Winkler Partners will be closed from Friday, the 5th to Friday, the 12th of February, 2016 for the Lunar New Year. Please direct any urgent matters to firstname.lastname@example.org, which will be checked regularly. We will return to normal working hours on Monday, the 15th of February, 2016.
Please note that all government offices in Taiwan will also be closed for the holidays on the above dates. Any specified governmental deadline falling during this period will be automatically extended to the next working day, Monday, the 15th of February, 2016.
From all of us at Winkler Partners, we wish you a prosperous and happy Year of the Monkey.
We strongly encourage any foreign individual, company or corporation (a “Foreign Buyer”) that is contemplating the acquisition of either (i) a Taiwan company Target (a “Taiwan Target”) or (ii) an offshore Target (an “Offshore Target”) that has a Taiwan subsidiary, to consider the effects of Taiwan’s foreign investment regulations on the planned transaction. While Taiwan’s foreign investment regulations can directly impact the structure of such an acquisition, an equally important, but often overlooked, issue is the effect these regulations may have on post-acquisition reorganization and operation of the Target.
Pursuant to Taiwan’s Statute for Investment by Foreign Nationals, any direct acquisition of a Taiwan Target by a Foreign Buyer requires Foreign Investment Approval (“FIA”). In addition to the obvious effect that obtaining the FIA would have on the timing of the acquisition, the related FIA regulations may also affect the transaction structure. For instance, the FIA regulations make it practically impossible to structure a direct acquisition of a Taiwan Target with any type of holdback, earn out or other form of deferred payment mechanism. (See our article here for more information on the effects of the FIA process on deferred payment mechanisms as well as a convenient workaround.)
In a large global acquisition, Foreign Buyer may be transacting with an offshore Seller to purchase an Offshore Target that has subsidiaries worldwide, including in Taiwan. Under these circumstances, FIA is typically not required in Taiwan. A common exception to this general rule arises when (i) Offshore Target’s Taiwan subsidiary has minority shareholders and (ii) these minority shareholders will have their shares purchased by either the Offshore Target or the Foreign Buyer as part of the transaction. FIA is required under these circumstances as there is a direct transfer of Taiwan assets (i.e., the shares in the Taiwan subsidiary) to a foreign purchaser.
Whether FIA is required for Foreign Buyer’s initial acquisition, Foreign Buyer should always consider the impact of the FIA regulations on any expected post-acquisition transactions in Taiwan. Common post-acquisition transactions that require prior FIA include:
(a) injecting equity capital into the Taiwanese subsidiary;
(b) providing a loan to the Taiwanese subsidiary for a term exceeding one year;
(c) investing in another company through the Taiwanese subsidiary;
(d) transferring some or all of the shares in the Taiwanese subsidiary to another person, including any post-acquisition restructuring of Foreign Buyer and related companies which results in the transfer of shares of the Taiwan subsidiary; and
(e) reducing the capital of, or winding down, the Taiwanese subsidiary.
As stated above, any foreign corporation or individual that is contemplating the purchase of a Taiwan Target or an Offshore Target that holds a Taiwan subsidiary should first evaluate Taiwan’s foreign investment regulations, with respect to not only the structuring of the initial acquisition, but also the post-acquisition operations and reorganization of the Target.
For more information on mergers, acquisitions, and foreign investment matters in Taiwan, please contact Gregory Buxton at email@example.com or +886 223112345 ext. 548.
Christine Chen, head of our employment and immigration practice, has contributed to the January edition of International Employment Law Update published by Taylor Vinters, a UK-based law firm with offices in London, Cambridge and Singapore. The update includes employment law news from jurisdictions around the world and is targeted at human resources managers.
In the Taiwan section, Christine summarizes proposed changes in the payment of pensions under the Labor Pension Act, as well as increases in penalties levied on employers who fail to offer employees pensions. Employees who are over the age of 60 with at least 15 years of service will be given the choice to receive their pension in one lump sum, rather than the monthly payments already in place. Christine notes that employees are likely to stick with monthly payments unless pressing financial matters such as healthcare costs are a concern for the employee.
Under the changes, penalties for employers who refuse to offer pensions will also increase from NT$250,000 (approximately US$7,450) currently to between NT$300,000 (approximately US$8,930) and NT$1.5 million (approximately US$44,680). Employers can be fined repeatedly with the government given powers to ‘name and shame’ those entities, as well as their key personnel, who are found to have breached the regulations.
Christine notes that the amendments follow a trend in Taiwanese employment law to better care for members of the workforce approaching retirement age, and provide more flexibility for employees. You can read the section on Taiwan here.
Winkler Partners has been recognized for our trademark practice for the sixth year in a row by the World Trademark Review. The WTR ranks firms and individuals in seventy-one major markets worldwide, and publishes their findings annually, in a report known as the WTR 1000.
This year, we were awarded ‘gold’ for our trademark enforcement and litigation work, the first time that we have been ranked in the top tier. Only five firms in Taiwan were given the gold ranking for 2016. The WTR explains that “any list of the world’s top brands would feature many names that this firm is proud to count as [clients]”.
We were also awarded ‘silver’ for our prosecution and strategy work, which WTR notes by saying “[Winkler Partners] enjoyed banner years in 2014 and 2015, in terms of both new client wins and filing volumes; the group filed over 1,000 applications each year on behalf of elite companies across multiple sectors.”
Also, for the first time, two of our partners were listed in the WTR 1000. Head of our IP practice, Peter Dernbach, who is currently serving on the Board of Directors at INTA (International Trademark Association) and has featured in the WTR 1000 before, is listed in the 2016 guide as a “prominent voice in the global IP conversation” and commended for “his international perspicacity [which] is a boon to clients seeking a local strategy that can dovetail with their approaches across other markets.” Peter is ranked as a WTR 1000 individual for both enforcement & litigation and prosecution & strategy matters. Christine Chen, who was promoted to partner in 2014, is described by WTR as a ‘seasoned litigator’. It is the first time Christine has appeared in the WTR 1000, where she is ranked for her enforcement & litigation work.
The WTR 1000 is the first definitive guide exclusively dedicated to identifying the world’s leading trademark legal services providers. Winkler Partners has been honored to be included since the publication launched in 2011. You can find the entire guide for 2016 here.
Taiwan’s Legislative Yuan passed a bill amending the Personal Information Protection Act (PIPA) on 15 December 2015. The bill was the first amendment to the PIPA since it took effect in 2012.
In 2012, the Executive Yuan declined to put Articles 6 and 54 of the PIPA into force on grounds of administrative impracticability. In response, the Legislature has now amended Articles 6 and 54. In addition, the Legislature added medical records to Article 6′s list of sensitive information that in general cannot be collected, processed, or used unless one of six enumerated exceptions applies. Consent of the data subject is now a permitted exception.
According to media reports, the Ministry of Justice has suggested that it will put the amendments to PIPA including Articles 6 and 54 into force in March of this year.
Employment in Taiwan has increasingly become a prominent issue, with the number of employment law disputes brought by employees rising significantly in recent years. Below is a list of ten useful tips for Taiwan employers to keep in mind when negotiating and drafting their written employment agreements. While not exhaustive, the following list is aimed at providing some guidance to Taiwan employers in using their employment agreements to address some key issues we regularly come across in our employment law practice.
1. Use a written employment contract
Taiwan has no specific laws or regulations that specifically govern employment contracts, and as such, a degree of flexibility is granted to employers with regard to the format of their employment agreements. While there is no express law that mandates written employment contracts, to ensure clarity and to avoid potential future disputes with employees, in Taiwan it is advisable for employers to use written employment contracts.
2. Use an employee handbook/work rules
Employers who hire 30 or more employees must have an employee handbook or work rules. Even if the threshold of 30 employees has not been met, many companies choose to have separate work rules or an employee handbook, which also forms part of the employment contract. Having a separate (but binding) document which details elements of the employment relationship such as IP rights, discipline and restrictive covenants, affords employers greater security with regard to the mutual rights and obligations arising under the employment contract.
3. Clarify the term of the contract
Employment contracts in Taiwan are indefinite-term contracts unless otherwise specified as fixed-term, and statutory employment rights are enjoyed upon commencement of employment. While probationary periods can form part of employment contracts in Taiwan, as termination in Taiwan is not at-will, but rather must comply with specific requirements under the Labor Standards Act (the “LSA”). Probationary periods which provide for termination are of limited practical use in Taiwan.
4. Protect your intellectual property
It is best practice for employment contracts to clearly define both ownership and creation rights in relation to all existing and potential intellectual property that is within the particular employee’s scope of work. Protection can be enhanced by referring in the contract to the employee handbook or some other written agreement, which in turn details relevant IP rights with greater specificity.
5. Clearly define restrictive covenants
Similar to IP rights, clearly describing the employee’s rights and obligations both during and post-employment with respect to trade secrets, competition, solicitation and confidential information is a crucial aspect of any employment contract in Taiwan. The scope of the restrictions or covenants relating to competition and solicitation must be reasonable, the length of the non-compete clause must be no longer than two years, the employer must have a legitimate interest to be protected, the departed employee’s job duties and position must be sufficient to grant the employee access to the legitimate interest the employer seeks to protect, and the employee must receive reasonable compensation for any loss caused by agreeing to the non-compete clause. If the clause does not conform to the above principles, a Taiwan court will most likely find it to be unenforceable in Taiwan.
6. Comply with relevant laws relating to transfer/severance of employees
When a business entity undergoes restructuring or changes ownership, any employees terminated as a result must be given the requisite advance notice as well as severance payment under the LSA. The LSA lists specific circumstances where an employee can be legally terminated in Taiwan with notice and severance pay, such as where the business transfers ownership or there is a suspension of operations. There are very limited circumstances where an employer may terminate an employee without notice or severance, such as where there is a serious breach of the employment contract or disclosure of business secrets by the employee.
7. Choose the right language
Taiwan courts will enforce both Chinese and English employment contracts, however it is best practice for employers to specifically state that if there is a conflict between the two, which version prevails. In most instances the prevailing version is Chinese.
8. Define jurisdiction and dispute resolution avenues
Employees may apply for mediation, with each local government in Taiwan having an employment center that offers mediation and free legal support to employees involved in disputes with their employers. Taiwan courts have specialized divisions to handle labor-related cases. It is common practice for many employment contracts, particularly for those involving foreign entities or foreign workers, to contain a provision stating that the governing law in the event of a dispute is that of the Republic of China (Taiwan) and that the parties must first use reasonable efforts to come to a negotiated solution through consultation or mediation before resorting to litigation.
9. Detail statutory benefits
Taiwan law mandates that employers who have established a legal entity in Taiwan must contribute to each employee’s National Health Insurance as well as Labor Insurance schemes. These and other benefits (such as labor insurance, parental leave, pension contributions, etc.), which must be paid for by the employer, cannot be unfavorably altered in an employment agreement by the employer.
10. Avoid making changes in working conditions
Restrictions are placed on employers who attempt to change working conditions (such as the place of work) in an employment contract. For example, many international companies wish to be able to dictate their employees’ place of work arbitrarily; however recent amendments to the LSA now provide that employers seeking to do so must abide with some general principles or else be found to have breached both the employment contract and the LSA. These include: (a) the change must be based on the needs of the business and be for a proper purpose, (b) no unfavorable changes can be made to salary or other working conditions, (c) changes must be suited to the specific employee’s skills and abilities, (d) employers must provide assistance to employees if the place of work is inconvenient, and (e) employers must consider the interests of employee’s families and lives.
Keeping in mind the above ten points when drafting your employment agreements can help to avoid potential employment disputes arising in the first place. For more information on employment law matters in Taiwan, please contact Christine Chen firstname.lastname@example.org or +886 (0) 223112345 extension 307.
Winkler Partners is looking for a law student intern for summer 2016.
The basic qualifications include good analytic, research, and writing skills. The successful candidate will probably be a native speaker of English or someone primarily educated in English who is currently a law student.
The successful candidate will also likely be able to speak Mandarin or Taiwanese and must be able to read traditional Chinese with reasonable proficiency. We will consider candidates who speak other Chinese languages such as Cantonese if the candidate can read traditional Chinese.
Duties would include curating social media sites, writing updates on legal topics, and light case work for 30-40 hours per week. The internship is (very) modestly paid but the successful candidate will need cover at least travel costs to Taipei.
We regret that Taiwan’s laws currently preclude us from obtaining work authorization for candidates with Chinese citizenship (including Hong Kong and Macau) unless the candidate is a dual national. Offers to successful candidates will be conditioned our ability to receive work authorization.
Please send a resume, a brief writing sample, and a cover letter explaining your interest in an internship in Taiwan to the attention of Zoe Chu email@example.com by 15 February 2016.
We recently welcomed two new additions to our growing corporate practice.
Ling-ying Hsu has experience both in a professional firm and as in-house counsel, where she was charged with overseeing corporate governance, and the incorporation and dissolution of subsidiaries. Ling-ying also has considerable knowledge of licensing matters, particularly in the software and entertainment industries. Ling-ying obtained her LL.M. from the University of Illinois Urbana-Champaign and has been admitted to practice in Taiwan since 2000.
Teresa Wang joins Winkler Partners from a well-known international insurance firm, where she was employed as in-house counsel. She handled insurance claim disputes as well as compliance issues relating to Taiwan’s Personal Information Protection Act and the United States Foreign Account Tax Compliance Act (FATCA). Teresa will be concentrating on mergers, international investments, data protection and commercial dispute resolution. Teresa is a graduate of the Institute of Technology Law at National Chiao Tung University and has been licensed to practice in Taiwan since 2004.
Winkler Partners proudly cosponsored a mediation workshop entitled “The Heart of Conflict” in Taipei on 21-22 October 2015. The workshop explored using Nonviolent Communication (NVC) in the context of mediation and conflict resolution, and was led by certified NVC trainers Jim and Jori Manske of Hawaii, USA.
Eleven colleagues and friends of Winkler Partners took part in the workshop. Our cosponsors were the Zhi-Shan Foundation, the CP Yen Foundation, and Sister Rosanna Hung of the Good Shepherd Community in Taipei.
We encourage and assist our clients to pursue alternative dispute resolution methods such as mediation or arbitration when possible. Mediation, in particular, can often help disputing parties satisfy their needs in an efficient and amicable manner. For further information on our alternative dispute resolution services, all are welcome to contact Chen Hui-ling at +886 (0) 2311 2345 ext. 555.
Each year Interbrand releases a list of the most valuable brands in the world. Winkler Partners represents 25 of the brands that made the Best Global Brands 2015 list, 10 of which are in the top 25. Interbrand measures both company brand value and product brand value to compile its list.
Brands such as Facebook, whose value increased 54% year on year, and Amazon, whose rose 29%, show that increasingly, the brands with the most value are associated with technology and the Internet. The most valuable brand in the world is still Apple, which saw a 43% rise in its brand value over 2014. Social media, eCommerce, software and IT solution providers as well as familiar hardware manufacturers feature heavily in the list. Perhaps based on growing sales and brand recognition in markets such as China and East Asia, several luxury fashion brands have made the list, in particular Hermes, who saw its value rise by 22%.
Winkler Partners currently represents 25 of these top global brands of 2015, an increase from 18 in 2010. Brands that we have worked with are active in many fields, from fashion to software, beverages to media.
The full list of Best Global Brands 2015 can be found here.