Answer ... (a) Commercial/corporate
Taiwan has a centralised digital government database that contains data on:
- the amount of issued shares;
- the paid-in capital;
- authorised shares; and
- the names of the directors and supervisors of any Taiwanese company.
It is generally highly reliable and can assist in the verification of the corporate information of the target in a M&A transaction. Generally speaking, information in this government database will have been vetted by a government staff. It can serve as a preliminary summary of the basic corporate information of a Taiwanese target.
(b) Financial
Due diligence on the financial aspect of a target is generally handled by an accounting firm. Normally, legal professionals will not be involved in the financial due diligence of the target.
(c) Litigation
The Taiwan courts have a database containing the full text of court judgments, which is digitally searchable. However, ongoing litigation is not searchable through this public database. Generally, most acquirers rely on disclosure by the target (and the appropriate representation and warranties in the transaction documents) in relation to ongoing litigation and disputes.
(d) Tax
Due diligence on the tax aspect of a target is generally handled by an accounting firm. Normally, legal professionals will not be involved in the tax due diligence of the target.
(e) Employment
Companies with a longer history may still have a substantial labour force (ie, employees who began their employment before 2005) who are subject to the old pension scheme under the Labour Standards Act of Taiwan. Such employees may have substantial pension or severance owed to them under the old pension scheme. Furthermore, many companies which are subject to the old pension scheme may not have contributed sufficient funds into the pension reserve. Therefore, pension liabilities under the old pension scheme can represent a significant liability and must be taken into account during an acquisition.
(f) Intellectual property and IT
Taiwan has modern trademark, patent and copyright regimes that are generally in line with those of most other jurisdictions. During due diligence, it is possible to publicly search for registered trademark and patents in Taiwan, although copyrights are not generally registered. Normally, legal due diligence for M&A in Taiwan does not cover due diligence on IT systems.
(g) Data protection
The personal data of customers and other parties is protected under the laws of Taiwan. During legal due diligence, the acquirer should inquire and ascertain whether the requisite personal consents from the data subjects have been obtained in respect of the use, transfer or transmission of such data.
(h) Cybersecurity
Normally, legal professionals will not be involved in the cybersecurity due diligence of the target, as this involves expertise which lies outside of the capabilities of most legal professionals in Taiwan.
(i) Real estate
The Taiwan government has a public registration database of all real estate ownership and mortgages in Taiwan. Generally speaking, the records in this database are legally valid and third parties can rely on such records with confidence.