萬國法律事務所

Primus Financial Holdings Limited (“Primus”) may face more obstacles in acquiring Nan Shan Life Insurance Company (“Nan Shan”) than it had initially expected. Taiwan’s Ministry of Economic Affairs (MOEA) and the Financial Supervisory Commission of the Executive Yuan (FSC) stated that if Primus applies to acquire the shares of Nan Shan, MOEA will first need to determine the stockholder structure of Primus and China Strategic Holdings Ltd. (co-buyer of Nan Shan) in Hong Kong. Secondly, MOEA’s Investment Commission (IC) will need to review the relevant documents and also determine whether the “ultimate beneficiaries” are investors from the People’s Republic of China’s (PRC). The acquisition will also need to be reviewed by the Council of Labor Affairs (CLA), FSC and the IC of MOEA.

In a public hearing held recently, the IC, FSC and other relevant departments have provided the above assurances when questioned by legislators, scholars, Nan Shan’s agents and insured parties regarding the acquisition of Primus and China Strategic.

The relevant agencies have set the following requirements for Primus:

1. CLA requires Primus to reach an amicable settlement with its employees and agents. CLA advised that the employers and employees enter into a collective bargaining agreement and at the same time create a platform for negotiations.

2. FSC will require Primus to provide sustainable financial capability and will most likely also require Primus to increase its share holding in Nan Shan.

3. Primus will need to provide its long-term management plan and undertake that it will not sell its Nan Share’s shares in the short term.

4. FSC will require Primus to utilize the Nan Shan funds according to relevant Taiwan laws. Currently, the assets of Nan Shan are held in custody by the Bank of Taiwan and Citibank Taiwan. Any investments and remittances exceeding a certain amount will require FSC approval.

5. If the insured parties do not wish to continue the policy and discharge the policy within a certain time frame, there shall be no deduction of any fees for the discharge of the policy.

6. FSC will conduct a standard review to determine major stockholder suitability. At the same time, IC will set out an additional requirement where if there are changes in China Strategic’s stock holding, and PRC investors’ ownership of the shares exceeds 30%, IC will revoke the approval of the acquisition of Nan Shan.

Other issues were also raised at the public hearing. Certain parties have expressed concern as to whether it would be appropriate for a private equity fund management to manage Nan Shan as those insurance policies are assets of the insured parties. Also, it was suggested that in order to manage Nan Shan’s 1.5 trillion dollars in capital, Primus should establish a finance holding company in Taiwan with Sixty-Trillion (60,000,000,000) New TaiwanDollars to be included under the supervision of FSC.