mutandis to the registration for transfer and alteration of rights and obligations pertaining to the assets acquired by the transferee company. Articles 27(1) and Article 21 shall apply mutatis mutandis to the acquisition made in the form of general assumption or transfer of all business or assets by the company and a foreign company. Article 28 Upon complying with the following requirements, the acquisition of the entire or substantial portion of the business or assets from a parent company by a subsidiary company may be made as resolved by the Board of Directors of the parent company. Action by the shareholders of the transferor and transferee company as provided in Articles 185(1) through 185(4) is not required and the requirements set forth in Articles 186 through Article 188 of the Company Law are exempted: 1.The said subsidiary company is entirely held by the parent company; 2.The subsidiary company shall issue new shares to the parent company in exchange for the business or assets of the later. 3.The said parent company and its subsidiary company have prepared the consolidated financial statements according to the Generally Accepted Accounting Principles. The preceding Paragraph and Article 21 of this Law shall apply mutatis mutandis to any transfer by a parent company of its entire or substantial portion of business or assets to its 100% held subsidiary company incorporated offshore, or the transfer by a foreign company of its entire or substantial portion of business or assets to its 100% held subsidiary company incorporated within the territory of the Republic of China. Article 29 If as resolved by the general meeting, a company may by means of share exchange to be acquired by any other existing or newly incorporation company as a 100% held subsidiary company pursuant to the following requirements: 1.The said resolution by the general meeting shall be adopted by a majority votes at the meeting attended by shareholders representing two-thirds or more of the total number of the issued shares; the same governs where the designated transferee company is an existing company; and 2.Requirements set forth in Articles 156(2), 197(1), 227, 278(2) of the Company Law and Articles 22-2 and 26 of the Securities and Exchange Law are not applicable to the share exchange described herein. For a company that has its share certificates publicly issued, if the total number of shares represented by shareholders present at the general meeting is short of the quorum, the resolution may be adopted by two-thirds of the shareholders present at the general meeting who present a majority of the total number of issued shares. Where a higher criteria is specified in the Article of Incorporation, such higher criteria shall prevail. If the transferee company is a newly incorporate company, the general meeting held under the item 1, Paragraph One shall be deemed as the meeting of promoters of the transferee company; directors and supervisors may be elected in that same meeting without being subject to Articles 128 through 139, 141, 155 and 163(2) of the Company Law. Article 30 In the course of share exchange by and between a company and another company pursuant to Article 29 of this Law, if the designated transferee company is an existing company, a share exchange contract shall be entered by Boards of Directors from both of the transferor and the transferee companies; if the designated transferee company is a newly incorporated company, a share exchange resolution shall be adopted by the Board of Directors of the transferor company. The aforesaid contract and resolution shall be presented at the general meetings of the company concerned. The share exchange contract and resolution as described in the preceding Paragraph shall contain the following particulars and shall be delivered to each shareholder together with the meeting notice: 1.Any alteration made to the Articles of Incorporation of the existing company or execution of the Articles of Incorporation of the newly incorporated company; 2.Where new shares issued by the existing or newly incorporated company, the total number of new shares, classes of shares, and amount of each class, together with other relevant matters; 3.Where shares are transferred by the shareholders of the company to the existing or newly incorporated company, the total number of shares, classes of shares, and amount of each class, together with other relevant matters; 4.The relevant provisions applicable if the amount of shares to be issued to the shareholders is less than the value of one share and payable in cash; 5.The share exchange contract shall enter whether any remaining office term of director or supervisor at the time of exchange should be continued; and the share exchange resolution shall enter a list of directors and supervisors of the newly incorporated company; and 6.In case of a joint share exchange with another company for the newly incorporated company, the share exchange resolution shall enter matters of concerns in such joint share exchange. The preceding two Paragraphs, Articles 29 and 21 shall apply mutatis mutandis to the share exchange between the company and a foreign company. Any undistributed retained earnings after the share exchange by a company with another company pursuant to Article 29, though entered as the capital surplus of another company, such distribution is immune from restrictions provided in Article 241(1) of the Company Law. Special shares already issued before the share exchange by a company, the transferee company shall assume the rights and obligations regarding these shares towards their holders, and in the fiscal year of conversion may distribute dividends after auditing by the supervisors according to the statements and reports produced by the Board of Directors, and such distribution is immune from restrictions provided in Article 228 through 231 of the Company Law. If a company is newly incorporated as a result of share exchange by the company and another company pursuant to the preceding Article, he portion of the capital quota for the share exchange of the newly incorporate company may not be applicable to Article 2(1)(i) of the Employees Warfare Payment Statute. Article 31 Where a listed (OTC) company enters into a share exchange plan with another company or a newly incorporated company, the shares then traded on the stock exchange (OTC) shall be terminated upon the completion of the exchange and required procedure of the stock exchange market (OTC), and taken over by another company in compliance with requirements set forth for a listed (OTC) company. Section 3 Division Article 32 In carrying on a division by a company, the Board of Directors shall draft a division plan and submit it to the general meeting. A resolution for division shall be adopted by a majority vote at the general meeting attended by shareholders representing two-thirds or more of the total number of the issued shares of the company. For a company that has its share certificates publicly issued, if the total number of shares represented by shareholders present at the general meeting is short of the quorum, the resolution may be adopted by two-thirds or more of the votes of the shareholders present at the general meeting who present a majority of the total number of issued shares. In the preceding two Paragraphs where a higher criteria for the total number of shares represented by the shareholders present at the general meeting and the total number of votes required to adopt a resolution thereat are specified in the Articles of Incorporation, such higher criteria shall prevail. Upon the division is resolved, a company shall immediately publish and notify each creditors of such division and specify a period of not less than thirty days to allow objection filed by the creditor. A company that has not given notice or made public announcement, or fails to satisfy a creditor who has raised an objection to the division, to furnish an appropriate security, to create any trust exclusively for creditors' satisfaction, to certify that such division is without prejudice to the rights of creditors, shall not assert the division as a defense against such creditor in action. The existing or newly incorporated recipient company, unless the liabilities existing before the division may be severed, shall within the scope of contributions made by the recipient company assume the joint and several responsibility of discharging the liability incurred by the divided company prior to the division. However, the creditors' right to claim for the performance of the joint and several liability shall become extinguished, if not exercised by the creditors within two years from the reference date of division. If the recipient company is a newly incorporated company, the general meeting of the company divided shall be deemed as the meeting of promoters of the recipient company and directors and supervisors of the newly incorporated company may be elected in the same meeting without being subject to Articles 128 through 139, 141 through 155 and 163(2) of the Company Law. The requirements set forth in the preceding Paragraph is also applicable to a general meeting called before the enactment of this Law. Article 24 of the Company Law shall apply mutatis mutandis to any company dissolved as a result of division. Where a listed (OTC) company is divided, the existing or the newly incorporated recipient company after the division found compliant with requirements of division and the relevant listing (OTC) rules may continue or start to offer its shares on the stock exchange (OTC) upon completing the procedures specified for such division and procedures of the stock exchange (OTC), while the listed (OTC) company before the division may continue to remain as such. In case of a division by a company limited by shares, the surviving company or the newly incorporated company shall be only in the form of a company limited by shares. Article 33 The division plan specified in Article 32 of this Law shall be made in writing with the following particulars: 1.Any alteration made to the Articles of Incorporation of the existing recipient company or execution of the Articles of Incorporation of the newly incorporated company; 2.Business value, assets, liabilities, shares exchange ratio and computation criteria of the business transferred by the company divided to the existing or the newly recipient incorporated company; 3.The total number of shares, classes of shares, and amount of each class issued by the existing company or the newly incorporated recipient company accepting the business from the company divided; 4.The total number of shares, classes of shares, and amount of each class acquired by the divided company or its shareholders; 5.The relevant provisions applicable if the amount of share to be issued to the divided company or its shareholders is less than the value of one share and payable in cash; 6.Rights and obligations of the divided company assumed by the existing or newly incorporated recipient company, together with other matters; 7.In case of reduced capital of the company divided, any things and matters related to such reduced capital; 8.The matters which shall be settled in the cancellation of the shares of the divided company; 9.If another company joins the division with the company, the resolution of the division shall contain matters related to the joint division; and 10.Reference date of division. The division plan shall be delivered together with the notice of the general meeting for the resolution of division to each shareholder. In case that a division is made with a foreign company, Article 32, 33(1), 33(2) and 21 of this Law shall mutatis mutandis apply. CHAPTER III TAX PAYABLE TO GOVERNMENT Article 34 In the acquisition of assets or shares by a company pursuant to Articles 27 through 29 of this Law with the shares entitled with voting rights as the consideration to pay the company so merged/ consolidated and acquired and such shares is at a value not less than sixty-five percent of the total consideration, or a company is carrying on merger/consolidation and/or division, the following shall apply: 1.Any and all deeds and certificates so created are exempted from stamp tax; 2.The titleship of acquired immovable property is exempted from deed tax; 3.Any securities exchange tax payable is exempted; 4.Any commodities or labor service transferred is deemed as not falling with the scope of imposition of business tax; and 5.Any land owned by the company when confirmed with its current value after the transfer declared shall be immediately completed with the transfer registration of the titleship. The land value increment tax duly born by the existing land title holder may be registered under the name of the company acquiring the land after the merger/consolidation and acquisition; and in case of any further transfer of that land, the land value increment tax registered shall be paid on a priority basis over any and all liabilities and mortgage from the proceedings of the disposition of such land. Upon having registered the land value increment tax under the item 5 of the preceding Paragraph, shares as the consideration are transferred, as a result of this, the shares it holds becomes lower than sixty-five percent of the consideration within three years upon completing the registration of the land transferred, the acquired company shall make later payment of the land value increment tax registered; and any shortage of the later payment shall be made good by the acquisition company. Article 35 The good will created as a result of merger/consolidation and acquisition by a company may be equally amortized within fifteen years. Article 36 The expenses incurred from the merger/consolidation and acquisition of a company may be equally amortized within ten years. Article 37 In case of a merger/consolidation, division or acquisition provided in Articles 27 and 28 of this Law by a company, the surviving company or the newly incorporated company after the merger/consolidation, the existing company or the newly incorporated company after the division or the company of acquisition may respectively continue to assume any tax incentives entitled to the dissolved company, the company divided or the company acquired that is not yet deducted or not expired for the assets or business already acquired before that current acquisition provided, however, that any company qualified for the incentive of exemption of business income tax shall continue to produce the product or labor service enjoying the incentives by the dissolved company, the company divided or the acquired company before the merger/consolidation and acquisition; and such incentives shall be limited to the income accounted for product independently manufactured or the labor service provided and otherwise enjoyed by the dissolved company, the company divided or the company acquired as of the surviving company or the newly incorporated company after the merger/consolidation, or the existing company or the newly incorporated company after the division or the acquisition company. In case of being qualified for the incentives of investment offset, such shall be limited to the tax payable accounted for the part of the dissolved company, the company divided or the company acquired as of the surviving company or the newly incorporated company after the merger/consolidation, or the existing company or the newly incorporated company after the division or the acquisition company. If any tax incentives continued to be enjoyed by the company pursuant to the requirements set forth in the preceding Paragraph is required to comply with the conditions and standards as specified in applicable laws and ordinances, the company shall meet the same incentive conditions and standards after the assumption of the tax incentives. To facilitate readjustment of the structure of the industry, a company with surplus is encouraged to merge/consolidate and acquire any other company in loss to repay the debts due to banks transferred at the time the merger/consolidation and acquisition take place, the Executive Yuan may prescribe a procedure to exempt the business income tax for the income created from the assets or business so merged/ consolidated and acquired within a given period of time. The preceding Paragraph may be applicable, mutatis mutandis, to the merger/consolidation between two companies in loss. The Executive Yuan shall specify the given period of time, applicable conditions and procedure for the exemption of business income tax as described in the preceding third and fourth Paragraphs. Article 38 If provided with sound and complete accounting books and records, the loss and the year for the declaration of deduction as a result of merger/consolidation by a company entitled to use the blue declaration form as referred in Article 77 of the Income Tax Law or if provided with a CPA certified report and the income tax has been declared and paid up within the given time, the surviving company or the newly incorporated company after the merger/ consolidation in declaring the final income tax of profit business may deduct from the net profit of the current year within five years upon the year the loss takes place the loss within the preceding five years authorized by the appropriate tax collection authorities before the merger/consolidation for deduction to each company participating in the merger/consolidation in pro rata of the equities of the surviving company or the newly incorporated company held by each corporate shareholder due to the merger/consolidation. In case of a merger/consolidation by a domestic company with a foreign company, the surviving company or the newly incorporated company or the subsidiary company incorporated by the foreign company within the territory of the Republic of China may deduct any loss not yet deducted before the merger/consolidation by each company participating in the merger/consolidation or by the subsidiary company incorporated by the foreign company within the territory of the Republic of China. Upon the division of the company, the existing company or the newly incorporated company may as specified in the first Paragraph deduct from the net profit of the loss pending deduction before the division by each company participating in the division at the amount calculated pro rata according to the division of equity. Upon calculating of the deductible loss by the existing company, the ratio of equity of the existing company held after the division by the shareholders of each company participating in the division shall be further accounted for the calculation. Article 39 If the shares with voting rights acquired by a company as a result of transfer of its entire or substantial portion of business or assets to another company is not less than eighty percent of the consideration of the entire transaction, and all the shares so acquired have been transferred to the shareholders, then any proceedings generated from the transfer of the business or assets is exempted from business income tax; and any loss incurred is prevented from deduction from the income. The substantial portion of business as described in the preceding Paragraph refers to the income of the latest three years of the transferor business is at an amount not less than fifty percent of the total operation income for each respective fiscal year; and the substantial portion of assets, to the assets to be transferred has a value not less than fifty percent of the total assets at the time the transfer takes place. Any income created as a result of the transfer of all shares acquired by the company to its shareholders due to division is exempted from business income tax; and any loss incurred is prevented from deduction from the income. Article 40 If as a result of carrying on the merger/consolidation, division or the acquisition as provided in Articles 27 through 29 of this Law, the shares of the subsidiary company held by the company reaches ninety percent or more of the total number of issued shares, the company may be elected as the tax payer since the fiscal year having survived twelve months of a given taxable year during the term of such holding to declare a combined final business income tax as provided in the Income Tax Law, and declare the undistributed earnings with an additional ten percent of business income tax; any other tax related matters shall be carried out separately by the company and its subsidiary company. Article 41 If a domestic company is carrying on a merger/consolidation, division or the acquisition of assets or shares under Articles 27, 28 and 30(3) of this Law with a foreign company; Articles 34 through 40 of this Law shall apply to the domestic company; and Articles 34 and 38, to that foreign company. Article 42 Any arrangement not made in arm's length transaction, avoidance or reduction of tax obligation on the amortized income, expenses, expenditures and profit/loss between a company and its subsidiary company, between a company or its subsidiary company and any domestic or foreign individual, profit-making business or education, culture, public interest, charities or organization; or any improper avoidance or reduction of tax obligation for oneself or for any other person by means of the acquisition of equity, transfer of assets or any other fraudulent arrangement; the tax collection authorities may seek the approval from the Competent Authority to readjust such tax obligations either according to the arm's length transaction or depending on the results of investigation in order for an accurate computation of the income tax and tax payable of the tax payer provided, however, that this Article is not applicable to the transaction made between any company and its 100% owned subsidiary company incorporated within the territory of the Republic of China. Any company or its subsidiary company when subject to a recompilation of the amount of income and the taxable amount by the tax collection authorities pursuant to the preceding Paragraph hereof is prevented from filing a combined business income tax as provided in Article 41. Article 43 Any loss from transaction of a company applied its business or assets in subscribing or exchange for the shares from another company and the value of such acquired shares is lower than the book value of the business or assets may be amortized within of fiftee CHAPTER IV FINANCIAL FACILITIES Article 44 To encourage merger/consolidation, acquisition and/or division among the enterprises, compliance with any of the following events may be applicable to Article 21 of the Statute for Upgrading Industrie: 1.A sound operation plan is produced for the improvement of the structure of the industry and a merger/consolidation, acquisition and/or division, the development funds owned by the Executive Yuan may be invested in the surviving company or in the newly incorporated company created after such merger/consolidation, acquisition and/or division; 2.For any domestic company with its productivity not fitting operating efficiency and a division and an overseas relocation are required for the production facilities in adapting to the improvement of the structure of the industry, and a plan for backflow of capital funds has been produced, any insufficiency in the capital funds for the existing or the newly incorporated corporation at home after the division may apply for project financing at lower interest rate by the development funds owned by the Executive Yuan. The project financing to be offered by the development funds owned by the Executive Yuan as specified in the preceding Paragraph may be provided jointly with any financial institute. Article 45 If the result of merger/consolidation, acquisition and/or division by a company breaches the credit authorization quota permitted by the law to an interested party, the same principal, the same interested party or the same affiliated enterprises, the financial institute may stick to the credit authorization agreement until the expiry of the term of credit authorization. Article 46 For any shares acquired from the existing company by transferring a certain part of business or assets by a company due to merger/ consolidation, acquisition and/or division, the financial institute may replace then existing collateral for the original business or assets with shares acquired. CHAPTER V REORGANIZATION Article 47 The plan of reorganization may contain the proposal for merger/ consolidation and acquisition. If the reorganization of a company is done through merger/ consolidation and acquisition, supporting documents shall be produced and deemed as an integral part of the plan of reorganization, without subject to the requirement of resolution adopted by the general meeting or the Board of Directors as provided in Articles 18, 19, 29 and 32 of this Law. Article 48 If merger/consolidation and acquisition are made in the course of reorganization by a company, any shareholder from that company is not invested with the right to request the company to buy back his shares and Article 12 of this Law is not applicable. CHAPTER VI SUPPLEMENTAL PROVISIONS Article 49 Any company applicable to requirements of tax payable to government as provided in Chapter III of this Law shall produce those documents required by the tax regulating authorities; failure of or insufficiency in the documents shall be notified for a later submittal by the tax collection authorities; the further failure of the later submittal without justified cause will prevent the applicability of those provisions. Article 50 This Law shall become effective on the date of promulgation.