The Legislative Yuan passed the Bill of Amendment to the Mergers and Acquisitions Act (the "New Mergers and Acquisitions Act") on June 15, 2015, and the President signed the New Mergers and Acquisitions Act into law on July 8, 2015 which came into effect on January 8, 2016 this year. With respect to the key contents of the New Mergers and Acquisitions Act, please refer to the News Letter: Amendment to the "Mergers and Acquisitions Act" that our firm published on June 30, 2015.
According to the Ministry of Economic Affairs' ruling dated January 4, 2016 (Jing-Shang-Zi-Di-10402439110), "Under the newly amended Mergers and Acquisitions Act, a company is given more options for paying consideration for share exchanges or de-mergers (spin-offs); in other words, a company may use cash or other types of assets as consideration for share exchanges or de-mergers (spin-offs) without having to issue any new shares. Nevertheless, in a de-merger (spin-off) or share exchange for a newly incorporated company, if the newly incorporated company pays only cash or other assets as the consideration of such de-merger (spin-off) without issuing any new shares to the company being spun-off or its shareholders (i.e., shareholders of the company conducting share exchange), an uncertainty will arise as to who will be the shareholders of the newly incorporated company. Hence, the newly incorporated company should not pay only cash or other assets as the consideration in such a de-merger (spin-off) or share exchange."