On April 28, 2023, the Taiwan Constitutional Court rendered the 112-Hsien-Pan-5 Judgment (the "Judgment"), declaring that the criminal liability for mandatory tender offer, structured on the basis of Articles 175, Article 43-1, Paragraph 3 and 4 of the Securities and Exchange Act, and Article 11 of the Regulations Governing Public Tender Offers for Securities of Public Companies (collectively, the "Provisions"), is in accordance with the principle of legal certainty and thus is not unconstitutional. The Court's English press release can be found here.

It is noteworthy that, in determining whether such Provisions are in accordance with the principle of legal certainty, the Court held that, in the event of blank statute (i,e, directing the details of certain elements in a statute to laws or orders enacted by the same or different authority (authorities) for supplement), such blank statute must be viewed together with the relevant supplemental laws and orders in order to determine whether the coverage of such blank statute is foreseeable. This is slightly different from the previous position of the constitution authority, which only examined the blank statute itself to process the review of legal certainty.

Furthermore, in this Judgment, the Court held that the persons subject to the relevant provisions regarding mandatory tender offer are (1) the company operators able to acquire significant amount of shares, (2) the professionals in the relevant business, or (3) the persons with the intension to acquire significant amount of shares. Therefore, when it comes to the review for the principle of legal certainty, it is the perspective of such persons (not the general public) that should be considered. This Judgment, to a certain extent, foreshadows that the hurdle to challenge financial or economic laws or regulations based on the principle of legal certainty would be high in the future.

Lastly, the most critical effect of this Judgment on the M&A practice is reaffirming the positon that to decide whether the requirement of mandatory tender offer is triggered, it is the execution date of the share acquisition agreement rather than the date of closing that matters. If the share acquisition agreement(s) for 20% or more of the total amount of issued shares of a public company is executed within 50 days, then such acquisition should be closed by means of a tender offer.

 (The article is originally in Chinese which can be found here. Chen & Lin acts as the counsel for the competent authority in the Judgment, but this article only expressed the author's opinion, not the opinion of the firm or the client it represents.)